By Jan Strupczewski<\/p>\n
NICOSIA, May 23 (Reuters) – European Union countries will face large bills for defence, energy and pensions in the next 15 years, the International Monetary Fund \u200ctold EU finance ministers on Saturday, suggesting a mix of reforms, consolidation and joint borrowing \u200cas a way to manage that.<\/p>\n
“If left unchecked, public debt will be on an unsustainable path. Under unchanged policy, \u200bdebt of the average European country would reach 130 percent of GDP by 2040 \u2014 roughly doubling from today,” the IMF said in a paper used as a basis for the ministers’ discussions at an informal meeting in Nicosia.<\/p>\n
The paper said that to prevent such a scenario, EU countries must improve incentives \u200cfor citizens to move around the \u206027-nation bloc to find work and for companies to hire them.<\/p>\n
The EU should also integrate its energy markets, make it easier for citizens’ savings to \u2060flow across the bloc into profitable investments and unify laws that now often differ from country to country.<\/p>\n
Pension reforms and a higher retirement age would also help, as would government guarantees for riskier investments in \u200blow-carbon \u200band climate-resilient projects that would help attract private capital \u200bto them.<\/p>\n
Finally, governments should agree that innovation, \u200cenergy and defence are European public goods and they should be paid for through joint borrowing.<\/p>\n
Joint debt is a highly controversial issue in the EU, where some countries like Spain, Italy or France are in favour, but others, like Germany and several northern European countries, strongly oppose the idea.<\/p>\n
“This is one of those areas where there are differences of opinion, but it’s certainly one of \u200cthe areas which we will be discussing in the \u200bcoming months,” the chairman of euro zone finance ministers \u200bKyriakos Pierrakakis told Reuters.<\/p>\n
The IMF said that \u200beven with reforms, most EU countries would still need fiscal consolidation to put \u200cdebt on a declining path, though the \u200bmore ambitious the reforms, \u200bthe less consolidation would be needed.<\/p>\n
It said that if governments did not act now, the problem would only get worse.<\/p>\n
“The ‘muddling-through’ approach that many countries have adopted so far is reaching \u200bits limits, and a more \u200cstrategic response seems essential to respond to rising spending pressures,” the IMF said.<\/p>\n
“Making changes \u200bin a piecemeal way, or tinkering at the margins, is likely to be inadequate,” \u200bit said.<\/p>\n
(Reporting by Jan StrupczewskiEditing by Tomasz Janowski)<\/p>\n","protected":false},"excerpt":{"rendered":"By Jan Strupczewski NICOSIA, May 23 (Reuters) – European Union countries will face large bills for defence, energy…\n","protected":false},"author":3,"featured_media":817709,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[12],"tags":[64,79,8309,336505,220535,252263,22489,336506,155161,336507,26289,67,132,68],"class_list":["post-817708","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-energy-markets","tag-eu-finance-ministers","tag-european-union-countries","tag-fiscal-consolidation","tag-international-monetary-fund","tag-northern-european-countries","tag-pension-reforms","tag-profitable-investments","tag-public-debt","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116626246015278335","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/817708","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=817708"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/817708\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/817709"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=817708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=817708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=817708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}