In March 2000, EU leaders unveiled an ambitious agenda for modernising the European economy at the Lisbon summit in March 2000. The EU vowed to push forward a wide-ranging reform programme, embracing new measures on innovation, liberalisation, enterprise and social inclusion. The agenda's soaring ambition was to turn the EU into the 'most dynamic knowledge-based economy in the world'.

Progress on the Lisbon agenda has been patchy. The EU's single market, for example, is flagging: the goods market is well integrated, but the internal market in services is more fragmented. Competition in the network industries (such as telecoms and energy) is uneven, with incumbents continuing to dominate national markets. Progress at national level has been equally inconsistent. As a result, there are still marked variations between the best-performing countries (which are mainly to be found in northern Europe) and the worst (particularly in southern Europe).

The overall story for the EU as a whole, then, is that progress towards the Lisbon targets has been made, but that further efforts are needed. The employment rate, for example, has risen across the EU since 2000, but joblessness among the young remains far too high. Access to secondary education has improved, but too many children still do not complete secondary education. The effective retirement age has increased across the EU, but it is still below 60 in a third of EU countries. And so on.

It is easy to dismiss the Lisbon agenda. Critics have questioned whether the programme has had any influence on national reform programmes - a fair criticism given certain countries' dilatory records. However, few observers contest that the Lisbon agenda rests on a broadly sound analysis of the challenges facing European countries against a backdrop of population ageing, globalisation and rapid technological change.