Policies to overcome the crisis

Abstract

The EU economy experienced a deep economic slump. Monetary policy has eased and fiscal stimulus provided to revive the economy. Past experience shows that economic crises can provide momentum for introducing longer term structural reforms by demonstrating the limitations of existing policies and by weakening the resistance to change. The crisis has already triggered reforms to tackle weaknesses in the financial system which, if implemented effectively, should support financial stability and longer term growth prospects. Pursuing structural reforms in the context of the Lisbon strategy will also be important as the recession could result in a considerable loss of capacity in the European economy, adding to the pressures on long-term growth prospects that will soon come from population ageing.