Central Bank chief urges EU reform
“The failure of productivity levels to catch up with those in the US represents a crucial challenge for European policy makers,” Mr Hurley told the Leinster Society of Chartered Accountants in Dublin.
He warned that many of the goals set out in the Lisbon Agenda, to turn European into the world’s most competitive and knowledge based economy, looked unrealistic.
The Lisbon strategy was too broad, with an overload of objectives and targets, said Mr Hurley.
“If the Lisbon Agenda is to get back on track and the EU is to realise its full growth potential, the pace of reform has to be stepped up at both European and national levels. A more rigorous prioritisation is also required, with increased focus on those areas where the impact on productivity growth and employment is likely to be greatest, a point that has been accepted by the European Council,” he said.
Mr Hurley suggested that failure to meet the Lisbon targets can in some degree be attributed to the weaker global economic environment in the first half of the decade.
But he believes the EU has to take some of the blame given the lack of urgency among member states to bring about the reforms require to make EU economies function better.
“If the Lisbon Agenda is to get back on track and the EU is to realise its full growth potential, the pace of reform has to be stepped up at both European and national levels,” he said.
While the drop in output gains during the first half of the decade surprised the Central Bank, Mr Hurley hoped data currently being compiled over the rest of the year would paint a clearer picture of what has been happening to the high-growth Irish economy.
The bank chief also addressed the issue of Research & Development, particularly in the context of the Irish market which still lags the rest of Europe.
It has picked up in recent years, but was still well below the EU norm, he said.
“If this economy is to stay competitive the amount of money injected into R&D will have to be increased. Otherwise the innovation process required to sustain strong economic growth though higher productivity will be lost,” he warned.
