There is something almost endemic about this mismatch between public concerns and the EU's political agenda. This, in turn, helps explain the decline in the popularity of the EU, the faltering turnout in elections for the European Parliament, and a devastating opinion poll in the Financial Times last week on the widespread dislike of the euro single currency.

In France, Italy and Spain more than 67 percent, and in Germany more than half of those polled, said the single currency has had a "negative impact." Only 5 percent of French respondents claimed the euro has had a positive effect on the French economy. In all 13 countries now using the euro, over half said they preferred their old national currency. In Germany, 65 percent wanted to bring back the Deutschmark.

There is, however, a chance for the EU to address the big issue of the lackluster economy and the shortage of jobs. Next month, the EU Commission is to present its regular report on the progress of the EU's Single Market, the sweeping economic reform launched by Britain's Margaret Thatcher in the 1980s to scrap internal customs barriers. One of the clear successes of the European Union, the Single Market is widely credited with boosting the EU's economic output by $300 billion and creating an additional three million jobs.

But the British government has just issued its own report warning that the Single Market is not adapting to globalization, and the EU is falling behind the rising new competitors in world trade. Research and development spending as a percentage of GDP is now lower than that of China and India, and is dwarfed by that of United States and Japan, says the report.

Launching the report, "A Vision for the Single Market in the 21st Century," at the meeting of EU finance ministers in Brussels, Britain's Treasury chief Gordon Brown (who is almost certain to replace Tony Blair as prime minister this summer) said: "We must not allow the Single Market, one the EU's greatest successes, to be overwhelmed by national champions or protectionism. In the globalized world of the 21st century the EU must work harder to open up markets and promote competition."

China and India are now respectively the second and fourth-largest economies in purchasing power parity terms, the report says. Twenty years ago just 10 percent of manufactured goods came from developing and emerging countries. By 2020 the figure could be as high as 50 percent. Developing economies are also increasingly trading in higher value added industries and in services -- nine out of the 25 leading importers and exporters of commercial services are developing countries.

The EU's biggest challenge, Brown went on, was to get people into jobs. No fewer than 95 million people of working age were currently "economically inactive" in a total population of almost 500 million.

"The EU must adopt a much more outward-looking, global perspective. It also means that the traditional model for the Single Market -- one that seeks to achieve integration through legislation and the harmonization of rules -- needs to be rethought. In an era of such dramatic global change, the Single Market will never be 'complete.' Boundaries will be continually redrawn, new challenges will emerge and we need an approach that is as flexible as the global markets in which we now operate," the report says.

It adds that rates of price convergence within the EU have slowed dramatically since the mid-1990s, and that intra-EU trade growth in goods and services has also declined. Living standards in the EU15 are now around 30 percent lower than in the United States.

"This helps explain persistently lower rates of productivity growth in EU manufacturing and services, when compared with the U.S. service sector productivity growth has been relatively stagnant since the 1980s and remains well below U.S. levels," it said. "The European business environment continues to be characterized by excessive regulation and market segmentation, which are stifling competition."

The British report claims that by embracing globalization and reforming the Single Market, the EU could gain up to 8 percent in per capita income -- an extra $1,000 billion. It cites research from the European Central Bank suggesting that more competition and a complete Single Market in Europe's network industries, such as energy, water communications and financial services, could slash prices by a third while creating 350,000 new jobs.

This report has gone down like a lead balloon in Brussels and other EU capitals, where the initial response has been to bring up yet again the issue of the British "rebate" that compensates Britain (a major food importer) for having to pay much more into the EU budget than other states because of the Common Agricultural Policy. With Britain now the richest of the big EU economies, with a per capita income higher than Germany or Japan, critics of the rebate say that Britain should simply pay up and shut up.

"The British check is a distortion for the own resources of the EU," EU budget commissioner Dalia Grybauskaite said Friday. "Currently the relation between wealth and what different countries contribute (to the budget) is fairly balanced, except in the United Kingdom. At the time it had an income below the (EU) community average, but now this is 115 percent of the average and continues to receive the check."

Given the impact of globalization on EU jobs, for example in the way that Chinese shoes and textiles have devastated two of Italy's biggest industries, and Chinese electrical goods are hitting Siemens, Phillips, Electrolux and others, concerns about the rebate and the constitution seem like moving the deckchairs just as the Titanic hits the iceberg. The EU public seems instinctively to know this, even if the politicians do not.

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