Dienstag, 27.06.2017 09:08 Uhr

Upcoming policies of the euro area

Verantwortlicher Autor: Carlo Marino Rome/Brussels, 12.06.2017, 09:56 Uhr
Kommentar: +++ Wirtschaft und Finanzen +++ Bericht 2600x gelesen

Rome/Brussels [ENA] The European Union remains the world’s largest economy. It accounts for over 20% of global gross domestic product. The EU has made momentous attainments in terms of creating the world’s largest single market where 500 million citizens can work, travel and invest freely. However, the EU entered a period of stagnation. Productivity growth is close to zero. The lack of structural reforms and current high debt burden has

lead the Member States towards a scarce productivity. In 2015 the EU’s GDP just about touched its level of 2008. The EU’s GDP per capita was 26 200 euro in 2007 and 26 900 euro in 2016. The increase since 2007 is only 700 euro. Significant differences in unemployment rates remain across the EU fluctuating between 3.2 % and 23.2 %. EU’s extremely low productivity and global competitiveness require structural reforms, constant fiscal efforts and investment in Member States in order to generate sustained growth, employment and achieve upward convergence with other global economies and within the EU.

There’s currently a good performance of the European economy, supported by moderate GDP growth and a declining, yet still high, unemployment rates. But the modest recovery remains fragile and the development of GDP per capita is close to stagnation. Europe has an unexploited economic potential as growth and employment are proceeding asymmetrically. This is the result of the heterogeneous performance of the Member States’ economies and one has to emphasize that the carrying out of structural reforms in the Member States could accelerate at least 1 % higher growth.

In these circumstances, a greater degree of upward convergence would be needed to support the economic recovery in the EU and the euro area in the longer term. It’s understandable that the structural conditions for growth need to be improved. The potential growth of all Member States should increase in the long term to at least 3 % and to do that it’s crucial to establish clear benchmarks on how to expand the potential growth of Member States providing the indispensable management for policy actions. Such a regular benchmarking exercise would have to take due account of individual structural strengths and weaknesses of Member States.

More efforts on improving the quality and management of national budgets by addressing the causes for growth in line with Union fiscal rules are needed. The irregular growth and employment situation in the euro area require better coordination of structural reforms, in particular through a better implementation of the country-specific recommendations. Legacies from the crisis such as a high level of indebtedness in all sectors of the economy still act as a drag on growth and pose potential risks. In this regard the high level of non-performing loans in some Member States could have significant spill-over effects from one Member State to another, presenting a risk to financial stability in Europe.

Reforms to improve the business climate are needed to increase productivity and employment in the euro area and in this perspective supply-side reforms are very important. Other requirements are changes in labour market legislation that provide flexibility and security for both employees and employers, thus increasing employment and ensuring sustainable growth with wage developments in line with productivity. The lack of competitiveness and investment in the EU is related to a general tax burden that is 10 to 15 % higher than in competing markets, creating frustrating tax blocks on companies, investments and labour.

Prudent fiscal policies play a fundamental role for the stability of the euro area and the Union as a whole and a strong coordination of fiscal policies and fulfilment with the Union rules in this area are a legal requirement and key to the correct operating of Economic and Monetary Union. Fiscal attitudes at national and euro-area level must balance the long-term sustainability of public finances in full compliance with the Stability and Growth Pact with short-term macroeconomic stabilization.

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