For decades, the structural reforms recommended and mandated by European bodies have been proposals for policies that supposedly can bring more growth and jobs to European Union (EU) countries, unlocking their growth and innovation potential. A new study published by the European Commission (EC) reinforces this idea.
But the work of EC specialists also shows that there are currently countries that stand to gain far more than others from making progress on a selected set of structural reforms.
Portugal, which was subjected to a forced program of “structural reforms” during the troika years, now appears to be one of the EU countries least likely to benefit from further reforms of this type.
It always wins, but in the medium (five years) and long term, the desired effect is meager according to most indicators, compared to what is happening in other partners of the Union.
It is not the case that the country gains nothing, but the research commissioned by the EC by Philipp Pfeiffer, Janos Varga and Jan Veld shows that, for example, a tax reform (which makes it easier for the IRS to impose higher taxes on consumption, such as VAT and ISP) or a new labor reform to get more people into work or to be part of the active population, will still have considerable residual profits in twenty-five years’ time, which will only become relevant “in the long term”.
In both reforms, Portugal is always at the bottom of the ranking of potential gains, in terms of wealth (GDP – gross domestic product) and employment.
With the aforementioned tax reform (less burden on work, more on consumption), the Portuguese economy becomes the fifth less profitable. The estimated increase in GDP is only 0.2% over 20 years.
In the long run, the benefit to GDP is slightly higher, about 0.5%. Of the 27 countries surveyed, Austria, Denmark and Luxembourg have many more to gain and lead the ranking.
Read the full article and view the charts on Dinheiro Vivo
Source: DN
