European business

Optimism about the European economy in 2007 is widespread. Following a year in which growth hit 2.7% in the eurozone and 2.9% in the EU, according to recent statistics, the economy is set to continue on its upward trend in ­coming months. As EU leaders meet to discuss progress in advancing the Lisbon Agenda of economic reform, they will want to take some of the credit.

Could it be that some long-demanded structural economic reforms by ­national administrations are bearing fruit - or is the economic revival largely down to restructuring in the corporate sector?

"The strength of an economy is the strength of its companies," says Philippe de Buck, secretary-general of employers’ association BusinessEurope, but he does not discount the ­importance of the public sphere. "The framework in which they work is very ­important. Tax policy, labour costs and market ­access are all important ­elements, creating a framework in which companies can work."

BusinessEurope is part of the team staging the ­European Business Summit in Brussels next week (15-16 March), when the private sector will be pressing politicians and lawmakers for further reform.

Their argument will be that European companies still face too many barriers when trying to do ­business - and that the improved economic environment might make it easier to dismantle them.

"We’re in a better situation. We have to sustain that," says de Buck. "That is critical as it will allow us to strengthen economies, reinforce fiscal policy and create jobs." Creating the conditions that will allow the EU to sustain the present economic upswing should be policymakers’ first priority, according to de Buck. Fiscal discipline will, he stresses, be a ­major factor in any future economic success.

"The economic situation is better. The perspective is that it will be sustained this year and next year. We have to avoid mistakes. In the past, it has always been a temptation when there is an economic upswing for member states to loosen their fiscal policy," he says. "We have to face globalisation, demographics and technology. If we want to face these challenges, we have to strengthen fiscal policy."

Member states will also have to work hard to ­create a competitive EU economy. With emerging economies moving faster than ever before, large member states such as France and Germany should be fostering innovation by encouraging ­investment in research and development activities, says de Buck. Flexible working practices that will allow more people to enter into employment should also be encouraged. "This makes companies more flexible but also gives ­people the chance to have jobs and to be more ­mobile," says de Buck.

Brussels policymakers should, he adds, be focusing on furthering the cause of the internal market. "We ask for completion and ­enforcement," says de Buck. The European Commission, as the primary ­enforcer of internal market rules, should step up action to ensure member states are complying with regulations. More efforts should also be invested into cutting back red-tape to make it easier to do business across the EU.

Optimism about the European economy in 2007 is widespread. Following a year in which growth hit 2.7% in the eurozone and 2.9% in the EU, according to recent statistics, the economy is set to continue on its upward trend in ­coming months. As EU leaders meet to discuss progress in advancing the Lisbon Agenda of economic reform, they will want to take some of the credit.