SLOW EU REFORMS HURT COMPETITIVENESS.

Position:Brief Article

Early in this decade, the EU set the goal of overtaking the United States in competitiveness by 2010. The slow pace of structural reforms and the dearth of entrepreneurs make it increasingly unlikely that the EU will achieve its competitiveness goal.

Economic output per person is still more than 30 percent lower than the US level and the gap is not closing very quickly. That, coupled with comparatively high labor costs, will make it difficult for the EU to put a dent in unemployment during 2004. As unskilled jobs continue to migrate toward China or Eastern Europe, consumer confidence within the ranks of the working class will remain depressed.

With the exception of the UK, low consumer confidence in the EU will put downward pressure on demand for high-end goods and services throughout most of this year. Durable goods sales growth in excess of 5 percent...

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