The European Commission has proposed a relaunch of the EU's strategy for boosting economic growth, calling for a clearer focus on job creation and research and development and dropping Europe's target of overtaking the US in competitiveness by 2010.

The Commission President, Mr Jose Manuel Barroso, told the European Parliament that Europe must become more attractive to investors, must reshape policies to create more and better jobs and must invest more in scientific and technological innovation.

He insisted that the Commission was not abandoning the Lisbon Agenda's goals of improving social cohesion and protecting the environment, but acknowledged that the plan was being refocused on economic growth.

"It is as if I have three children - the economy, our social agenda, and the environment. Like any modern father, if one of my children is sick, I am ready to drop everything and focus on him until he is back to health. That is normal and responsible," he said.

Mr Barroso said the EU's internal market must work more effectively, but hinted that a proposed Services Directive that would liberalise the European market in services was likely to be watered down. He also suggested that REACH, a plan to oblige manufacturers to test and label chemicals they use, could be modified to take account of complaints from business.

The Commission wants all 25 member-states to increase their investment in R&D (research and development) to 3 per cent of GDP, and Mr Barroso called for the establishment of a European Institute of Technology, modelled on the Massachusetts Institute of Technology in the US, "which can build on our strong track record in technology, but also attract the brightest minds from around the world".

Most of the reforms envisaged by the Commission must be implemented by national governments, and Mr Barroso wants to improve co-ordination by asking each member-state to draw up a national action plan. Each government would nominate a "Mr or Ms Lisbon" to oversee implementation of the reforms at national level.

Business and employers' organisation IBEC welcomed the call to refocus the reform strategy on jobs, growth and innovation as a timely attempt to adapt the Lisbon Agenda to the realities of the EU economy. IBEC's director of European affairs, Ms Maria Cronin, said it was now up to EU leaders to take the recommendations on board when they meet in Brussels next month.

"The specific proposals to prioritise better regulation, knowledge and innovation, and speedy adoption of the Services Directive are fully in line with what business has been calling for. Heads of state must ensure they are more than just aspirations," she said.

The leader of the Greens in the European Parliament, Mr Daniel Cohn-Bendit, dismissed the Commission's relaunch of the reform strategy as a step backwards.

"The Commission is reverting to one-dimensional policies that have already proved unable to solve the problems we face.

"We need an integrated strategy able to achieve our economic, environmental, and social goals. The approach put forward today is depressingly reminiscent of the Thatcher years," he said.

The Labour MEP Mr Proinsias De Rossa said that Mr Barroso was right in acknowledging that the Lisbon Agenda had failed to deliver on its promises, but that it was a mistake to ignore factors other than economic growth.

The Fine Gael MEP Ms Avril Doyle welcomed the Commission's proposals, adding that profit should not be considered an unworthy pursuit.