After years of crisis, the European economy has picked up momentum. EU-wide unemployment, at 7.1%, is below its pre-crisis level and we project economic growth to remain above 2% this year and next. The ongoing recovery is one reason why support for the Union has rebounded. Two thirds of Europeans polled by Eurobarometer in April believed that their country had benefitted from EU membership, the highest percentage in 35 years.
The European economy is growing robustly, helped by accommodative monetary policy, mildly expansionary fiscal policy and the global acceleration. The current economic expansion should be used to speed up implementation of reforms to the euro area architecture and EU policies that would support greater European integration and ensure stronger, more inclusive long-term growth, according to two new reports from the OECD.
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This country note from Going for Growth 2017 for the European Union identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
Labour market mobility in the European Union is increasing, but it remains too low to provide sufficient adjustment in the face of diverging labour market developments.
To achieve a euro area fiscal stance that fosters the recovery, countries with fiscal space under the Stability and Growth Pact rules should use budgetary support to raise growth, and existing incentives and flexibility should be taken advantage of to pursue reforms of tax and spending policies.
To support the recovery, structural reforms that yield short-run as well as long-run gains should be prioritised.
The European Commission will assess again the fiscal situation of Portugal and Spain, and decide whether to recommend to the Council that the Excessive Deficit Procedure be stepped up for those countries, exposing them to various sanctions. This momentous decision can have major consequences for the countries concerned, but also wider implications.
The global economy is stuck in a low-growth trap that will require more coordinated and comprehensive use of fiscal, monetary and structural policies to move to a higher growth path and ensure that promises are kept to both young and old, according to the OECD’s latest Global Economic Outlook.
Achieving strong growth in the global economy remains elusive, with only a modest recovery in advanced economies and slower activity in emerging markets, according to the OECD’s latest Interim Economic Outlook.
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This note provides a summary assessment of Europe’s structural reforms including countries’ responsiveness to reform recommendations in recent years, a quantification of the economic impact of reforms, and structural reform priorities going forward.