Moreover, with general elections in Germany scheduled for October 2025, it is unlikely that the mainstream parties will reform the debt-brake rule, which requires a two-thirds majority and support from the conservative opposition. This political inertia also makes further European-level reforms difficult even though they are essential to boosting investment and growth in Germany and Europe.
Europe’s Divergent Productivity Levels Reflect Different Stages of Economic Development
Similarly, raising Europe’s growth outlook will require Southern Europe to address its productivity gap, particularly when compared with the US – on per capita and per hours worked bases – over the past 25 years (Figure 2). Full and timely implementation of NextGenerationEU reforms and investments through 2026, especially in Italy and Spain, are thus critical.
The productivity…
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