The IMF’s call comes as Europe faces increasing global competition and demographic shifts. The organization highlighted that reforms should focus on improving labor market flexibility, enhancing productivity, and ensuring sustainable public finances. Specific recommendations include reducing barriers to entry for new businesses, promoting wage flexibility, and reforming pension systems.

According to the IMF, these structural reforms are essential for unlocking Europe’s growth potential and improving its resilience to economic shocks. Failure to implement these measures could lead to prolonged stagnation and increased vulnerability to future crises. The IMF acknowledged that implementing these reforms may face political challenges but emphasized the long-term benefits for European citizens and businesses.