Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

Chapter 6
Do we need the Lisbon
strategy after all? Lessons
from the (recent) past;
issues for the future
Nikos Koutsiaras 1
Despite its US origins, and irrespective of its alleged precipitation by the
Anglo-Saxon economic model, the financial and economic crisis has
probably hit Europe harder than the US. The downturn in economic
activity has rapidly expanded across economic sectors and member states,
resulting in declining employment opportunities and rising unemployment
rates. The immediate effects of the crisis on the productive capacity of
Europe will be sizeable, whilst its longer term impact on the potential
output of the European economy is likely to be unfavourable. Therefore,
in addition to managing the crisis, whilst fully appreciating that a swift
return of fiscal and monetary policy to their business-as-usual, pre-crisis
position is simply not possible, governments should also aim to eliminate
the output gap induced by the crisis and thus avert a permanent loss of
potential output.
Bringing the long-term outlook back
into the (post-crisis) economic policy agenda
Given this challenge, strengthening the supply side of the European
economy should be prioritised and structural reforms should figure
prominently in the policy agenda. Furthermore, implementation of
structural reforms needs to gather pace as fiscal stimulus is progressively
withdrawn. Structural reforms should comprise of three types of measures.
Chapter 6 – Nikos Koutsiaras 89