Euro Area: IMF Staff Concluding Statement of the 2025 Mission on Common Policies for Member Countries

June 19, 2025--Europe's economy remains resilient with record-low unemployment, headline inflation broadly at target, and a stable financial system. However, policymakers face mounting challenges, including trade tensions, rising demand for defense spending, and the need to ensure energy security, all while addressing subpar productivity, rapid aging, and weak medium-term growth.
The most effective solutions require decisive EU actions. Deepening the EU single market is the key tool available to policymakers to enhance investment, innovation, and productivity.

A better-integrated EU single market, in turn, calls for a joint provision of key public goods including for energy connectivity and defense-including through the multiannual financial framework. This can help internalize positive cross-border externalities of investments, leverage economies of scale, and avoid costly duplicative national efforts.

Ensuring orderly growth-friendly fiscal consolidations designed to address country-specific risks is critical to preserving fiscal sustainability and managing long-term spending pressures associated with aging and increased spending on security. Diversifying economic ties and expanding rule-based trade integration can further bolster competitiveness and strengthen economic resilience. Safeguarding price and financial stability continues to be the bedrock for addressing these longer-term challenges.

view more

Source: imf.org