The International Monetary Fund published opening remarks by Alfred Kammer, Director of the IMF European Department, arguing that Europe is settling into slow medium-term growth and needs to raise productivity and resilience by completing the European Union (EU) Single Market and building a more integrated energy system. The speech calls for EU-level and national reforms, including advancing the savings and investment union, reducing frictions to cross-border trade in goods and services, enhancing labour mobility, and integrating energy markets. Kammer cited IMF analysis that intra-EU regulatory barriers are equivalent to tariffs of around 44 percentage points for goods and 110 percentage points for services, while regulatory and institutional barriers make moving between EU countries roughly eight times more costly than moving between US states. If reforms reduced internal EU frictions to US-state levels, European productivity could rise by around 20 percent, crowding in up to EUR 800 billion in additional private investment over ten years and lifting GDP per capita by around 35 percent. On energy, the remarks highlighted that real energy prices for EU industry have roughly doubled since 2000 and were about two to three times higher than in the United States and China in 2023, with the EU Emissions Trading System contributing only modestly to the transatlantic electricity price gap; the 2022 energy shock is estimated to have reduced euro area potential output by roughly 0.8 percentage points. A just released IMF paper is referenced as finding that meeting the EU's 2035 climate goals would require an increase in aggregate annual investment of around 1 percent of GDP, with carbon-pricing revenues more than covering the required public investment of 0.5 percent of GDP annually, while further IMF work suggests new interconnections typically reduce wholesale electricity prices by around 5 percent on average. The speech pointed to the European Commission's proposed Grids Package and plans to expand grid investment in the EU's next budget as steps to accelerate permitting and strengthen interconnections, while calling for an EU-level strategy to coordinate energy-system planning, investment and market design, including capacity mechanisms. It also noted the European Council has set end-2027 as a target for completing key elements of the Single Market agenda.

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