We in Europe are trailing the USA in technological innovation and this is reflected in our standard of living, says the European Commission.

The EU's lack of technological innovation and urgency in bringing cutting-edge technologies to market is causing it to lag behind the US in competitiveness and living standards, the EC said in its annual report on competitiveness, enterprise policy and innovation.

"For most sectors, R&D [research and development] intensity is higher in the US than in the EU. Most strikingly, in office machinery and computers, research intensity in the US is three times greater than in the EU," said Erkki Liikanen, Commissioner for Enterprise and the Information Society in a speech in Brussels on Thursday last week.

Technology-driven industries have been a key aspect in driving productivity increases in the USA for longer than the the EU, Liikanen said.

"In bad times, short-term issues often come to dominate the policy agenda. However, neglecting our long-term priorities in the present economic slowdown would be a serious mistake. Only a dynamic and competitive enterprise sector can pull our economies into a new upturn," Liikanen said.

One way of tracking the health of the IT industry in a given country is to measure the nation's success in international markets, and Liikanen pointed out that, when it comes to hi-tech products the EU's total exports are only about two thirds of the corresponding US share.

Of all of the countries that make up the EU only Ireland performed better than the US, Liikanen said. Although almost all EU member states were able to increase the share of hi-tech products in their total exports between 1999 and 2000, "the differences relative to the US and Japan remain substantial".

"This gap underlines the need for continued and increased efforts to restructure, innovate and adapt new technologies. Behind the successful and innovative companies are always people with ideas and a willingness to take risks," Liikanen said.

Liikanen called for member states to sign up to a terribly Eurocratic-sounding eEurope Action Plan to coordinate and 'refocus' their IT development. The scheme includes plans for better broadband access for consumers, releasing the entrepreneurial potential in the EU and reinforcing innovation with open, competitive markets and an aggressive R&D program, Liikanen said.