FT : EU Sucks

Tuesday, March 6, 2007

Okay I am “embellishing” the headline a bit.  But these European types really need to start working more than 20 hours a week if they are to stay from slipping into the category labelled “totally irrelevant” in this new age dominated by the younger and more dynamic nations.  Excerpts from the Financial Times article entitled “EU economy is 20 years behind that of US, says study” –

The European Union’s economic development is only now reaching the level achieved by the US more than two decades ago, according to a study released yesterday.  The US reached the EU’s current level of gross domestic product per capita in 1985, according to the report by Eurochambres, the pan-European business lobby.  The EU’s employment rate and level of investment in research and development were reached by the USin 1978, and its level of productivity (expressed in GDP per employed) was reached by the US in 1989, the report said.  The conclusions suggest that despite last year’s growth spurt and an acceleration of economic reforms, the EU is still far from matching America’s economic clout.  It will make uncomfort-able reading for EU leaders at their economic summit in Brussels this week, a gathering that traditionally concludes with a call for further reforms to improve competitiveness.  The study illustrates the development gap between the two blocs by establishing how many years earlier the current set of EU indicators was attained in the US.  Compared with the first such report by Eurochambres published two years ago, it shows the time lag widened between 2003 and 2006.  The most drastic gap appears in R&D spending, where the time lag expanded from 23 to 28 years.

Though the deterioration can be explained in part by EU enlargement in 2004, when 10 less developed countries joined the bloc, it also reflects the fact that the US has extended its lead over Europe in many categories.  The study said: “Europe would need to register monstrous yearly performances to reach the current US levels by 2010.”  It pointed out that in order to match the 2005 US level of R&D spending, the EU’s expenditure would have to grow by almost 14% every year until 2010.  For the EU to catch up with US GDP per capita by 2010, the bloc would require annual growth rates of more than 8%.  Last year US GDP grew by 3.3%, compared with an average growth rate of 2.9% across the 25 EU member states.  The study warned: “The EU is progressing at an insufficient pace to really compete on the world stage.”

Reference : http://www.ft.com/cms/s/1a1c3aaa-cb87-11db-b436-000b5df10621.html

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