The European Union risks missing out on its best chance to boost growth and create jobs if it does not create a single market for services, European Commission President Jose Manuel Barroso said today.
Efforts to liberalise that market are threatened by concerns of EU heavyweights France and Germany that it would favour companies based in countries with the lowest social protection, wages, and consumer and environmental standards.
"Today the greatest growth and employment potential clearly lies in services. If we are not able to tap this potential European workers and consumers will be the real losers," Mr Barroso said in a speech at the Lisbon Council think-tank.
Mr Barroso has made boosting growth and employment through a revamped economic reform plan called the "Lisbon Agenda" the top priority of his five-year term at the helm of the EU executive.
He made clear the Commission would not simply withdraw its proposed services legislation, as Berlin has demanded, or drop the core "country of origin" principle, whereby firms can operate throughout the 25-nation bloc under their home laws.
The ultimate aim is to make Europe more competitive than the United States, but progress to meet the numerous goals has been slow since the initial Lisbon Agenda was agreed in 2000.
"Although services account for some 70 per cent of European Union GDP and have been the major driver of growth and job creation for over two decades, both cross border trade and investment remain at a pitiful level," Mr Barroso said.
The EU economy is seen growing by 2.3 per cent this year, against 3
per cent in the United States, with the euro zone seen expanding at just 2 per cent.