European Union (EU) leaders agreed on a plan to re-launch the EU's economic reform agenda on Wednesday and called for "urgent action" to achieve their ambitious goals.

However, the final conclusions of the two-day EU summit have dropped the original headline goal set in the Lisbon Strategy five years ago, which was for the EU to become the "most competitive and knowledge-based economy in the world by 2010".

Growth in the euro-zone is forecast to be just 1.6 percent this year compared with 3.6 percent in the United States. Unemployment is stubbornly high too, hitting 10 percent in France and Germany.

Just a few days before the summit, pan-EU small business organization Eurochambres unveiled an explosive new study, showing the US economy is 20 years ahead of that of the EU and it will take decades for Europe to catch up.

The survey, unveiled by pan-EU small business organization Eurochambres, is intended as a sharp "wake-up call" for EU leaders as they gather on March 22 for a summit on how to boost growth and jobs in the EU economy.

The EU's current performance in terms of employment was achieved in the United States in 1978 and it will take until 2023 for Europe to catch up, the report says.

The situation is scarcely better when it comes to per capita income. The United States attained the current EU performance in 1985 and Europe is expected to close the gap in 2072.

But the bleakest picture comes when comparing the two economic blocs in terms of research and development. Europe is expected to catch up with the United States in 2123 and then only if the EU outstrips America by 0.5 percent per year in terms of R&D investment.

Obviously the Lisbon Agenda, born in the heady days of the internet boom, has not worked. In truth, it never got off the ground. Few countries matched fine words with actions.

Leaders also agreed that "the results are mixed" in terms of making progress towards economic reform, adding that "there is a high price to pay for delayed or incomplete reforms".

According to the EU executive European Commission, the combined effects of various reforms could be a growth increase of 0.75 percent per year over 10 years. But failure to implement economic reform could cost the EU around 800 billion euros.

The Commission last month proposed a new plan, named Growth and Jobs, in a bid to boost economy growth and create 6 million jobs in the next five years.

"To that end, it is essential to re-launch the Lisbon Strategy without delay and re-focus priorities on growth and employment," agreed the 25 EU heads of state and government.

Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the rotating EU presidency, said that the EU institutions had "a meeting of minds" on the importance of boosting jobs and growth and also retaining the European social model.

The new strategy is based around a three-year cycle, which begins this year and will end in 2008.

The reforms place more emphasis on jobs and growth but also contain many references to the "European social model" and "the important contribution of environment policy", to avoid criticism from unions and socialists, who have slammed the new strategy as being too oriented around growth.

The leaders also agreed on a "European Youth Pact" which "aims to improve the education, training, mobility, vocational integration and social inclusion of young Europeans" to tackle the problem of an ageing population in Europe.

On the first day of their meeting, the EU leaders agreed to review measures to liberalize the services sector, which counts for 70 percent of the EU economy. The services directive is supposed to create a true single market in services, as now in goods.

"We agreed to say that the internal services market must become fully operational, but that its entire implementation should preserve the European model," said Juncker.

The EU leaders also gave their blessing to an agreement reached by their finance ministers on Sunday on the reform of a key plank of the union's economic policy. After months of debate, the ministers finally agreed on how to reform the EU's infamous Stability and Growth Pact, a set of rules underpinning the euro.

These rules force governments to maintain budget discipline by limiting debt and spending. But for the past three years they have been flouted by countries including France and Germany.

They argued the rules were too strict and held back economic growth EU leaders now agreed to keep the core rules intact while giving countries numerous loopholes, paving the way for some EU member states to allocate more money to stimulus the sluggish economy.

Source: Xinhua