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IMF Warns Europe Risks 130% Debt by 2040 Without Deep Cuts and Reforms

The fund says demographic pressures plus surging energy-security costs necessitate consolidation equal to 3.5%–5% of GDP.

IWF warnt vor wachsenden Schulden in Europa und fordert radikale Sparmaßnahmen.
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Overview

  • IMF Europe director Alfred Kammer warned in Brussels that unchanged policies could lift average public debt to about 130% of GDP within roughly 15 years and shave around 0.5 percentage points from annual growth.
  • The assessment calls for sustained fiscal consolidation of approximately 3.5%–5% of GDP to close a widening sustainability gap across EU public finances.
  • Pensions and healthcare are deemed unsustainable in their current form due to rapid ageing and rising costs, alongside mounting needs for energy security and defense.
  • The recommended strategy combines budget savings with structural reforms to lift growth, including labor‑market, education and migration changes, deeper single‑market integration, and higher EU investment in energy and defense.
  • Coverage notes a policy gap, with the IMF urging cuts to energy subsidies even as Germany is reported to plan an industrial electricity support scheme starting in January 2026.