The Lisbon Strategy: a Framework for Social Reform Agenda in the EU EU trade takes place in the European home market, this economic interde­pendence has to be leveraged for the purpose of stronger economic growth and job creation. The economic integration needs coordinated national policy measures and also use of all European tools such as the Lisbon Strategy, broad economic and employment guidelines and the Stability and Growth Pact. But effective economic policy coordination has not yet been achieved despite the fact that everybody knows about positive spill-over effects because of economic integration and interdependence. The Lisbon Strategy was launched to reinvigorate Europe's economy and to boost employment by especially addressing the following important Lisbon goals: the creation of an internal market for services, the reduction of administrative burdens, goals on improving human capital, the target of 3% of GDP on research and development expenditures, and the 70% target on the employment rate in order to achieve an 11% increase in employment and a GDP growth by 12% to 23%. The credibility of European integration is at stake with 19 million unemployed and 70 million poor people. European integration was for decades not only a success story for the establishment and maintenance of peace but also for economic growth and an increase in living standards but this has to gain mo­mentum as far as investment-led, employment-intensive growth is concerned. To meet the target of a 70% employment rate, an average annual growth rate of 1.5% is needed until 2010 compared to only 0.7% per year growth achieved in 2000-2003. Demand and supply measures have to be integrated into an appropriate policy-mix so that internal demand is becoming more dynamic, thus leading to higher investment and consumption. The European Union's drive for economic modernisation cannot deny the interdependence of economic, social and environmental progress and the fact that Europe has no future trying to compete as a low-cost producer in a globalised world. The source of the Union's competitive edge in the 21st century will be excellence, a knowledge-based economy with the participation of all, universal access to public goods and services, good universities and research centres, efficient public administration, social peace, a high quality of life, a highly skilled work force, investment in human resources, life-long learning, and dynamic labour markets and companies. A strong social policy is also needed, but social policies have not only to be looked upon as an expense factor but also to become a productive factor in economic performance. Social policies actually not only help to reduce social exclusion but also contribute to a better economic performance by increasing the capacity of the economy to adapt 39