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  Basic Statistics of the European Union 2010

  This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.

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  Executive summary

  The EU needs to tackle the economic crisis and move to stronger, fairer and cleaner growth. The EU27 economy is in a serious downturn driven by the euro area sovereign debt crisis and on-going weaknesses in the wake of the financial crisis as set out in the Economic Survey of the Euro Area. Longer-term prospects are for growth to be weaker than over the past twenty years, influenced by population ageing and sluggish productivity gains. Structural weaknesses in labour and product markets contribute to low productivity and employment, as well as slow growth. Higher growth would help to make current debt levels more sustainable and create more space to deal with social and environmental challenges.

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  Assessment and recommendations

  The EU economy is in a serious downturn as the protracted sovereign debt crisis has lowered confidence, against the background of underlying economic, financial and fiscal weaknesses and imbalances. The economy will contract in the short run, but longer-term growth prospects are also dim. The origins of the crisis lie in inadequate financial oversight, insufficiently prudent and disciplined fiscal policy, and weaknesses in structural policies during the upswing of the credit cycle that gave rise to serious imbalances. Weaknesses in the design of regulatory, labour market and a range of other policies have impaired growth and labour market performance, while hindering necessary economic adjustments.

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  A Single Market for Europe

  The creation of a more integrated Single Market is one of the EU’s main policy levers to boost growth and job creation. Despite major progress with integration of EU goods and services markets over the past decades in terms of cross-border trade, it remains lower than within the United States. In recent years, trade has increased mainly from Central and Eastern Europe, while intra-EU15 cross-border economic activity has stalled and some of the progress of financial integration over the past decade now appears to have been unsustainable. The remaining fragmentation of the Single Market prevents Europe from fulfilling its full growth potential and important gains in terms of scale and competition. Product market regulations at national level and their diversity are key obstacles to a more effective Single Market. Many of the institutions and regulations that govern and facilitate integration among EU countries are still organised on national lines. While enormous progress has been made over past decades in building the Single Market, including the landmark Services Directive, weak implementation of the framework has undermined its effects on growth.A step change is required in the priority devoted to achieving a true Single Market in Europe. This should include better identification and more rapid adoption of policies required to make markets more integrated, as well as better implementation and stronger enforcement of Single Market requirements. Product market regulations at national level should be more friendly to cross-border activities. The Single Market needs more effective basic economic institutions for cross-border activity in areas such as taxation, competition policy and patent protection. Specific measures are needed to ensure that there is more cross-border competition and integration in some sectors, particularly network industries such as telecommunication, energy and transport.

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  Mobility and migration in Europe

  There are large differences in labour market performances in EU countries, resulting in part from different policy settings. High unemployment, particularly among young people, and low labour mobility within and between countries coexist with skill and labour shortages in some countries and regions. This reflects weaknesses in national labour market policies, such as high costs of exit and entry, training mismatches or disincentives to participation, and also barriers to labour mobility. Well performing labour markets are important for facilitating adjustment to shocks, especially in the monetary union, allocating resources to best uses, and in dealing with potential labour market shortages related to ageing. Mobility within the EU can in principle help to fill labour market shortages, but the cost of moving for individuals is increased by policy-induced barriers to mobility such as the loss of pension entitlements, lack of recognition of qualifications, inaccessibility of some public sector jobs and housing market frictions. To achieve better functioning EU labour markets, labour market institutions should be improved and obstacles to mobility reduced. With demographic changes underway, most EU countries expect growing shortages of skilled labour. In principle, this should be addressed through increasing labour participation and employment rates of female, young and older workers and migrants already living in the country, and making sure that training and education match skill requirements by employers. Nevertheless, policies at the EU level should be developed to ensure that migration responds more directly to specific labour market needs particularly for high-skilled workers.

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  Glossary
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