The report gives a rather gloomy picture of the current state of the Lisbon process, even though there has been some progress during the last year, such as the spread of new technology in society and the liberalisation of several markets, e.g. the energy market. However, in many areas action is still missing. This is especially true in areas that are critical for long-term growth and where the Lisbon agenda is vague. Thus, reforms of the labour market and in the taxation area are most urgently needed in many EU countries. The credibility of the whole process is at stake. In order to trigger necessary structural changes decided upon in EU institutions and by member states, there must be incentives for effective implementation on national levels. The slow growth in many EU countries in recent years is clearly a result of the inability to launch necessary reforms on a national level. In many countries, the reform process has in fact almost come to a standstill. This is especially true for the labour market and for major countries like Germany, Italy and France. This report also gives an illustration of the new competitive situation in the wider EU that will be created in May 2004. The demand for structural renewal will be even stronger than before, which will put further pressure on the Lisbon agenda and make it more important than ever to start delivering. The report shows that there are hardly any areas where the EU-15 on average is ahead of the US. However, some countries achieve very high ratings in certain areas, scoring in parity with the US and in some rare cases also outshining the US. It is primarily Ireland, the UK and the Nordic countries which can match the American performance in some areas.