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A different Europe for a new economic era


BIS Department for Business Innovation and Skills - Expert Author

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Issued 05 November 2009

The European Union must re-build its leadership and reshape its core spending and economic policy to strengthen Europe's ability to compete on a global scale, Lord Mandelson said today.

He said the EU needed to “get real” about the need for a strong leadership and radical change in order to keep pace with the “G2” – the US and China – including greater strategic support for innovative, high-growth sectors and low-carbon job-creation.

Lord Mandelson said:

"We are approaching a decisive break with the economic past – a totally reordered global economy. The idea that this doesn’t require serious new thinking in Europe is just not credible - it must be based based on new strengths and capabilities to enable us to compete in a much tougher global economy.

“We will either step into a meaningful role in a multipolar world, or make do with a walk-on role. Will we drive the agenda, or become a subsidiary of a process driven and shaped elsewhere, above all by the G2, meaning the US and China. We need policies and structures for this changed world. So it is time that Europe got real.”

Lord Mandelson offered a wide range of suggestions for refocusing EU policy around innovation and investment in growth, including:

Refocusing the EU’s structural and research funds to support innovation.Potentially amending EU State Aid rules to boost growth in high-tech industries including low-carbon.Driving forward the benefits of a single market, especially by making open trade in services a reality. Rethinking some of the organisation of the European Commission to reflect the importance of innovation, the digital economy and climate change.

Lord Mandelson said that it was important that open markets and fair competition was defended during the downturn and this remains the case. He argued that it is right for the temporary State Aid framework to end in 2010, but that new guidelines are needed on risk capital so as to support the growth of high-tech industries, including digital and low-carbon.

He said:

“The EU’s budget priorities are misaligned, and that needs to change. We need to start seeing that the EU budget of “just 1%” of EU GDP as a critical 1% of added value for the EU - but that should be better used, notably at the cutting edge of our investment in European innovation, especially in the skills that help people get good jobs and in low carbon job creation.

“EU rules risk suppressing investment in innovation. Change is needed. EU rules need to encourage private capital to invest and innovate, and state aid rules need to provide the right kind of space for governments to encourage and facilitate such investment. That’s a departure, but it is necessary".


1. Lord Mandelson was speaking in Brussels at an event hosted by the think-tank Bruegel.

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Article Published/Sorted/Amended on Scopulus 2009-11-06 13:41:01 in Economic Articles

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