The European economy is gradually recovering but further policy
action will be required to address unresolved legacies of the global
economic crisis that are weighing on growth and major new concerns that
have emerged, according to two new OECD reports.
The latest OECD Economic Surveys of the European Union and of the
Euro Area, presented today in Paris by OECD Secretary-General Angel
GurrÃa, underline the challenges facing European policymakers. Although
growth has gradually strengthened, unemployment in many countries is
still high, investment remains below pre-crisis levels in most European
countries, and credit growth is still sluggish.
The Surveys project EU GDP will grow by 1.8% this year and 1.9% in
2017, while GDP in the euro area will grow by 1.6% this year and 1.7% in
2017.
‘Europe has put the worst of the crisis behind it, but there is still
much more to do to support a full robust recovery that benefits all
Europeans,’ Mr GurrÃa said. ‘Most of the recommendations in these two
Economic Surveys have one thing in common: they call for collective
action by European countries. Cooperative solutions have enabled Europe
to leave the worst of the crisis behind it. But continued cooperation is
still needed to implement effective solutions to common problems.
The
alternative to collective action is not the status quo, but something
worse: the risk that Europe will move backwards. This would jeopardise
what has been achieved to date by the Single Market and the rest of the
EU acquis, decreasing growth and destroying jobs across Europe.’
The Surveys say that countries with fiscal space should use budgetary
spending to boost growth. Given the deep cuts in public investment
since the global financial crisis, the reports recommend increasing
public support for key investment projects. Enacting broad reforms to
tax structures and public spending would also favour growth.
Easing financial constraints would bring benefits across the economy,
notably to private sector firms considering future investment plans.
This will require addressing one of the legacies of the crisis – the
resolution of non-performing loans in many countries, which threaten
financial stability and act as a drag on bank credit.
Waivers could be
applied to the new Bank Recovery and Resolution Directive rules to help
put in place government-supported schemes when non-performing loans are a
serious economic disturbance, the Surveys said.
The Surveys discuss the need for additional steps to deepen the
single European market, notably with regard to labour mobility, which
can be a key tool to reduce unemployment and boost productivity.
Reducing administrative and regulatory barriers in the services sector
and speeding up the recognition of professional qualifications from one
country to another would encourage internal mobility, the Surveys said.
Read moreL OECD: European Economy Is Slowly Recovering But Legacies Of The Crisis Remain And New Challenges Are Emerging | Hellenic Shipping News Worldwide
