## Press Briefing Transcript: European Department, Spring Meetings 2026

_IMF News, April 17, 2026_

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## Bibliographic details
- Published: April 17, 2026

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### Outlook and headline projections
- Date: April 17, 2026.
- IMF reference scenario: the Iran war is expected to shave off over the next two years, 0.5 percent of GDP on euro area growth.
- IMF severe scenario: the impact could be as bad as shaving off 1.7 percentage points of GDP.
- Monetary policy projection for the euro area (IMF recommendation under the reference forecast): a neutral monetary policy stance implying a 225 basis points increase in the policy rate in 2026, which "to some extent, can be taken back in 2027."
- Bank of England recommendation: maintain a restrictive monetary policy stance and keep the policy rate unchanged for the remainder of the year (i.e., not proceed with the expected cuts).

### Short-term fiscal policy guidance
- Overarching guidance:
  - Preserve price signals; avoid suppressing price signals through broad measures or rationing.
  - Prioritize targeting: focus support on the vulnerable and, if necessary, limited parts of the middle class.
  - Prefer temporary, targeted measures that preserve incentives and fiscal space.
- Fiscal space examples and arithmetic cited:
  - Last energy support packages during the Russian gas shut-off period cost on average 2.5 percent of GDP.
  - If support had focused on the 40 percent of the population most affected, the cost would have been 0.9 percent of GDP.
- Germany-specific comment on recent policy:
  - Reductions on fuel taxes are temporary but not targeted; these measures blunt price signals and benefit wealthier households as well as vulnerable ones.

### Country-differentiated impacts and examples
- Euro area average two-year GDP loss (reference): 0.5 percentage points.
- Country examples for two-year impact:
  - Germany: minus 0.6 percentage points lower GDP over two years.
  - France: minus 0.3 percentage points lower GDP (clarification provided during the briefing).
- Ukraine:
  - October 2025 forecast: 4.5 percent growth in 2026 (previous forecast).
  - February program range for 2026: between 1.8 and 2.5.
  - Latest estimate noted in the briefing: 2 percent for 2026.
  - Forecast revision drivers: assumption change on war duration (October assumed war would end by end-2025; latest assumes the war lasts one year longer) and direct targeting of energy infrastructure reducing growth.
  - IMF-supported financing: an external financing envelope over four years of U.S. $135 billion as part of the IMF program design.
  - IMF strategy for debt sustainability in Ukraine (four-pronged):
    - Build up revenue capacity over time.
    - Maintain spending discipline and focus on priority spending.
    - Secure large external financing with conditionality.
    - Proceed with debt restructuring already underway.
- Italy:
  - Fiscal numbers: projected deficit of 2.8 percent this year, down from a provisional 3.1 percent in 2025 (previous expectation had been 3.3 percent).
  - Debt context cited: Italy's debt is "still very high"—about 137 percent of GDP in 2026 (IMF commentary referenced this level when discussing Italy).
  - Growth context: weak medium-term growth (examples given: GDP growth of 0.5 percent in the near term and 0.8 percent in 2027 cited in question context).
  - IMF recommendations: continue spending discipline, pursue reforms to raise labor force participation, human capital, governance, and productivity to support growth and ease fiscal consolidation.
- Spain:
  - Noted drivers for somewhat higher inflation: stronger labor market, stronger wage growth, and benefits from RF funds and renewables expansion.
  - IMF view: Spain’s higher inflation is not materially different from other countries’ experiences given the shock; progress in renewables has mitigated the impact.
- Bulgaria:
  - Revised growth for 2026: 2.8 percent (downgraded by 0.3 percentage points).
  - Inflation revised to 3.8 percent in 2026 (0.5 percentage points higher than previous forecast).
  - IMF concerns: strong domestic demand, rising current account deficit, expansionary fiscal policy, rapid public wage growth, automatic indexation of benefits—need for fiscal policy to become neutral and for structural reforms (governance, human capital, education).
- United Kingdom:
  - IMF advice mirrors euro-area guidance: maintain fiscal consolidation; provide targeted, temporary support to the vulnerable; avoid blunting price signals.
  - IMF notes limited fiscal space and that yields reflect financing needs and deficits.
  - On domestic fossil extraction (North Sea): IMF staff noted limited remaining volumes in the North Sea and emphasized that global energy markets and prices limit the effect of domestic increases in supply on insulating the country from global price movements.

### Structural and medium-term priorities (EU-wide and country-level)
- Core structural reforms and EU-level priorities highlighted:
  - One single market for products and services: remove barriers that prevent firms from scaling up and becoming European/global champions.
  - An integrated labor market: facilitate labor mobility across the continent.
  - Deep capital markets with risk capital: facilitate scaling and innovation finance.
  - An energy union and accelerated energy transition (Green Deal): reduce import dependence on fossil fuels, increase economic resilience, and support long-term growth.
- Rationale for EU-level coordination:
  - Energy transition and intermittent renewables require balancing capacity and large-scale planning; country-by-country approaches raise costs.
  - A European plan for energy infrastructure and interconnection lowers transition costs and improves resilience.
  - Joint financing (including joint debt for EU public goods) suggested for European priorities such as defense, R&D, and energy infrastructure to capture scale and efficiency benefits.
- Warnings on policy inconsistency:
  - Wavering on the energy transition undermines investor confidence; investors consider 10-year horizons when deciding returns.

### Monetary policy and inflation management notes
- Euro area: IMF recommendation is neutral stance in reference forecast; timing allows assessment of evolving scenarios given high uncertainty.
- UK: IMF recommends keeping a restrictive stance and not cutting rates this year.
- Ukraine National Bank: IMF staff praised the central bank’s difficulty and performance—keeping inflation under control under repeated severe shocks and using interest rate actions to prevent second-round effects and de-anchoring of expectations.

### Risks, scenarios, and resilience
- IMF stress on uncertainty:
  - Large uncertainty about war duration, energy-price persistence, and infrastructure damage.
  - Severe scenario could materially worsen the growth outlook relative to the reference scenario.
- Recession risk:
  - IMF staff said they do not see a recession in Europe materializing in the reference forecast and not even in the severe scenario assessed in the briefing, but emphasized shocks are significant and should not be underestimated.
- Fiscal sustainability and resilience:
  - Policymakers urged to avoid wasting scarce fiscal space on untargeted broad measures; instead prioritize targeted, temporary support and medium-term reforms that boost growth and resilience.

### Communication and political economy
- IMF staff advice to policymakers:
  - Do not let urgent crises completely crowd out medium-term reform agendas.
  - Explain to populations the benefits of reforms and what Europe delivers to sustain public support.
- Role of media:
  - IMF Director emphasized journalists' role in calling out problems and holding policymakers accountable.

*Source: Press Briefing Transcript: European Department, Spring Meetings 2026 (April 17, 2026).*

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_Source: https://www.imf.org/en/news/articles/2026/04/17/tr-04172026-press-briefing-transcript-european-department-spring-meetings-2026_