EU cannot fail Lisbon Agenda a second time - adviser to French PM

Europe failed to reach its Lisbon Agenda targets but cannot fail a second time "otherwise it is going to be in a rather difficult economic situation with a lot of geopolitical implications", according to Christian de Boissieu, economic adviser to French Prime Minister François Fillon.

Interviewed by The Times Business during a visit to Malta last week, Prof. de Boissieu said: "The Chinese are growing in the technological frontier, they could soon be at the same level as us and they are improving their education system. We cannot compete with China and India through wages and if we want to be competitive we have to push forward the post-Lisbon Agenda, which is now called Europe 2020."

He called Europe's economic recovery "moderate" and said he did not believe the EU will go back into recession this year. However, he emphasised that the recovery and potential growth needed to be boosted and Europe had to become more competitive.

Prof. de Boissieu said the French government is attaching great importance to innovation, research and development, education, universities and the growth of SMEs in order to boost growth.

Europe, he said must avoid going down to second league and must prevent the rise of a de facto G2 - the US and Asia.

Prof. de Boissieu said the EU had to draw some lessons from the Greek crisis and needed "to complement the Maastricht and Lisbon treaties with some de facto mechanisms in order to improve the economic governance of Europe."

"My view is that we have to improve the political and economic governance of Europe and the eurozone. Mrs Merkel, for example, said that the budgetary rules should be tightened for the stability and growth pact. Before tightening the rules I would say that first we have to come back to the limits which are in the existing growth and stability pact - the three per cent deficit figure and the 60 per cent debt ratio figure. Most eurozone countries are far off from these figures," he said.

Prof. de Boissieu said that after the fall of the Berlin Wall, capitalism lost its external enemy.

"However, since the Enron scandal in 2001 and following other corporate scandals, we have had to face some big internal challenges. Sometimes it is more difficult to face challenges such as greater transparency, how to limit conflicts of interest and how to improve macro governance and corporate governance than deal with an external enemy," he said.

Prof. de Boissieu said he expects France's 7.5 per cent deficit to start being reduced next year and the French government was committed to reduce public expenditure.

He said the reform of the state, the local authorities, the social security system and the labour market were all priorities for the French government, as was combating the high unemployment rate.