Alfred Kammer, Director of the European Department at the IMF, calls for deep EU reforms to boost European productivity and resilience during his visit to IE University

IE School of Politics, Economics and Global Affairs recently hosted the conference "Reforming Europe under pressure: an agenda for resilience and higher productivity", featuring Alfred Kammer, Director of the European Department at the International Monetary Fund (IMF). 

In a conversation moderated by Enrico Letta, Dean of the School, Mr. Kammer emphasized that Europe’s fundamental challenge is a scale deficit: "While Europe produces exceptional entrepreneurs and world-class research, too few firms grow large enough to compete globally from within Europe". Addressing a packed room of students, Mr. Kammer explained that, in some cases, "it is easier to expand to the United States than across Europe but scale matters because scale supports investment in research and development, resilience and higher wages."

Mr. Kammer also suggested a solution: "The most powerful tool Europe has to raise productivity and strengthen economic resilience is the Single Market. A fully integrated market would allow firms to operate at continental scale".

According to Mr. Kammer, leaving this integration unfinished is far too expensive: "The remaining direct and indirect costs of cross-border trade within the EU are equivalent to a tariff of around 44 percentage points for goods and 110 percentage points for services". "These costs are driven by high administrative burdens, fragmented capital markets and low labor mobility", he added. 

In his opinion, Europe needs reforms to be implemented at both EU and national levels. At the EU level, the reforms should include four priorities: one rulebook - that would allow Firms to register once and operate across the EU under a single framework-, one capital market, one labor market and one energy market.

At the national level, Mr. Kammer pointed out the need to remove domestic barriers and avoid adding requirements, to reform housing and labor market institutions -which would foster labor mobility-, and to improve the business environment eliminating bottlenecks. 

Enrico Letta, Dean of IE School of Politics, Economics and Global Affairs, concurred with Mr. Kammer that "Europe can act immediately to complete the Single Market and enhance European competitiveness."