Europe’s Reform Opportunity

BRUSSELS – The eurozone crisis is far less dangerous now than during its peak years of 2010-2013. Growth has picked up across the European Union, and five million jobs were created between 2014 and 2017.

But the EU banking union remains incomplete, Greece and the Italian banking sector are facing challenges, and the aftershocks of the euro crisis could still undermine the EU’s stability – or even threaten the common currency.

Barring the worst-case scenario of populist victories in the French election this May and the German election this September, European leaders should seize the opportunity later this year to pursue more ambitious, but pragmatic, reforms.

As a first step, policymakers will need to acknowledge that they still lack effective policy-coordination tools. Although the European Semester created a broad framework for coordination, it has failed to effectively improve competitiveness, growth, or employment across all EU countries. At the same time, investment remains too low throughout the eurozone, and especially in countries that need to stage the largest recoveries. The “Juncker Plan” for targeted EU-wide investments can be a part of the solution, but it will not be enough.