Structural reforms for growth and resilience in the Euro area

This section discusses how structural reforms in the euro area have contributed to the functioning of the EMU over the past 20 years by stimulating growth, convergence and resilience. There is a high premium on structural reforms in a monetary union, as they increase the capacity of individual economies to adjust and hence compensate for the limited discretion at the national level. However, progress in implementing structural reforms has been uneven across countries. Efforts to complete the Single Market and establish the Banking and Capital Market Unions also help to make growth more inclusive and sustainable and improve resilience in the euro area, but the full benefits of cooperation among Member States can only be reaped when EU action is complemented by structural reforms at national level. The EMU governance framework has offered a number of means to stimulate national reforms. Despite some progress, tools such as the country-specific recommendations have not entirely overcome the political economy constraints facing national governments. Recent initiatives, including the establishment of the National Productivity Boards or the proposal for the Budgetary Instrument for Convergence and Competitiveness, are intended to help implement reforms. The need for reform will be even greater in the future with digital transformation, ageing, climate change and changes in the global economy.