Why Europe is sick man of the world

Carlo de Benedetti, chairman of the Italian Olivetti group, outlines a five-point plan for renaissance
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The Independent Online
Worrying signals are coming from the European economy. The sluggish recovery that began at the end of 1993 appears stalled. In many industries demand is faltering even before it reaches pre-recession levels. Germany has "technically" entered a recession; France, Italy and Spain are stagnating.

Estimates that six months ago predicted European growth for 1996 at around 2.5 per cent have been halved. Unemployment levels, currently about 11 per cent - way above that of the US and Japan - are a permanent threat to prospects of social and economic recovery.

This premature slowdown of the economic cycle is a symptom of structural weakness. Europe is not keeping up: in a world of global competition it is falling behind, squeezed between traditional rivals and a growing number of new, aggressive players.

National disputes must not divert politicians' attention from the key problem: how to restore Europe's competitiveness within an international scene that changes daily.

On the economic front, two main factors have allowed us to fall behind: market globalisation and the unprecedented wave of technological progress.

On their own, European countries cannot tackle the challenge of a global economy. The only practical solution is economic integration. Similarly, the only sound answer to the technological revolution is to adopt a new economic and social model, more focused on knowledge, communication and new technologies (the so-called "information society").

In terms of the velocity and magnitude of change, the European Union's reactions have been slow and weak. Even the Intergovernmental Conference, launched last March, is regarded with indifference by member states and public opinion alike.

This conference is miles from confronting the two crucial issues: the means by which a European government can be created and the framework for a common defence and foreign policy.

What is needed is a "European renaissance" - a programme of concrete actions that will relaunch European integration and recreate the sense of a "new frontier"; a frontier for which commitment and sacrifices are worthwhile and in which everyone - individuals and businesses - can feel involved.

The goal is a new Europe, richer in knowledge, ideas, employment and development.

In 1992 the concept of a single currency promised a new phase in European integration. But the Europe of Maastricht has been unable to win consensus and enthusiasm.

Europeans fear the single currency will only bring new taxes and cuts in welfare spending. The plan for monetary union is stale. It must be reinforced by a programme of new initiatives:

r eliminate protectionism, monopolies, red tape and the regulatory blocks which kill entrepreneurialism and curb the creation of new jobs;

r enhance flexibility and transparency in the labour market;

r promote new technologies and construct innovative infrastructure and service networks;

r encourage investment in education and training - young people being the most precious strategic resource;

r promote the birth of new enterprises: the main source of innovation and jobs.

To give this programme momentum, clear objectives with precise deadlines must be set and progress should be gauged by benchmarking against global competition. Goals need to be measured in terms of their actual benefits.

The European Union's plans for the liberalisation of telecommunications are, I believe, a good example of what needs to be done. European policy on telecommunications has fixed terms and deadlines; it has guided and determined the decisions of national governments and it has created a sense of urgency in terms of government action, corporate decisions and public expectations.

Europe has little time left to decide its future. European citizens seem more conscious of this today than many politicians. I hope the debate in the future will belie this judgement, and provide a new platform for European development, ever more grounded in free markets, knowledge and innovation.