Although he recognised that progress has been made, Watson considers it unlikely that the EU will reach its target of becoming the world's most competitive economy by 2010.
"We set ourselves this beautiful deadline of 2010, but we didn't set ourselves any interim deadlines, for example, the idea of having 3% of gross national income going to research and development," said Watson, highlighting a key failure.
However, the shortcomings must not be a reason to give up, he said, instead insisting that "[we have to] redouble our efforts". "We have to make sure that even if we do not achieve our target by 2010, we are at least well on track."
The MEP highligted two "dangers" currently facing the EU. The first is that member states may get tied up in in the debate on the Lisbon Treaty and the Union's institutional workings and take the "eye off the ball" on the economic challenges. Secondly, he fears that rising fuel and food prices may trigger the adoption at EU level of "panic measures that do not fit with the strategy that we have".
While refusing to play a "blame game", Watson nevertheless pointed to the Commission's "slow start" to its mandate, although he praised its latest efforts, highlighting the Social Services Directive and the Small Business Act in particular.
But at least an equal share of the blame must go to the member states, he said. "I think it is very hard laying the blame at any person's door," he stated before adding: "There are certainly a series of governments which have sought to obstruct or delay an agreement on liberalisation of markets."
Asked what to expect from the French EU Presidency, which has already repeatedly stated its aversion to the open-market philosophy, Watson was not very optimistic: "It is not easy to ask a French Presidency to liberalise markets but if this is really a new start, who knows? [..] Sarkozy claims to be a great pro-European. Is it too much to hope that he might also prove to be a great liberaliser?"
Watson urged all parties to work together, saying the lack of a "political sense of urgency" on the part of national governments was the main obstacle standing in the way of further progress.
A Commission review of the EU single market presented yesterday (9 July), however, points to a strong improvement in transposing internal market rules into national law, seen as crucial to the achievement of the bloc's growth and jobs target.
Presenting the EU executive's bi-annual assessment, Internal Market Commissioner Charlie McCreevy said only 1% of internal market directives, for which the implementation deadline has passed, are still not written into national law.
Cyprus, Luxembourg, Poland, Portugal and the Czech Republic are lagging behind, most notably in the areas of environment and taxation.
