## Europe’s National-Level Structural Reform Priorities

_IMF Working Papers, May 29, 2025_

## Source details

**Canonical URL:** [Europe’s National-Level Structural Reform Priorities](https://www.imf.org/en/publications/wp/issues/2025/05/28/europes-national-level-structural-reform-priorities-567269)

## Other formats

- [Markdown version](/en/publications/wp/issues/2025/05/28/europes-national-level-structural-reform-priorities-567269/index.md)
- [Structured JSON version](/en/publications/wp/issues/2025/05/28/europes-national-level-structural-reform-priorities-567269/index.json)
- [Bundle manifest](/en/publications/wp/issues/2025/05/28/europes-national-level-structural-reform-priorities-567269/bundle-manifest.json)

## Bibliographic details
- Authors: Nina Budina, Oyun Erdene Adilbish, Diego A. Cerdeiro, Romain A Duval, Balázs Égert, Dmitriy Kovtun, Anh Thi Ngoc Nguyen, Michelle Tejada
- Published: May 29, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229011877.001

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### Summary and central finding
- Europe has a large and persistent per capita income gap with the United States.
- Deficiencies in total factor productivity, labor utilization, and capital intensity all play a role.
- Deeper intra-Europe integration is one key element toward closing these gaps, but remaining structural domestic policy gaps in growth-friendly regulatory settings highlight the scope for complementary national-level action.
- Successful implementation of the compiled national reform priorities could entail sizeable medium-term gains of around 5, 7 and 9 percent for advanced European, Central Eastern and Southeastern European, and Western Balkan economies, respectively.

### Objective and scope of the paper
- Compiles IMF staff’s structural policy priorities for European countries to lift output over the medium term.
- Reviews key implementation challenges to those national reforms.
- Discusses complementarities with EU-level efforts.

### Main drivers of Europe–U.S. per capita income gap
- Total factor productivity deficiencies.
- Labor utilization shortfalls.
- Lower capital intensity.

### Policy focus areas highlighted
- Growth-friendly regulatory settings at the national level.
- Complementary domestic reforms to deepen integration benefits from intra-Europe initiatives.
- Structural policies spanning capital markets, financial markets, human capital, labor and labor markets, macrostructural analysis, revenue performance assessment, and tax gap mitigation.

### Implementation challenges
- Long-standing political economy obstacles to reform.
- In some cases, technical obstacles to reform.
- Need to address political feasibility alongside technical design.

### Expected medium-term impact (country groups)
- Advanced European economies: around 5 percent medium-term gain.
- Central Eastern and Southeastern European economies: around 7 percent medium-term gain.
- Western Balkan economies: around 9 percent medium-term gain.

### Keywords and themes emphasized
- business regulations
- Capital markets
- Europe, Europe integration
- governance
- human capital
- innovation
- labor markets
- political feasibility
- potential output
- product market reforms
- Productivity
- reform priorities in Europe
- Structural policies
- structural reforms
- Tax gap

*IMF Working Papers — “Europe’s National-Level Structural Reform Priorities”*

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## Content in this bundle

- **Working Paper**
  - [Working Paper (Markdown version)](/-/media/files/publications/wp/2025/english/wpiea2025104-print-pdf.pdf.md){rel="alternate" type="text/markdown"}
  - [Working Paper (PDF)](/-/media/files/publications/wp/2025/english/wpiea2025104-print-pdf.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2025/05/28/europes-national-level-structural-reform-priorities-567269_