IMF chief says Europe looks like a “supermarket of ideas” for the United States

The head of the International Monetary Fund on Thursday called on Europe to exploit the full potential of its valuable single market, deploring what she described as a situation that makes the region a “supermarket of ideas” for the United States.

Speaking to CNBC’s Karen Tso, IMF Managing Director Kristalina Georgieva said Europe’s economic performance was strengthening and inflation was clearly on a downward trajectory.

Georgieva said the IMF’s observation of rising consumption and expected interest rate cuts from the European Central Bank were good news for investments in the eurozone. She said this would strengthen the economic performance of the 20-member bloc.

“We come with this relatively good news and with a warning: there is no time to lose for the eurozone to focus on productivity,” Georgieva said.

“That means two things. Firstly, realizing the full potential of the single market. It’s not there yet. We want to see more flexibility in the labor market in Europe, we want to see (a) deepening (of) the markets financial, integrating them (and) we want to see the banking union, the capital union in place,” she continued.

“And secondly, we want more attention to be paid to innovation, by investing in (research and development), which would allow companies based on innovation in Europe to materialize in Europe. Right now, Europe looks like a supermarket of ideas for the United States,” Georgieva said.

“A lot of what is invented here ends up being commercially viable and on a large scale there. And when you look at the main obstacle: 27 countries are not yet integrated into a single market.”

The European Union’s single market aims to ensure the free movement of goods, capital, services and labor throughout the territory.

Created more than 30 years ago, the Single Market is designed to enable EU citizens to live and work across the EU and to offer consumers a wider choice of high-quality services and products.

The IMF believes that further integration of the single market could further boost economic growth in the region.

In May, the Washington DC-based institute said in a blog post that an IMF report published in 2023 estimated that a 10% reduction in remaining barriers to the single market for goods and services could increase European production by up to ‘at 7 percentage points compared to 2023. the long term.

“The euro zone is now focusing on crucial questions for the future. Among them, the first is how to increase productivity to the same level as that of its competitors, in particular that of the United States,” Georgieva said.

The IMF chief boosted the fund’s growth outlook for the eurozone, saying the bloc was on course to record a growth rate of 0.8% in 2024, up from 0.4% in 2023 – and an increase 1.5% next year.

Correction: A previous version of this article incorrectly stated the month in which the IMF said a 10% cut would increase European output by up to 7 percentage points.