Structural Reforms and Growth Potential in the European Union

Abstract

Following the onset of the financial and economic crisis, the latent and gradual decline of growth potential in the European Union turned into an overt growth crisis. However, this crisis can also exert a cleansing effect and release resources for activities of higher efficiency. A core element of the strategy focusing on a turnaround to growth – by means of structural reforms designed to improve the functioning of the market and strengthen the growth potential – lies in boosting a faster increase in productivity. Concur-rently with more efficient resource utilisation, the principal objective is to raise the employment rate in a sustainable fashion. Underly-ing as a central factor the structural reforms supporting the growth potential is the need for a better functioning internal market and an improved business environment. All this requires profound reforms in product and service markets as well as resource markets, primarily the labour market and money market. Reforms promoting knowledge and innovation are closely connected with this and are of the same significance.