Lagarde says Europe’s next economic test is delivering change

Bloomberg reports that according to European Central Bank President Christine Lagarde, the greatest challenge facing Europe’s rebounding economy is whether authorities can implement the changes needed to transform its potential.

Unprecedented monetary and fiscal aid and more vaccinations have brought the region to a point where it is “recovering more rapidly than we had anticipated,” she said. The euro area is now expected to reach pre-pandemic output levels before the end of this year.

A key test now hinges on how Europe acts to close the longstanding gap between northern and southern countries, reduce inequalities exacerbated by the pandemic, and aid the transition to a more environmentally-sustainable economy, Lagarde observed.

“The single biggest challenge always is to deliver,” she said. “It’s a question of directing the financing to the right investment, making sure that the economies are going to bounce back in the right shape, with the right structural reforms that will improve the productivity of those economies, that will position them to be more digital and to be be greener.”