Despite the current economic upswing, the European Union is still losing ground vis-à-vis its global competitors. According to a study by the Association of European Chambers of Commerce and Industry (Eurochambres), the EU is on the wrong path to reaching its goal of becoming the most competitive economy in the world by 2010.

"We do acknowledge that the EU is experiencing a period of sustained economic growth, and that member states have improved their performance with regard to several economic indicators," said Eurochambres president Pierre Simon. "However, the results of our study are alarming, and we should beware complacency."

Economic growth, jobs and innovation were given top priority in the so-called Lisbon Strategy, launched by EU leaders at a meeting in the Portuguese capital in 2000. It consists of a set of goals aimed at making the bloc the globe's most competitive economy by 2010.

"The EU would need monstrous yearly performances to reach the current US levels by 2010," Simon said. "We call on political leaders gathering in Brussels this week to reinforce the focus on growth and jobs, and to take advantage of the favorable economic upturn to suggest radical structural reforms."

EU leaders are meeting for a two-day economic summit in Brussels beginning Thursday. They are expected to conclude that the Lisbon strategy "is beginning to deliver results," according to draft summit conclusions quoted by Brussels-based media.

Europe has a lot of catching up to do

The Eurochambres study, published on Monday, compared EU and US economies in a number of areas, such as GDP per capita, employment, research investment and productivity.

If Europe would start catching up with the US on key Lisbon indicators, the bloc would have to perform better than the US, the study said. Yet the latest results showed the opposite. In 2006, the US registered an average GDP growth of 3.3 percent and the EU about 2.9 percent, the highest since 2000.

"If income (GDP per capita) would grow in the US at two percent per year and in the EU at three percent per year, meaning a one percent higher growth of the EU, the EU would catch up with the US around 2045," the authors of the report concluded.

China doing more for R&D than Europe is

A key area of the study was research and development (R&D). The authors found that the EU has consistently spent less than two percent of GDP on R&D since 1998. These levels matched those of the US almost 30 years ago. The Lisbon strategy aimed for three percent of GDP.

The US also showed a flat trend, but over the 2.5 percent mark.

China, on the other hand, has been catching up in terms of R&D expenditures. These rose from 0.7 percent of GDP in 1998 to almost 1.5 percent in 2004. Japan consistently spends over three percent of GDP on R&D.

The study is a follow up to the association's first such analysis, published in 2005. In two years' time, the EU-US gap had widened for all economic indicators, it said.

Yet Eurochambres said the previous analysis was based on figures from the "old" EU member states. Countries that joined in 2004, on the other hand, recorded significant growth rates but worse figures on employment and on investment in knowledge economies.

Eurochambres is a European network of 2,000 regional and local chambers with over 19 million member companies in Europe.