IMF Warns EU of Soaring Debt Without Structural Reforms

The International Monetary Fund (IMF) has warned European Union finance ministers that member states face significant spending pressures on defense, energy and pensions over the next 15 years. Without reforms, public debt in the average European country could rise to 130% of gross domestic product (GDP) by 2040, roughly double today's level.

The IMF recommends labor market reforms, greater mobility of workers and deeper interconnection of energy markets within the EU. It also calls for pension reforms and an increase in the retirement age.

The Fund further recommends encouraging investment in low-carbon and climate-resilient projects and exploring joint funding for defense at EU level. Common debt remains a contentious issue, however, with France, Italy and Spain in favor and Germany and several Nordic countries opposed.

The IMF warned that incremental or piecemeal changes will no longer be sufficient.

(reuters, lud)