OECD Economic Surveys: European Union and Euro Area 2023
The European recovery has been disrupted since the onset of Russia’s war of aggression against Ukraine. Co-ordinated and timely policy action helped avoid a severe downturn, but the near-term outlook is clouded by uncertainty and downside risks. Monetary and fiscal policy need to become sufficiently restrictive to reduce underlying inflationary pressures durably. Fiscal sustainability should be grounded in well-prioritised, efficient public spending and underpinned by improved economic governance. Protecting the level playing field through a strong state aid framework and deepening the Single Market would open opportunities for firms to grow and innovate, facilitating needed structural change. Furthermore, achieving the net-zero target by 2050 requires an acceleration of emission reductions. More action is needed across all sectors, but particularly in sectors not covered by emission trading, notably agriculture, building and transport. Reducing emissions in these sectors will rely on regulatory measures and a gradual alignment and raising of carbon prices. An important element of the green transition is affordable and secure energy, which requires more integrated electricity markets. Deeper capital markets could support the development of new clean technologies. Moreover, improving labour mobility and skills will help to reduce transition costs.
SPECIAL FEATURE: ACCELERATING THE GREEN TRANSITION
Also available in: French
Foreword
This Economic Survey was prepared by Jan Stráský, Martin Borowiecki and Federico Giovannelli with inputs from Joaquín Calvo Giménez (external consultant), Jean Chateau, Antonela Miho (external consultant) and Francesco Vanni under the supervision of Mame Fatou Diagne. Research assistance was provided by Federico Giovannelli and editorial support by Robin Houng Lee.
Also available in: French
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