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This country note from Going for Growth 2015 for the European Union identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
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The global economy continues to run at low speed and many countries, particularly in Europe, seem unable to overcome the legacies of the crisis. With high unemployment, high inequality and low trust still weighing heavily, it is imperative to swiftly implement reforms that boost demand and employment and raise potential growth.
The EU Single Market remains fragmented by complex and heterogeneous rules at the EU and national levels affecting trade, capital, including foreign direct investment, and labour mobility.
Action taken by many European countries to return their public finances to health are beginning to pay off, says the OECD. The Euro area economies which emerged from the crisis with serious current account deficits are now in surplus. Debt-to-GDP ratios are stabilising and market tensions have abated.
Low productivity growth in the EU has deep structural causes. Strengthening human capital, work incentives and competition, and better integrating the Single Market would boost inclusive growth.
Raising euro area economic performance requires cleaning up bank balance sheets, completing banking union to foster unbiased risk assessment, further structural reforms and strong fiscal policy frameworks.
After five years of work at every level to correct the fiscal, financial and external imbalances that led to the crisis, and to reinforce fiscal and financial institutions, the Euro Area is beginning to show signs of recovery. But, despite these positive signs, growth is still weak and uneven.
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The euro area is beginning to show the much-awaited signs of recovery. Area-wide efforts to strengthen the public finances and the institutional underpinnings of the monetary union are sowing the seeds of vigorous, inclusive growth. But comprehensive structural reforms are needed to enhance productivity and restore competitiveness in the years to come.
In Europe, the two most pressing structural policy priorities that must be addressed are the challenge of unemployment and the restoration the health of euro area banks, said OECD Secretary-General in Brussels.
A moderate recovery is underway in the major advanced economies, according to the OECD’s latest Interim Economic Assessment. Growth is proceeding at encouraging rates in North America, Japan and the UK. The euro area as a whole is out of recession, although output remains weak in a number of countries.