Europe must grow faster or borrow less to keep its debt on a sustainable trajectory, the International Monetary Fund (IMF) said on Friday. According to the institution, the planned recovery plans may not be sufficient and the risks linked to short-term debt remain entirely manageable.
Concerns about the health of public finances are particularly pressing in France, the second largest economy in the euro zone. The country is struggling to reduce its deficits and saw, in the same month, the yields on its sovereign debt reach their highest level since 2002.
The budgetary recovery planned under the EU's medium-term plans amounts on average to around 2% of GDP, a level lower than what will be necessary for some countries, warns the IMF. Furthermore, European Commission projections show a debt/GDP ratio increasing from 82.8% at the end of 2025 to 84.2% in 2026, then to 85.3% by 2027.
For the bloc, the IMF forecasts economic growth of 1.1% this year. This estimate is revised upwards compared to that of July (0.9%), but unchanged compared to that of last April, supported by the increase in investments in artificial intelligence and the increase in defense spending.