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Europe faces critical moment as economy trembles-IMF head

Europe faces critical moment as economy trembles-IMF head

Mubasher: European Union (EU) leaders should ramp up their efforts to raise living standards across the continent, as doubts by populist movements mounted over the merits of integration, the International Monetary Fund (IMF) Director Christine Lagarde said.

Europe faces once again a defining moment, Bloomberg reported on Thursday, quoting Lagarde’s prepared speech to be delivered in Munich.

The goal should clearly be “restarting convergence and ensuring the fruits of economic growth are shared broadly across the EU, [in an attempt to] restore faith in the European project,” Lagarde stated.

Although the EU to a large extent made good on its pledge of peace and broadly shared prosperity, poorer southern nations in the bloc have not caught up to their richer northern peers, she said.

The gap between northern and southern nations has widened since the global financial crisis, the IMF director noted.

Between 2008 and 2017, average annual growth in real income per capita was negative in the five southern member states of the Eurozone, which received the hardest blow from the crisis, Lagarde said.

EU countries should reform their labour markets to give companies more flexibility in recruiting and firing workers, and make their business climate more welcoming to investment and boost research and development (R&D) expenditure, Lagarde urged.

It is worth noting that the growth rate in both the 28-member EU and the Eurozone during the fourth quarter of last year was initially estimated at 0.2%.