The discussion covered a range of issues, including

• The past record of the Labour government's engagement with the EU
• the Lisbon Agenda
• the EU stability and growth pact
• the prospects for economic reform and the liberalisation of markets driven by both the EU and individual member states
• the need to establish a new political framework to underpin the economic reform agenda
• different EU 'models'
• EU engagement with China

1) Any analysis of the prospects of economic reform needed to look at what had happened over the previous decade. While it would be wrong to say that there had been no progress, the consensus of opinion certainly within the UK and among reformers across Europe was strongly that much less had been delivered than was desirable, and this feeds current pessimism about the reform prospects going forward.

The British government had, after 1997, been optimistic about European economic reform. This had been the central theme of the first British EU presidency – and after 1998 both the Blair and Schroeder governments in particular invested a lot of political and policy capital in creating a new social democratic platform for reform. Yet it had proved extremely difficult to maintain sufficient support for this within the German Social Democrats, and indeed within the European left more broadly. New Labour had also seen Anzar's centre-right government in Spain as a partner for reform - political promiscuity was seen as necessary to secure allies in the reform agenda, yet this may also have added to suspicions within the left about this. Ultimately, domestic politics had proved the most significant obstacle to reform in several EU countries: governments may have been committed to the policy agenda in principle, but found it difficult to secure sufficient consensus for this.

2) This was perhaps most strongly reflected in what had happened to Lisbon. The targets agreed in 2000 were seen as a highly significant breakthrough; they had now become a symbol of failure. The language of becoming the most dynamic knowledge economy in the world by 2010 now seemed a bad joke. But at the time there had been considerable support for Lisbon as necessary for Europe's economic future.

3) What went wrong? Core European economies began getting into difficulties after the bursting of the 'dot.com' bubble: Britain had recovered relatively quickly, which had increased the perceived and actual divergence between the UK and the Eurozone economies, making the economics as well as the politics of potential Euro membership much more difficult. The failure of the EU stability and growth pact, particularly the non-compliance of key member states like France and Germany, had undermined the credibility of Lisbon and the prospects for economic growth in large areas of the EU. Thus it has become difficult to gain momentum towards reform.

4) Despite this general consensus, there were grounds for cautious optimism in some areas. There have been significant reforms in pensions within some member states and there has been a steady liberalisation of some product markets, for example telecoms and financial services. A fully open energy market is expected by 2007. Unemployment, although a problem in many member states, is not as high as one might expect during a recession. Furthermore, key member states with poor growth figures have made some significant reforms. Germany has increased the retirement age to 67; while France was highly divided over the proposed flexible labour package for young people, in the face of significant domestic opposition, it was felt by some that the long-term climate of opinion in France could shift as the consequences of not reforming became clearer. It was suggested that, following the Chirac Presidency in 2007, France might be persuaded to compromise over CAP reform, with some return to nation states of agricultural subsidies, if this could be sold politically as enabling investment in future economic growth and technology which would benefit France.

5) The key issue remains the level of individual member states' commitment to economic reform. There is also confusion over aims at an EU institutional and at a national level. The Lisbon agenda had, to a large extent, consisted of pan-European injunctions to reform in areas which were often largely the preserve of the member states. For example, the EU Commission's has attempted to intervene in energy to ensure cross-border not national mergers and there is pressure on member states to open up markets to workers, both of which aim beyond purely national gain from reform.

6) The case was made for a new sort of politics that recognises the fears of individual EU citizens and member states. For the last 10 years the EU has been seen by many as the promoter of a world people don't like: open markets to China, liberalisation, polish plumbers, threats to French workers, etc. Just advocating the single market is not enough to win political consent on the continent – there needs to be a new narrative of the social dimension in Europe. If the political approach taken to reform had not worked so far, a different political strategy was required. The EU could remain a champion of openness and reform – but needed to demonstrate that it did have something to offer the 'losers' as well as the winners. One difficulty was if all of the liberalisation seemed to occur at European level and all of the social protection at a national level –some rebalancing might well be required to build and sustain support.

7) There is already an agreed pan-European framework for minimum standards in the workplace. The EU social model now needs to reform in order to deal with globalisation and people's fears, to provide social justice in an era of globalisation. This needs to be done on the understanding that globalisation brings uncomfortable social consequences, particularly for the industrial working class. There is an element of people being shaken out of their old jobs while inequality and child poverty is increasing across a lot of countries.

8) A discussion of different European 'models' centred on the idea that there is too much an exchange of often inaccurate caricatures, and too little engagement as to the content of the policy model. Whether the success of the Nordic economies in the 1990s could change this was an important focus of the debate. They demonstrate that a generous welfare state can be combined with a competitive economy. It is not possible to simply transfer the Nordic model to other countries, and important to recognise the differences between different Nordic models. The Scandinavian countries had gone through tough internal reforms to get to their current successful positions, but their spending priorities can be incorporated into the thinking behind the EU budget. Investment is crucial in the areas of childcare and families, post-16 education, up-skilling during working life and helping people shaken out of their jobs. Without such investment and reform, there is a real risk of regression and protectionism. One hopeful scenario sees a convergence of the UK and Nordic models: what has been called a shift from the Anglo-Saxon to the 'Anglo-Social' model, though recognising that this would be reflected differently within different national traditions.

9) The issue of China was raised as one of crucial importance – more engagement is needed. A problem with the Doha round is that it detracts from bilateral thinking on trade policy. The EU/China relationship needs to incorporate new investment rules, IP protection issues and there is an enormous potential market in China in dealing with their health problems (there exist virtually no healthcare services) and environmental technology. Another crucial challenge to address is the currently under-valued Chinese currency and therefore the need for exchange rate adjustment between major currencies.

10) What would British domestic political change mean? The expectation of a Brown premiership was that it would be pro-EU but pragmatic. The influence of domestic politics on British EU debates remained strong. David Cameron had created a problem for himself with the EU – over the marginal issue of alliances in the European Parliament, he was now not on speaking terms with Angela Merkel, the most significant centre-right voice in the EU. The Conservatives' Euroscepticism seemed to remain strong, if less prominent. This might not prove particularly electorally damaging, but it would prove a difficulty in government given the central importance of forging alliances for change within the EU.

The Fabian Society would like to thank all those who attended, particularly Roger Liddle for speaking to the Network, and Hill and Knowlton for hosting the seminar.

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