March 20, 2017 – The European Commission released 2017’s first Quarterly Report on the Euro Area, which focuses on: non-performing loans and the macroeconomic environment, investment in intangible assets, and price and non-price competitiveness. The report’s aim is to provide policy suggestions, including measures that could improve the ongoing economic recovery. The most important step would be to deal with the high amount of NPL held by banks, which is key to spurring lending, investment, and therefore growth. Investment in intangible assets would also help sustain potential growth, especially as non-price competitiveness gains importance for European companies. Low bank profitability is a big issue, since tackling its root causes would create the conditions for investment to rebound, after which aggregate demand should also improve. A crucial element here, again, is dealing with NPL.
- The original report is available from the European Commission.