9 Enterprise policy scoreboard 2004
| (26135)
14639/04
SEC(04) 1427
| Commission staff working paper entitled: "Benchmarking Enterprise Policy: Results from the 2003 Scoreboard"
|
| Legal base | — |
| Document originated | 10 November 2004
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| Deposited in Parliament | 17 November 2004
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| Department | Trade and Industry
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| Basis of consideration | EM of 7 December 2004
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but relevant to any debate on the mid-term review of the Lisbon Strategy
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Background
9.1 The March 2000 Lisbon European Council set the strategic goal
for the EU to become the world's most competitive and dynamic
knowledge-based economy by 2010, capable of sustainable economic
growth with more and better jobs and greater social cohesion.
Since 2000, the Commission has each year published an Enterprise
Policy Scoreboard that offers an overview of the business environment
in Member States and the EU as a whole. They are designed to contribute
to the review of competitiveness and to influence policies intended
to achieve the Lisbon goal. The 2004 scoreboard was produced before
the report by the high-level group chaired by Mr Wim Kok, former
Prime Minister of the Netherlands, which was commissioned by the
European Council in March 2004 as a contribution to the mid-term
review of the Lisbon Strategy which the Commission is preparing
for the Spring European Council in March 2005.
The scoreboard
9.2 The Commission staff working document is helpfully summarized
in the Explanatory Memorandum of 7 December 2004 by the Parliamentary
Under-Secretary of State for Construction, Small Business and
Enterprise at the Department of Trade and Industry (Mr Nigel Griffiths):
"The 2004 edition follows the pattern of the 2003 report
by recording progress in business environment indicators and national
quantitative targets adopted by Member States, Candidate Countries
and Norway. It also again enables comparisons to be made with
the United States and Japan. However, for the first time the Scoreboard
includes a chapter on taxation. The other eight chapters concern:
access to finance; the regulatory and administrative environment;
open and well-functioning markets; entrepreneurship; human resources;
innovation and knowledge diffusion; ICT; and sustainable development.
Where countries have voluntarily offered national targets in areas
of enterprise policy for wider EU consideration (as most countries
have done), they are mentioned in the text.
"The executive summary suggests that there have
been modest improvements in the business environment, despite
slow economic growth. However, the picture is varied in almost
all of the nine areas examined. The report does not offer a comprehensive
comparison between the EU, the US and Japan but mentions several
areas where the EU, or individual countries, are out-performing
them. However, it mentions a greater number of areas where the
US and Japan remain ahead.
"In access to finance (chapter 1), the report
shows that negative trends for equity markets eased in 2003, and
that market capitalisation increased in most countries. Numbers
of business angel networks increased sharply, particularly in
the UK and Sweden. On the other hand, new listings continued to
fall relative to existing firms. Venture capital investments also
continued to decline, particularly in start-ups and in high technology,
although this trend might have reversed early in 2004. Several
northern and central European Member States countries, including
the UK, offer a favourable bank credit environment, but a number
of southern countries do not.
"The regulatory and administrative environment
(chapter II) continues to be a high policy priority area. Several
Member States have set quantitative targets to reduce burdens,
and application of impact assessments has become more widespread.
However, there remains strong evidence that small firms are burdened
disproportionately more than large firms.
"The report notes that taxation (chapter III)
is an important part of the business environment. The top all-in
statutory corporate tax rate has decreased in most Member States
since 1995, and tax rates have converged in the pre-Accession
EU-15 save for Ireland which has drastically reduced its rate.
However, the implicit tax rate on corporate income rose in most
of those Member States for which data was available. There were
mixed increases and decreases in implicit tax rates on labour
across the EU-15. In its response to the Commission on the Scoreboard,
the DTI said that the UK Government considered it inappropriate
to include taxation, which is a Member State competence.
"Chapter IV notes that the share of international
transactions in each Member State's GDP (trade integration) in
2003 remained generally the same as in 2002. Most of the new Member
States showed high trade integration. Foreign direct investment
has declined in most Member States, but countries have progressed
further in reducing the share of state aid in GDP and re-directing
state aid towards horizontal objectives.
"European aims in entrepreneurship (chapter
V) remain to improve attitudes towards self-employment, increase
the number of entrepreneurs and stimulate growth of incumbent
companies. In 2003 the rate of self-employment remained generally
unchanged at about 13% of civilian workers. The female self-employment
rate was up marginally to 28%, compared with the US's 45%. Sluggish
growth has affected willingness to consider entrepreneurship and,
since 2000, the propensity towards self-employment has declined
continuously in the EU-I5 (and in the US). On the other hand,
the gross birth rates of EU enterprises was only 2% less than
in the US.
"On human resources (chapter VI), 79% of all
22-year-olds had completed upper secondary education. Although
the number of tertiary graduates increased, they constituted a
considerably smaller proportion of the population and labour force
than in the US (though the UK was among five countries that had
a higher number of tertiary graduates relative to the relevant
age group than the US). Life-long learning participation remained
unchanged or decreased in several countries.
"The EU-25 continues to lag behind the US on
innovation and knowledge diffusion (chapter VII), though Sweden
and Finland out-perform both the US and Japan. Business expenditure
on R&D remained at previous levels, and patent applications
decreased (as they did in the US). Preliminary data suggested
that technology transfer from science to enterprises needed to
be strengthened.
"The EU's under-performance in productivity
growth partly reflects a lack of ICT modernisation (chapter VIII).
IT expenditure as a proportion of GDP in the EU-15 declined over
2001 and 2002 and, unlike in the US, did not improve in 2003.
On the other hand, Internet usage has risen markedly, to over
80% in most of the EU-15. Broadband, too, has continued to rise.
However, significant market reforms in telecommunications have
not led to narrow price differences.
"The report on sustainable development (chapter
IX) is comprehensively positive. Virtually all Member States have
significantly improved their eco-efficiency in manufacturing,
and in 2002 there was further progress in reducing emissions of
greenhouse and acidifying gases and ozone precursors."
The Government's view
9.3 The Minister briefly comments that "the
document data will be taken into account by officials in their
recommendations to Ministers and policy inputs to Commission and
other Member State deliberations on enterprise matters" and
that "the Commission itself may well draw upon the Scoreboard,
along with other evidence, when formulating policy proposals".
Conclusion
9.4 There is a depressing sense of déjà
vu about this document. Last year, in considering the 2003 scoreboard,
we noted that these annual papers provide much factual information
on and insights into the main features of the EU economy, but
we wondered whether they really assisted in pointing to remedies,
or whether Member States would be seriously disposed to implement
any such remedies.[24]
The same applies now. Moreover, there is little to suggest, any
more than there was a year ago, that the EU economy is beginning
to close any of the serious gaps between it and the US (and Japan).
9.5 We said then, and now repeat, that what is
lacking is a comprehensive, in-depth analysis of why the US continues
to do so much better, to which should now be added analysis of
the additional challenges posed by the rapidly industrialising
and modernising economies of China and India. We hope that the
Commission's mid-term review of the Lisbon Strategy will address
these fundamental questions. Many of the relevant considerations
are also explored in the 2004 edition of the Commission's annual
report on competitiveness in the Union and in the Kok report.
When we cleared those two documents on 12 January 2005,[25]
we considered them relevant to any debate on the mid-term review
of the Lisbon Strategy. The same applies to this document, which
we also clear.
24 (25123) 15036/03; see HC 42-ix (2003-04), para 28
(4 February 2004). Back
25
(26146) - (26161) 14509/04; see HC 38-iii (2004-05), para 35 (12
January 2005).
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