The International Monetary Fund published remarks by Alfred Kammer, Director of the IMF’s European Department, arguing that Europe’s main economic constraint is a “scale deficit” created by an unfinished Single Market, and that deeper integration is the most effective route to higher productivity and stronger resilience. Kammer pointed to three mounting pressures on Europe’s model, including rising fiscal spending needs that could reach almost 5 percent of GDP by 2040, alongside geopolitical fragmentation and energy and strategic dependencies. He cited IMF analysis estimating that remaining intra-European Union cross-border trade costs are equivalent to a tariff of around 44 percentage points for goods and 110 percentage points for services, driven by administrative burdens, fragmented capital markets, limited labour mobility, and energy-market fragmentation. Based on IMF research, he said a comprehensive package of EU-level and national reforms to lower intra-EU barriers toward US levels could raise productivity by around 20 percent, crowd in up to EUR 800 billion of additional private investment over ten years, and lift GDP per capita by around 35 percent over time. The reform agenda highlighted four EU priorities, covering a single rulebook for firms including a voluntary “28th regime” for company law and insolvency, a more integrated Capital Markets Union, measures to increase labour mobility including qualification recognition and social security portability, and steps toward an integrated energy market including interconnectors and streamlined permitting, while cautioning against relying on relaxed merger rules or uncoordinated national industrial policies and untargeted subsidies.

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