IMF Director Urges Europe to Pursue Bold Reforms for Sustainable Growth
In a recent seminar hosted by the European Central Bank (ECB), Alfred Kammer, Director of the International Monetary Fund’s European department, delivered a keynote speech outlining Europe’s path to enduring growth amidst global challenges.
Mr. Kammer began by acknowledging Europe’s successful navigation through recent crises, including Russia’s invasion of Ukraine and energy shocks. Despite these hurdles, Europe’s recovery remains on track, buoyed by domestic demand and improving consumer sentiment.
However, Mr. Kammer stressed the need for sustained efforts to lift Europe’s medium-term growth outlook, identifying low productivity as a critical weakness.
Comparing Europe to the United States, Mr. Kammer highlighted a significant income gap attributable to Europe’s lower productivity. To address this disparity, Mr. Kammer proposed bold reforms focused on enhancing economic integration, particularly through the Single Market.
Citing recent reports by Enrico Letta and Christian Noyer, Mr. Kammer underscored the importance of a more integrated, green, and inclusive Europe. He outlined the potential benefits of reducing barriers to trade and services within the Single Market, estimating a substantial increase in European output over the long term.
Moreover, Mr. Kammer emphasized the role of the Capital Market Union in catalyzing productivity growth and innovation across firms. He called for measures to streamline regulations, enhance cross-border investment, and foster a thriving venture capital ecosystem.
In addition to economic integration, Mr. Kammer addressed the need for a larger pool of qualified workers and improved labor mobility. He advocated for policies to activate underutilized workers, strengthen skills, and reduce barriers to cross-border labor movement.
However, Mr. Kammer cautioned against engaging in a subsidy race, warning that uncoordinated policies could disrupt the Single Market and hinder productivity growth. Instead, he urged European countries to work together to address strategic considerations while preserving a level playing field.
In conclusion, Mr. Kammer called for Europe to re-accelerate integration efforts, emphasizing the potential for decisive action to overcome challenges and achieve sustainable growth.
