Why is Europe so bad at creating private sector jobs? Why are new

Why is Europe so bad at creating private sector jobs? Why are new business start-ups so low, and why are they lower in some countries than others? Most important of all, how can Europe turn its cultural diversity from a potential weakness into a practical strength?This is a wholly new way of thinking of the role of government, but one more tuned to the the next century. It is that the Commission should start to think of itself much more as a super development agency, charged with continuing the European countries’ economic success story in the very different economic conditions of the new century.This is a task which does not particularly need big money but rather big brains. What sort of Commission does Europe need to help it to become more competitive vis-a-vis the rest of the world over the next generation, given that most of the power will remain for the time being with the national governments, and given that most of the gains from economies of scale have been achieved?I have a suggestion. That legacy continues to cast a shadow over many parts of the country. But the UK has been good at creating new industries – not as good as the US, but better than most European competitors – with around 40 per cent of the European venture capital market.Now ask the central question. Having pulled itself back from catastrophe in the Seventies, it still has a legacy of weakness in the older industries.

Companies which did that, such as the Finnish group Nokia, could dominate the world market for their products. Companies which continued to think of Europe as their main market stagnated.Britain is in the interesting position of being the least European and most American of the EU economies. Indeed the gap between Europe and North America, which had been narrowing until about 1990, has started to widen again.Why is this? I don’t think is it possible at the moment to give more than an intuitive answer, but when the economic history of the Nineties comes to be written, I suspect that one key conclusion will be that Europe had, by 1990, extracted most of the gains that could be made from closer economic integration – not all, but most.Europe was no longer big enough; it was no longer sufficient to be strong in one of the three time zones To move forward meant thinking not Continental but global. Nor is it strong in the new computer-related technologies – with the exception of Scandinavia, which dominates global mobile communications, and the partial exception of the UK which does well in some software, as well as in pharmaceuticals.From a European perspective one of the disturbing lessons of the 1990s is that many of the new information technologies have been developed in the US, and not in Europe. There is a common theme in luxury goods: the world’s best luxury products, from Paris and Milan fashions to German cars to Scotch whisky, are made in Europe.But that apart, the variety is more notable than the similarities. While Europe as a whole has a strong record in the medium and upper-medium technologies, it is not so strong at the very top end of the scale.

What are Europe’s strengths and weaknesses in this new world?The most remarkable thing about Europe’s economy is its diversity Different regions are good at quite different things. The nature of the world economy has moved on, and while there may well be further gains in efficiency to be made, the growth points of the world economy are no longer in manufactured goods but rather in services. The European economy is vastly more efficient as a result of its work, and you could certainly argue that the single currency will extract further gains from economies of scale, as prices and costs become more directly comparable across Europe and greater efficiency follows.But that is the position as of now. It also had to administer an agricultural policy, but that, from an economic point of view as opposed to a financial one, was the lesser task.I think that the Commission deserves considerable credit for the way it has pursued that goal.