IMF tells Eurozone: Learn how to hire and fire
The International Monetary Fund (IMF) has issued a stark warning to Eurozone leaders, saying the economy is at risk of tipping back into stagnation unless it gets on with reforms to promote competition and make hiring and firing easier.
“A moderate shock to confidence—whether from lower expected future growth or heightened geopolitical tensions —could tip the block into prolonged stagnation,” Mahmood Pradhan, the IMF’s mission chief for the Eurozone, said yesterday.
The IMF, led by Christine Lagarde, expects the Eurozone economy to grow by 1.5 per cent this year and 1.7 per cent next year, but said high youth unemployment and excessive levels of corporate debt clouded the outlook for growth over the next five years.
The bailout provider believes that medium term potential growth is only around one per cent a year, which it said is well below what is needed to cut unemployment to acceptable levels.
If reforms are not undertaken, the IMF says, then the Eurozone’s nascent recovery is at risk of turning back into a stagnation.