You've Got A Long Way To Go, Europe

No question, economic prospects are looking brighter in Europe. Exports have ramped up, and manufacturers are shaking off their pessimism of a few months ago. Sales are rising, and forecasters figure economic growth across the European Union will approach 3% next year, a rate that could surpass that of the U.S..

It has been a long time coming, and it's welcome news. But it's too soon to celebrate the new Europe. The message that European business must restructure in a big way hasn't really taken hold. Cost-cutting has been restrained, and policymakers and executives have backed and filled on real changes. This on a Continent that has much further to go than did the U.S. to restructure business and deregulate industries. The framework of the old way of doing business still stands, slightly battered.

Europe has only begun to downsize manufacturing, with minimal shifting into service jobs. Governments are bloated in terms of spending and employment, and while social spending is being cut, the process is slow. Technology, the boon to growth and productivity gains in the U.S., is making slower inroads in Europe. Business is largely unwired, and the high-tech sector is small at less than 10% of gross domestic product. Productivity is growing but has far to go to catch up with the U.S. The Europeans shouldn't squander the opportunity to truly restructure now offered by economic growth.