The International Monetary Fund published a speech by Managing Director Kristalina Georgieva calling on the European Commission to “re-energize” Europe by prioritising much faster productivity growth through national structural reforms and completion of the European Union single market across the four freedoms of goods, services, labour and capital. The speech argues that Europe’s convergence model is stalling due to an incomplete single market and regulatory burdens, highlighting estimates that a potential trade breakdown could cost the EU about 0.3 percent of GDP this year and next on top of a half percentage point already lost. It points to intra-EU regulatory barriers in cross-border trade that are two to three times higher than for interstate trade in the United States, labour mobility costs about eight times higher than moving between US states, average energy prices around double US levels, and a fragmented financial system where the EU’s EUR 60 trillion financial sector is constrained by national silos. Proposed remedies include a deep “regulatory housecleaning” and stronger resistance to “gold plating” of EU directives, support for a “28th regime” allowing firms to opt into a pan-EU legal framework via EU Regulation, deeper energy market integration with interconnectors and aligned grid access and tariffs, and advancing the savings and investment union to mobilise risk capital. Georgieva also sets out a case for more EU debt issuance for shared European public goods alongside calls for fiscal consolidation where public debt is high, and cites IMF research suggesting EU productivity could rise by 20 percent if intra-EU frictions were reduced to US-comparable levels. As practical next steps, the speech suggests appointing a single market “czar”, setting a hard deadline such as January 2028 for completing key elements of the single market, and using artificial intelligence to support regulatory streamlining and removal of obsolete rules.
International Monetary Fund 2026-02-04
International Monetary Fund urges the European Commission to complete the single market and cut regulatory frictions to lift productivity
IMF Managing Director Kristalina Georgieva urged the European Commission to boost productivity growth through structural reforms and completion of the EU single market, warning that regulatory barriers and an incomplete market could cost the EU 0.3% of GDP. She proposed measures including regulatory streamlining, deeper energy market integration, and more EU debt issuance, suggesting a single market "czar" and a 2028 deadline for key reforms.