12 Competitiveness Report
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16978/08
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COM(08) 774
| Commission Communication: European Competitiveness Report 2008
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| Legal base | — |
| Documents originated | 28 November 2008
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| Deposited in Parliament | 10 December 2008
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| Department | Business, Enterprise and Regulatory Reform
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| Basis of consideration | EM of 5 January 2009
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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
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Background
12.1 In recent years, the Commission has produced an annual European
Competitiveness Report, which seeks to provide an analytical contribution
to discussions on ways of achieving the objectives contained in
the Lisbon Strategy. The Report for 2008 is set out in a lengthy
Staff Working Document, which is accompanied by a Communication
from the Commission identifying the key messages to be drawn from
it.
The current document
12.2 The Communication begins by observing the severe crisis facing
financial markets, which it says has started to spill over into
the real economy, with policy makers around the world working
to restore confidence. It notes that economic developments have
been influenced by the weakening of the dollar against the euro,
underlining the need for Europe to develop a knowledge-based economy
and to boost competitiveness through the Growth and Jobs Strategy.
Overall, it says that, although lower than in 2006, economic growth
in the Community continued to be strong in 2007, with real GDP
increasing by 2.7% and employment by 1.7% (but the increase in
labour productivity falling to 1.3%). It also acknowledges that,
although productivity and standards of living have continued to
improve relative to those in the United States, per capita GDP
for various reasons still remains about one-third lower. Within
the Community, productivity differences are diminishing, with
the gap between old and new Member States narrowing, but there
are large variations as between industrial sectors, with six —
agriculture, retail trade, wholesale trade, post and telecommunications,
inland transport and financial intermediation — accounting
for half of the growth over the period 1995-2005.
12.3 The Report then considers the main factors
affecting competitiveness. It notes the strong evidence that
openness in terms of trade or foreign investment has a beneficial
economic effect at both company and aggregate levels, suggesting
that this may be due to the most productive firms opting for export
markets and increasing productivity as a result. At the same time,
it stresses the paramount importance of the internal market in
generating productivity growth, suggesting that average productivity
would fall by 13% if bilateral trade within the Community did
not take place: and, whilst it identifies the importance of lowering
trade barriers, such as tariffs, and costs of transport, distribution
and currency conversion, it suggests that firms within the Community
regard non-tariff barriers and lack of information as a more important
constraint, adding that its external competitiveness policies
should seek to reduce these and to enhance international regulatory
cooperation.
12.4 A section of the Report also looks specifically
at the role of small and medium-sized enterprises (SMEs). It says
these are increasingly recognised as the main drivers of the Community's
economic performance, due to the stimulus they give to structural
change, innovation and the growth of employment, and that encouraging
the growth potential of SMEs is one of the main objectives of
the Small Business Act,[69]
which is itself a key element of the Strategy for Growth and Jobs.
The Report also comments that rapidly growing firms exist in every
sector and Member State, and that these are not only, or even
primarily, "high tech" firms.
12.5 The rest of the Communication looks at the impact
on competitiveness of various Community policies. The Commission
notes that, in order to achieve a low carbon and resource-efficient
economy, it has put forward a range of measures relating to the
internal energy market and climate action, the aim being to reduce
greenhouse gas emissions and increase the share of renewable energy,
without compromising the Community's competitiveness. It adds
that this creates a real potential market for environmentally-
friendly products, both within the Community and internationally,
but that, in order to achieve greater market penetration, it has
recently adopted an Action Plan on Sustainable Consumption and
Production and Sustainable Industrial Policy,[70]
aimed at improving the energy and environmental performance of
products.
12.6 The Commission also highlights the role of Corporate
Social Responsibility, in which companies integrate social and
environmental concerns in their business operations. It notes
the key role which this can play in contributing to sustainable
development, whilst enhancing competitiveness, in such areas as
human resources, customer perspectives, innovation, risk and reputation
management, and financial performance. Furthermore, the Commission
believes that the relationship between Corporate Social Responsibility
and competitiveness appears to be getting stronger, and that it
needs to be part of a core business strategy.
The Government's view
12.7 In her Explanatory Memorandum of 5 January 2009,
the Minister for Economic Competitiveness and Small Business at
the Department for Business, Enterprise and Regulatory Reform
(Baroness Vadera) points out that this Communication is a background
document with no direct policy implications, but that the Commission
may draw upon it (along with other evidence) when formulating
and considering policy proposals.
Conclusion
12.8 Although these annual Competitiveness Reports
are themselves lengthy, technical and detailed, the accompanying
Communications which seek to identify the key messages have provided
an input to discussions on the Lisbon strategy, and consequently
we (and our predecessors) have tended to draw them to the attention
of the House. We are therefore doing so again on this occasion,
but we see no need for any further consideration, and we are accordingly
clearing the document.
69 (29791) 11262/08: see HC 16-xxix (2007-08), chapter
8 (10 September 2008). Back
70
(29874) 12026/08: see HC 16-xxx (2007-08), chapter 4 (8 October
2008). Back
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