LONDON (MktNews) - UK Chancellor Gordon Brown will table a Treasury paper at Ecofin on Monday which will urge faster economic reform by the EU to close the economic performance and productivity gap with the U.S.
UK Prime Minister Tony Blair has written a preface to the Treasury paper -- an unusual step -- as he seeks to reach the ears of other EU heads of state for the Stockholm European Council on March 23-24.
The UK government would appear to be anxious to stress the importance of EU economic reform, and the UK the UK can apply to bring it about, at what is widely expected to be the last EU summit before the next UK general election.
The Stockholm summit is in fact the second of the annual EU gatherings of heads of state when they will to apply "peer pressure" to see how each of them is shaping up against on economic reform. The first was the Lisbon summit a year ago when the economic reform agenda was set.
"Reform, while underway, must move forward with speed," Blair writes. "Stockholm must take forward the Lisbon modernising agenda and achieve concrete results. We need a higher rate of sustainable growth and to close the performance gap with the US."
The Treasury paper itself intones, "European economic reform is strongly in the UK's national interest. The UK has much to gain from a strong and vibrant European economy. Eight of the UK's top ten trading partners are in Europe and, in 1999, 59% of UK trade in goods was with the EU."
The UK government is at pains to stress that the paper is not designed to preach economics to its EU partners or somehow impose the UK economic model. Indeed, it notes that while the EU is some 20% behind the U.S. in productivity growth, within the EU, the UK lags Germany and France (though data for last year show UK productivity improving as labour absorbed in recent years acquires more skills and accelerates output).
The priority areas for reform which Brown will highlight with his EU counterparts are familiar ones. They include measures to improve the supply of venture capital, an EU study on research and development as a means to generate more R&D investment, more labour market flexibility, and (where the UK anticipates a tougher fight), single market liberalisation in areas such as telecommunications, energy, aviation and financial services, as well as action to reduce "unfair state aids" while still permitting "fair" ones.
The Treasury paper continues to stress the importance of fair tax competition and not tax harmonisation (for which read the UK government's continued preference for exchange of information between national tax authorities and not coordination of national tax policy from Brussels).