## Europe’s Moment for Revival

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**Canonical URL:** [Europe’s Moment for Revival](https://www.imf.org/en/publications/fandd/issues/2025/06/editor-letter-europes-moment-for-revival)

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## Bibliographic details
- Authors: GITA BHATT
- Published: May 20, 2025

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### Overview
- Title: Europe’s Moment for Revival
- Publication: F&D Magazine
- Author: GITA BHATT, F&D editor-in-chief
- Date: June 2025
- Central thesis: The European Union must unite to shape today’s global economy, rather than be shaped by it.

### Key challenges identified
- Stalled growth and innovation:
  - The EU is wealthier than China and more populous than the United States, yet "has been trailing both in growth and has fallen back in technological innovation since the global financial crisis."
- Demographic pressures:
  - "The growth gap is widening as the continent’s workforce shrinks, productivity stagnates, and trade tensions rise."
- Security and defense:
  - "Governments are scrambling to boost defense spending to rely less on the United States for their security."
- Fragmentation of markets and regulation:
  - Fragmented markets, particularly in defense, energy, telecoms, and finance, weaken economic security and investment prospects.
- Financial market incompleteness:
  - "A single capital market will only lead to a larger pool of savings if Europe also completes its banking union," and investment depends on firms expecting higher returns, requiring "much less fragmentation, less red tape, and more uniform regulation across the union."
- Country-level malaise:
  - "Germany’s economy has barely grown since 2019, while the US expanded 12 times as much—and 3 times more than the euro area."
- Population aging and fertility decline:
  - A special report in the issue "investigates the policy implications of falling fertility and rising longevity" and the challenge of "managing the shrinking numbers of workers relative to retirees."

### Policy roadmap and reform priorities
- Arguments for closer economic union:
  - Alfred Kammer, head of the IMF’s European Department, "argues ... that the case for closer economic union is more compelling than ever."
- Pre-existing road maps:
  - Reports by former Italian Prime Ministers Mario Draghi and Enrico Letta outline how to make the EU more competitive and productive.
- Key priorities highlighted:
  - Boosting innovation.
  - Supporting businesses.
  - Enhancing economic security by consolidating fragmented markets in defense, energy, telecoms, and finance.
  - Completing the banking union to enable a single capital market.
  - Reducing fragmentation, cutting red tape, and achieving more uniform regulation across the union.
- Germany-specific recommendations:
  - After reforming the "debt brake," German leaders "must now open up the economy to future-oriented investment and overcome chronic labor shortages."

### Country cases and positive examples
- Poland:
  - "Poland’s successful economic transformation can inspire the continent today," says finance minister Andrzej Domański.
- Greece:
  - "Sweeping restructuring has turned Greece—which emerged from a debt crisis not so long ago—into one of Europe’s fastest-growing economies," writes former finance minister Konstantinos Hatzidakis.
- Spain:
  - Spain "has found the sweet spot between strong growth and social progress with sustainable public finances," according to finance minister Carlos Cuerpo.

### Broader contributions in the issue
- IMF chief economist Pierre-Olivier Gourinchas calls for "a new global growth compact."
- Karen Dynan "proposes pointers to economists seeking to influence the policy conversation."
- Ajay Agrawal and coauthors "stress the importance of human judgment in shaping AI’s global impact."
- Andreas Adriano profiles Agustín Carstens, the Bank for International Settlements’ outgoing head, for People in Economics.

### Conclusion and outlook
- Urgent collective action: "Europeans know that the moment to revive their economic might has arrived. They know they must unite to shape today’s global economy, rather than be shaped by it. And they can aim to do so by remaining true to their values."
- The issue examines whether member states will overcome distrust of each other and of EU institutions to implement the road map for revival.

*Europe’s Moment for Revival — F&D Magazine, GITA BHATT, June 2025.*

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## Content in this bundle

- **THE TALENT EQUATION**
  - [THE TALENT EQUATION (Markdown version)](/-/media/files/publications/fandd/article/2025/03/the-talent-equation-fd-mar25.pdf.md){rel="alternate" type="text/markdown"}
  - [THE TALENT EQUATION (PDF)](/-/media/files/publications/fandd/article/2025/03/the-talent-equation-fd-mar25.pdf){rel="external" type="application/pdf"}
- **Europe’s Moment for Revival**
  - [Europe’s Moment for Revival (Markdown version)](/-/media/files/publications/fandd/article/2025/06/editors-letter.pdf.md){rel="alternate" type="text/markdown"}
  - [Europe’s Moment for Revival (PDF)](/-/media/files/publications/fandd/article/2025/06/editors-letter.pdf){rel="external" type="application/pdf"}
- **europe-fd-june25**
  - [europe-fd-june25 (Markdown version)](/-/media/files/publications/fandd/article/2025/06/europe-fd-june25.pdf.md){rel="alternate" type="text/markdown"}
  - [europe-fd-june25 (PDF)](/-/media/files/publications/fandd/article/2025/06/europe-fd-june25.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/fandd/issues/2025/06/editor-letter-europes-moment-for-revival_