EU leaders vow to push reforms as economy grows

BRUSSELS (Reuters) - European Union leaders will vow on Friday to take advantage of the current economic upswing to make Europe more competitive by implementing reforms and shoring up public finances, a draft document showed.

Draft conclusions of a two-day summit said reforms already undertaken were translating into higher economic growth and more jobs in the 27-member bloc, but more needed to be done.

"Member States are determined to take full advantage of the improving overall economic situation to strengthen the momentum for reforms and thus to further improve Europe's global competitive position," draft conclusions of the summit said.

"Member States will continue their efforts to pursue structural reforms and to further consolidate their public budgets," the conclusions, obtained by Reuters, said.

The EU needs to boost its economic growth and employment rates to be able to pay for its generous social policies and become more innovative and less bureaucratic to withstand tough global competition.

The EU economy is set to expand 2.7 percent this year after 2.9 percent growth last year, the draft conclusions said, forecasting employment levels would reach nearly 66 percent by 2008 from just under 64 percent in 2005.

EU leaders stressed new jobs should be good quality and said a mix of flexibility and security for workers, dubbed flexicurity, was the way forward.

"The European Council looks forward to the discussion...on flexicurity, which should be instrumental in preparing a range of flexicurity pathways to find the right mix of policies tailored to labor market needs," the draft said.

In the draft, EU leaders said small and medium-sized companies deserved special attention as key drivers of growth, new jobs and innovation and agreed that administrative burdens on companies should fall by 25 percent by 2012.

They also agreed that an EU law on providing services across the bloc, adopted last year, should be quickly transposed into national laws to give a boost to the services sector which generates more than two thirds of the bloc's economic growth.

The leaders stressed the need for further integration of the EU's financial markets, liberalizing postal services and connecting the bloc's many electricity and gas grids as well as reducing mobile phone roaming charges by the end of June.

The draft conclusions reiterated the EU goal of spending 3 percent of gross domestic product on research and development by 2010 and the commitment of member states to cut red tape and fewer and simpler laws.