The International Monetary Fund (IMF) believes that Europe must take action to increase its growth potential in order to close the gap with the United States. To achieve this, the organization recommends promoting regional integration as a way to improve growth, rather than engaging in a subsidy war. According to the IMF, low potential growth is a major challenge for Europe, and new policies are needed to address declining productivity growth, an aging population, and lack of investment.
The IMF emphasizes that increasing labor force participation, preparing workers for structural changes, creating a conducive environment for private investment, and promoting innovation at a European level are key measures to enhance potential growth. The organization suggests that greater European integration, both within and outside the EU, would lead to untapped productivity gains and increased growth. By reducing internal barriers by 10%, the IMF estimates that GDP could increase by 7%.
To improve productivity and growth prospects, the IMF recommends completing banking and capital markets unions, harmonizing tax and subsidy rules, improving insolvency regimes, reducing barriers to labor mobility and trade, and liberalizing services. The organization also calls for more ambition in initiatives related to digital repositories, insolvency procedures