Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

Chapter 8
Lisbon through the
looking glass: Europe’s
knowledge economy and
the Varieties of Capitalism
Dermot Hodson and Marco Simoni
The European economy has undergone unprecedented turmoil as a result
of the global financial crisis. The collapse of the US subprime mortgage
market in mid-2007 and its after effects have been keenly felt on the other
side of the Atlantic with banks in the euro area alone expected to lose
US$649 billion over the period 2007-10 (ECB, 2009: 103). The financial
crisis has already taken its toll on the real economy with gross domestic
product (GDP) in the European Union set to contract by 4% in 2009 while
unemployment is likely to rise above 9%. 1
The global financial crisis has put paid to EU leaders’ promise at Lisbon in
March 2000 to deliver “sustainable economic growth with more and better
jobs” by the end of the decade. In truth, however, the dream of Lisbon
faded well before the current round of economic and financial turmoil.
In 2007, the unemployment rate in the EU15 was at 7%, i.e. marginally
lower than 2000. 2 GDP growth in the EU15 averaged 1.9% over the period
2000-08, which is disappointing by historical standards and compared
with key trading partners: in 2008 GDP per capita in the EU15 stood at
74% of the US level, which is only fractionally better than in 2000.
The Lisbon Strategy has also fallen far short in its efforts to build the
world’s most competitive, dynamic knowledge-based economy. According
Chapter 8 – Dermot Hodson and Marco Simoni 115