European Union leaders will today consider a high-level report that passes a scathing verdict on their efforts to make Europe more competitive and warns that failure to reform is endangering the European social model.

"Facing the Challenge", an analysis of the EU's Lisbon Agenda, was drawn up by a 13-person committee chaired by the former Dutch prime minister, Mr Wim Kok.

It calls for the Lisbon Agenda, which aims to make the EU the world's most competitive economy by 2010, to be refocused towards economic growth and job creation - and away from environmental and social concerns.

The report calls on EU governments to take their reform commitments more seriously, to break the deadlock on negotiations towards such innovations as a common European patent and to take decisive action to attract researchers and scientists to the EU.

The report also calls on European politicians to work harder to explain to citizens why economic reform is not only beneficial but necessary to maintaining Europe's distinct social model.

"Competitiveness is not just some dry economic indicator that is often unintelligible to the man in the street; rather, it provides a diagnosis of the state of economic health of a country or a region.

"In the present circumstances, the clear message must be: if we want to preserve and improve our social model we have to adapt: it is not too late to change. In any event the status quo is not an option," it says.

Insiders say that the high-level group was marked by divisions between members of different nationalities and between employers' and trade union representatives.

The report received a mixed response in Brussels yesterday, with IBEC's Director of European Affairs, Ms Maria Cronin, giving it a cautious welcome.

"The high-level group has missed an opportunity to make an unequivocal call for resuscitating the Lisbon Strategy, primarily on growth and competitiveness. IBEC supports most of the specific recommendations in the report, however, notably the call to reduce the administrative burden on business and to improve the quality of regulation at EU level," she said.

Mr Paul Hofheinz, president of the Lisbon Council, a pressure group that advocates economic reform, said that the report's basic analysis was correct but criticised its lack of radicalism.