AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

BRUSSELS: Cross border challenges are widening the gap between the output of Europeans and Americans, who have been moving ahead since the 1990s, a study by the International Monetary Fund showed.

The European Union’s GDP per capita measured with purchasing power parity is now around 72% of the United States, the IMF study said.

“Seventy percent of that gap is explained by lower productivity growth,” the head of the IMF’s European department Alfred Kammer said.

He said productivity in Europe grew more slowly than in the US because even though the two markets were comparable in size, the European one was highly fragmented, with trade barriers between the EU’s 27 countries that did not exist in the US.

“Therefore firms are targeting national markets rather than the larger European market. They are not actually exploring the scale of having that large market available and scale matters,” Kammer said.

If trade barriers between EU countries were lowered to the level that existed between US states, it would boost European productivity by seven percentage points, he said.

The second setback was the lack of a unified market for capital flows, which put EU companies at a disadvantage compared to US firms in finding financing through equity issues, leaving them to rely on bank loans.

European tech companies often do not have the traditional physical collateral that banks require for a loan, as their main assets are intellectual property and ideas.

Such companies normally seek funding from risk-taking venture capital firms, but these are underdeveloped in Europe and, where they do exist, they focus on national markets to avoid navigating the complexity of cross-border regulation.

Dollar holds firm at one-year high on Trump trade momentum

For the last 10 years the EU has been working on a Capital Markets Union to remove the various barriers to capital flows, a push that has intensified this year, but officials and diplomats are sceptical on how quickly progress can be made.

The third factor holding back EU productivity growth was that workers moving around the 27-nation bloc face much greater barriers than US workers moving from state to state, as well as a shortage of housing to buy or rent.

“The costs in Europe are eight times as high,” Kammer said. Pointing to the need to improve the EU’s single market for goods and services, he said: “The good news is that … the solution for much of this is in policymakers own hands.”

EU leaders asked the European Commission last week to prepare proposals for mid-2025 on how to make the single EU market better.

Comments

200 characters