European Business Summit 2010

 

Putting Europe Back on Track

 

Judging by the headlines and the freefall of the Euro, it seems that this year’s European Business Summit would have a lot of explaining to do. But, going from this year’s theme “Putting Europe Back on Track”, they were ready for the task.

The Summit, held at Brussels’ Tour & Taxis June 30 and July 1, is billed as the key platform for business leaders and decision makers to debate how to build a more competitive and sustainable European Union. The event attracted about 2000 participants, including many CEOs, top executives, prime ministers, EU commissioners and members of the media.
 

This year’s event was organized around two plenary sessions, The Presidents’ Debate, and twelve interactive sessions on various topics all relating to Putting Europe Back on Track. Here’s a look at what was said:

The CEOs Point of View
Every crisis carries the promise to change the way things are. As the current crisis is global, it will bring changes in power in all regions of the world. Europe with a population of 500 million, stands to gain – or lose – a great deal during the period of readjustment. At the same time, the crisis is also affecting conflicting priorities, such as between finance and economics, social issues and economic adjustments and anticipated growth and limited resources.

In this dual-context, Europe must fall-back on its founding principles and its advantages and strengths in order to identify priorities and actions that can solve current problems. In other words, it must ask itself how to put itself back on track. Unfortunately, European business and political leaders were not forceful in addressing this question.

According to a survey of Europe’s business leaders conducted in preparation of the EBS by the Federation of Enterprises in Belgium, Accenture and INSEAD, the following was found:

Europe can recover and become stronger. European CEOs strongly believe that Europe can recover from its current turmoil and be strengthened in the process. However, they are concerned by the slow pace at which some actions are taken, and by the somewhat disjointed way in which the dual objectives of ‘return to growth’ and ‘budget rigor’ are being pursued.

Innovation will be at the core of Europe’s recovery. European CEOs have not diminished their investment in this area since the start of the crisis, and continue to see areas like ‘clean tech’ as promising. They also consider that additional efforts are needed to allow SMEs to play their role fully and to create jobs in the process. They see the production of new skills as critical to these new jobs.

The quality and diversity of its people will remain Europe’s biggest advantage. This richness is critical for innovation. European CEOs consider that Europe is more than a 500 million people market; it is also a powerful concept based on the combination of growth and solidarity. Openness to the world and diversity remain key to the future of Europe. Keeping the European ideal alive in the minds and hopes of younger generations will be essential to its success.

The SME’s Point of View

Currently, 99 percent of all EU companies are SMEs, meaning they provide two out of every three jobs in Europe. Although the numbers make it clear just how important this sector is to economic recovery, all too often this fact seems lost upon decision makers. Even with the passage of 2008’s Small Business Act, many SME business groups continue to criticize EU and national leaders for a failure to implement its policies and objectives.

How do we get SMEs back on track? To start, a more business-friendly environment, which means a transparent and easy regulatory framework. There’s also a general clearing of the red tape and making access to finance easier. Finally, SMEs want more flexible labor and prompt public/private payment.

The Financial Sector’s Point of View

2010 has thus far been defined as a struggle to control financial imbalances. Governments across the continent have introduced various actions aimed at restoring stability to the markets and ensuring access to finance for firms. Among these actions are restrictions on bonuses and compensation, stress tests of banks and stimulus packages aimed at the ‘too big to fail syndrome’.

Yet even with these measures the financial sector is still shaky as new crisis continue to emerge. There’s risk of a domino effect as one crisis tends to tip another inter-dependency that has gone unchecked, creating a new crisis and so on. How do we stop this tumble? Increasing international coordination and economic governance to prevent a future credit crunch and ensuring that financial firms compete to the benefit of the consumer would be a start.

The Job Seeker’s Point of View

Many say the key to getting Europe back on track is innovation as innovation generates employment and employment sustains recovery. However, the jobs of the new economy will require new skills – and this has to be a priority item for the European agenda. Needless to say, this will require a substantial revision of Europe’s education systems – in which governments, universities and businesses will have to play a role in.

For example, the crisis drove unemployment up to 20 million in the EU. At the same time, 4 million vacancies remain unfilled. Why? Simply put, there’s a skills mismatch. Before Europe can get back on track, this mismatch must be sorted out by ensuring that the workforce has the right skills for tomorrow’s jobs.

The View from the Other Side of the Pond

The US remains the EU’s most important economic partner (and vice versa) and this by a wide margin. However, Europe must be concerned about the emergence of a G2 between the US and China as the leaders of tomorrow’s globalized economy.

This becomes more of a concern as the transatlantic relationship is worth millions of jobs and billions of Euros in trade and investment standardization. More so, it is also a source of commonality in views of the future of the global economy. Again, the catch phrase in Europe staying on this transatlantic track is innovation and the key is partnership. Europe and the US must team up on IP protection, the fight against protectionism, financial stability and governance.