Hungary and Poland ‘lagging behind on EU competitiveness’

Hungary and Poland have been rated the worst performing EU member states - apart from new members Romania and Bulgaria - in the European Commission’s latest assessment of progress towards the Lisbon Agenda goals of improving competitiveness.

An evaluation of each country’s performance published by the Commission on Tuesday (11 December) said that Hungary had made only "limited progress" in carrying out national reforms and dealing with priority actions it agreed at the March 2006 EU leaders’ summit. The Commission said that Hungary needed to take action to deal with its excessive deficit, improve labour participation and access to high quality education and training.

Poland’s performance was only slightly better. The Commission said that Poland had also made only "limited progress" in implementing its national reform programme. The report said that the country needed to improve its public finances, strengthen regulation and the performance of markets in network industries, increase its spending on research and development and tackle the problem of high unemployment for older workers. It praised Poland’s efforts to improve entrepreneurship, reduce the tax burden and introduce incentives to enter the labour market.

Romania and Bulgaria, which only joined the EU in January 2007, were the worst performers overall but they only submitted their national strategies in July this year. The Commission said that Bulgaria’s national programme "lacked concrete and substantial measures" and called on the country to improve its administrative capacity, tackle macro-economic imbalances and fight against corruption.

Romania’s programme "lacks information", according to the Commission. Bucharest should strengthen administrative capacity, improve fiscal policy, reduce administrative procedures and delays, and take action to boost employment and reform the education system.

Sweden was the best performing member state, with the Commission saying that it had made "very good progress" in implementing its national strategy and addressing the priority actions. The Commission praised Sweden’s efforts on regulatory simplification, increasing the labour market supply, boosting sustainable energy use and increasing public investment in research and development. Sweden was urged to increase competition in services and increase work incentives to reduce unemployment among youth and immigrant communities.

Estonia was the best performing of the new member states with its performance rated as "very good", especially in R&D investment and increasing employment.

Denmark, Finland and Ireland also scored very highly although Denmark and Finland were urged to make more efforts to encourage more people into work.

Of the larger member states, France and Italy performed worst. The Commission’s report said that France had only made "steady progress" and urged more efforts on public finances, more competition in the economy and especially in the gas, electricity and rail freight markets and professional sectors. The report also urged more labour market flexibility.

Italy’s performance was rated as "good", although "significant further reforms" were needed. The Commission stressed the need for fiscal consolidation, pension reform and more competition in product and service markets. Italy should reduce regional disparities and improve the quality of education and its relevance to labour markets. The Commission said that there had been some improvement in the business environment, and moves towards greater competition in financial services and distribution.

Germany scored moderately well, with its performance rated "good" by the Commission. But the Commission said that there was a need for more competition in services, especially on public procurement and in the telecoms sector. Germany should also take action to tackle high structural unemployment, reform the healthcare system and introduce more competition for rail, gas and electricity.

The UK’s performance was rated "significant", with praise for a business-friendly environment. But Britain was urged to do more to improve skills to increase productivity and to boost the housing supply to meet demand.

Hungary and Poland have been rated the worst performing EU member states - apart from new members Romania and Bulgaria - in the European Commission’s latest assessment of progress towards the Lisbon Agenda goals of improving competitiveness.