EU must speed up reforms - OECD

The European Union must speed up reform efforts in order to generate a lasting recovery from the recession, according to a new study from the Organization for Economic Cooperation and Development (OECD).

Strengthening innovation, deepening the single market and moving to a low carbon economy are among the areas where reform needs to be accelerated, it said.

The Economic Survey of the European Unionargues that Europe has responded promptly to the economic crisis but warns that emergency policies aimed at stabilising financial markets and supporting the economy must not endanger the single market and should be withdrawn once markets recovers.

The OECD also said that better financial regulation and supervision is required.

"Economic crises can offer opportunities to carry out important reforms to reinforce the long-term resilience of the economy," said OECD secretary-general Angel Gurría. "The current crisis has already triggered ambitious reforms to tackle weaknesses in the financial system which, if achieved and implemented effectively, should support longer-term growth prospects."

The OECD said that a major challenge for the EU over the long-term is to raise the level of innovation, preferably though initiatives such as introducing a European Community patent and a Unified Patent Litigation System .

It added that growth would also be boosted by enhancing competitive pressures in part through the implementation of the Service Directive.

The report said policies to reduce greenhouse gases, promote low–emission technologies and cut energy consumption are helping Europe to become a low-carbon economy.

However, the OECD added that such measures need to focus on correcting only genuine market failures and must be flexible enough to cope with future environmental, economic and technological changes.

Faster liberalisation of EU electricity and gas markets are also critical to increase competition and improve energy security, the organisation concluded.