Europe’s growth conundrum


The gap in productivity and economic performance between the US and Europe has been a source of much debate in recent years, but many experts seem agreed on one point: that a lack of progress on reform in labour and product markets has not helped the European cause.
This is a constant refrain of the OECD’s Going for Growth series (see page 25), and Structural Reform in Europe was also the theme of a one-day high-level conference jointly organised by the OECD and the IMF in Paris in March. Dominique Strauss-Kahn, managing director of the IMF, was a keynote speaker alongside Angel Gurría, secretary-general of the OECD. Other speakers included Joaquín Almunia from the European Commission, and Sweden’s employment minister, Sven Otto Littorin. The following is a short extract from Mr Strauss- Kahn’s speech.“This may seem like a strange time to be holding a conference on structural reform. We are in the middle of a financial crisis, which will have significant economic implications for many countries, so it seems that we have more urgent problems to address.But actually, it’s a good time to talk about structural reform, because it has an important bearing on what Europe will be like when it emerges from the financial crisis, and because mobilising public support for reform is vital to the success of the European model.I have said before that the European model is based on the desire to found a world of justice built on the irreducibility of human dignity. The model requires: that we take human rights seriously; that we focus on culture as a means of human development; that we achieve a balance between economic prosperity, social justice and the environment; and that we promote multilateralism.The key question is whether structural reforms—the kind of reforms that Angel Gurría has talked about—are consistent with this model. I believe that they are mostly consistent with the European model, and with European values; moreover they can provide important support for them, for two reasons.First, because all of the values that we hold will become easier to achieve in an environment of economic growth. Angel [Gurría] has explained very clearly the ways in which structural reforms can help Europe to compete successfully in world markets and to produce high growth. Second, structural reforms can help to create new opportunities for European citizens, which again supports European values. People—especially young people— don’t just want to be protected against failure; they also want the opportunity to be successful. […]We see the benefits of these reforms clearly. But we must also recognise that people are hesitant about structural reform. Policymakers cannot dictate to people on this; they need to persuade people. […]Finally, as we go forward, let us keep our eyes on the prize. The European model is the product of many years of passionate endeavour by the citizens of Europe. It is worth an equal expenditure of passion and effort to sustain it. The model is not static: European governments and institutions must learn from the world and adapt to changes in the world—as their citizens are already doing. But there is also much that Europe can give to the world if we hold fast to the principles of justice and human dignity, and if we approach our reforms with these values always in our minds.”Mr Strauss-Kahn’s full speech can be read at more information, contact the OECD Economics Department at also article “Counting the hours”.©OECD Observer No 266 March 2008

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.3% Dec 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.5% Dec 2017
Last update: 12 Feb 2018


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