"If we can re-dynamise Europe's performance, we can help guarantee a sustainable and lasting transformation of our continent," European Commission president Jose Manuel Barroso told leaders of the EU parliament.
"The simple truth from the last five years is that we have to get our economy moving, if more people are to find a job they want and if we hope to preserve and develop our unique model of society," he said.
The report marks the mid-way review of the EU's five-year-old "Lisbon Strategy" of reform, launched amid much fanfare in the Portuguese capital with the goal of overtaking the United States in the competitiveness stakes.
The new-look Lisbon Strategy will be presented to EU leaders at a March summit where, diplomats believe, it will win strong approval.
The 2010 target is no longer mentioned in the report, giving formal recognition to the widespread view that owing to years of economic slowdown and a lack of reformist zeal, the EU is nowhere near ready to meet the goal.
But Barroso, who when Portugal's prime minister was in the vanguard of Europe's free-marketers, made clear that reforms could no longer be put off.
The EU was now averaging economic growth of just 2.0 percent, compared to 3.5 percent in the United States, while China and India are marking "huge strides" at a time that the EU's populations are ageing rapidly, he said.
"A job is the best weapon against poverty," he added, on the day that new figures confirmed unemployment in EU heavyweight Germany is now at its highest level since the 1930s.
But Barroso also sought to assuage the fears of left-wingers and environmentalists who fear he wants to take the EU down the road to a US-style, freewheeling capitalism with minimal safeguards and rampant poverty.
"It is as if I have three children - the economy, our social agenda, and the environment," he said.
"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. But that does not mean I love the others any less," he added.
The report recommended a range of action: - Pensions and healthcare systems must be modernised to cope with the ageing societies.
-- Billions more euros should be pumped into research and development (R and D). Europe should create its own elite academy along the lines of the world-famous Massachusetts Institute of Technology.
-- Business must be freed from onerous regulation. - The EU's internal market should be completed with long overdue deregulation of the telecommunications, energy and transport sectors.
- Government aid for companies should be channelled into nimble start-ups rather than national champions to support the R and D goal.
-- The EU should appoint an economic reform overseer - dubbed "Mr or Ms Lisbon".
The commission's plan would appear to mark a radical break with a past in which Brussels was caricatured as a busybody keen to spread its reach into every facet of life in EU countries.
Left-wingers have already launched pre-emptive strikes, accusing the commission of ditching Europe's "social model" of consensual politics and ignoring the success of Scandinavian nations despite their high welfare costs.
But Barroso was unapologetic. One relic of the past - subsidy-reliant "European industrial champions" - was no longer tenable, he told the Financial Times in an interview.
On the dropping of the 2010 target, Barroso said: "We should avoid slogans that put at risk the credibility of the whole exercise."