Convergence: a narrative for

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Convergence: a narrative for Europe

12 June 2018

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1.Our economies

2

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GDP per capita (in €)

Source : Eurostat 3

0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 100.000

Luxembourg Ireland Denmark Sweden Netherlands Austria Finland Germany Belgium United Kingdom France Italy Spain Malta Cyprus Slovenia Portugal Czech Republic Estonia Greece Slovakia Lithuania Latvia Hungary Poland Croatia Romania Bulgaria

2007 2017 EU 27 average, 2007 EU average 27, 2017

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GDP per capita (in €) in PPP

Source : Eurostat 4 0

10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000

Luxembourg Ireland Netherlands Austria Denmark Sweden Germany Belgium Finland United Kingdom France Italy Malta Spain Czech Republic Cyprus Slovenia Portugal Slovakia Lithuania Estonia Poland Greece Hungary Latvia Croatia Romania Bulgaria

2007 2016 EU 27 average 2007 EU 27 average 2016

0 0,05 0,1 0,15 0,2 0,25 0,3

sd(log GDP per capita, PPP)

EU 27

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Unemployment rate % σ-convergence

Source : Eurostat 5

0,00 1,00 2,00 3,00 4,00 5,00 6,00

SD (Unemployment rate)

EU 27 0

5 10 15 20 25

Greece Spain Italy Croatia Cyprus France Portugal Latvia Finland Slovakia Belgium Lithuania Sweden Ireland Slovenia Bulgaria Estonia Denmark Luxembourg Austria Poland Romania Netherlands United Kingdom Hungary Malta Germany Czech Republic

2007 2017 EU 27 average, 2007 EU 27 average, 2017

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Long-term unemployment rate (% active population)

Source : Eurostat 6 0 2 4 6 8 10 12 14 16 18

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Current account as % of GDP

Source: Ameco, European Commission and Fred (Federal Reserve of St. Louis)

-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

DE FR IE IT GR PT ES NL Other EA US

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Debt in % of GDP

(households and non-financial corporates, government)

Notes: * Private debt data for Ireland are based on central bank statistics (CCB indicators), which are based on national bank credit data, thereby excluding debt of foreign affiliates. ** Private debt data for US are based on World Development Indicators and GG debt on Fred statistics.

Sources: Eurostat, Irish National Central Bank Statistics, World Development Indicators, Fred.

0 50 100 150 200 250 300 350 400

LU CY IE* NL DK SE BE PT UK FI ES FR MT GR AT EE IT BG HR DE SK LV PO SI HU CZ LT RO US**

% GDP

2000 Peak

Average EU 27

Average EU 27, government debt

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2.The way we are organised

9

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Ease of doing business –Rankings, 2017

10 3

10 12 13 16 17 19 20 22 27 28 29 30 31 32 37 39 45 46 48 50 51 52 53 63

67 84

Denmark Sweden Estonia Finland Lithuania Ireland Latvia Germany Austria Poland Spain Portugal Czech Republic France

Netherlands Slovenia Slovak Republic Romania Italy Hungary Bulgaria Croatia Belgium Cyprus Luxembourg Greece Malta Source: World Bank, Ease of Doing Business.

Economies are ranked on their ease of doing business, from 1–190. The ranking does not include EU countries only.

A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

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Time required to enforce a contract, (days)

World Bank, Doing Business. Data for Cyprus, Luxembourg and Malta non available for 2003

11 0

200 400 600 800 1000 1200 1400 1600 1800

Greece Slovenia Italy Cyprus Slovak Republic Poland Croatia Ireland Czech Republic Hungary Bulgaria Portugal Netherlands Romania Spain Belgium Malta Germany Denmark Finland Sweden Latvia Estonia United Kingdom Austria France Lithuania Luxembourg

2003 2017

EU 27 Average, 2003 EU 27 Average, 2017

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Level of internet access,

% households

Source: Eurostat 12

0 10 20 30 40 50 60 70 80 90 100

Netherlands Denmark Luxembourg Sweden Finland United Kingdom Germany Austria Ireland Estonia Belgium France Malta Spain Czech Republic Slovenia Poland Hungary Slovakia Italy Latvia Cyprus Portugal Croatia Romania Lithuania Greece Bulgaria

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Female participation rate,

% female labour force

Eurostat

13

0 10 20 30 40 50 60 70 80 90

Sweden Lithuania Germany Estonia Denmark United Kingdom Netherlands Latvia Finland Austria Czech Republic Portugal Slovenia Luxembourg Bulgaria Ireland France Cyprus Hungary Slovakia Belgium Poland Romania Spain Croatia Malta Italy Greece

2007 2017 EU 27 Average 2007 EU 27 Average 2017

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Gender pay gap

% average gross hourly earnings of men

14 Source: Eurostat

The indicator measures the difference between average gross hourly earnings of male paid employees and of female paid employees as a percentage of average gross hourly earnings of male paid employees. The indicator has been defined as unadjusted, because it gives an overall picture of gender inequalities in terms of pay and measures a concept which is broader than the concept of equal pay for equal work. All employees working in firms with ten or more employees, without restrictions for age and hours worked, are included.

0 5 10 15 20 25 30 35

Estonia Czech Republic Germany United Kingdom Austria Slovakia Portugal Finland Latvia Netherlands France Denmark Lithuania Bulgaria Spain Hungary Cyprus Sweden Malta Slovenia Poland Belgium Luxembourg Italy Romania Greece Ireland

2007 2016 Average EU27, 2007 Average EU27, 2017

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Foreign-born population, % total population

15 Source: Eurostat

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

40,0%

45,0%

50,0%

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3. Preparing for the future

16

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PISA Scores, Mathematics

17 Source: OECD

0 100 200 300 400 500 600

Estonia Netherlands Denmark Finland Slovenia Belgium Germany Poland Austria Sweden France Czech Republic Portugal Italy Spain Luxembourg Latvia Malta Lithuania Hungary Slovak Republic Croatia Greece Romania Bulgaria Cyprus

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PISA Scores, Reading

18 Source: OECD

0 100 200 300 400 500 600

2006 2015 EU-27 average, 2015

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Financial Literacy Scores, 2015 (%)

19 50

0 10 20 30 40 50 60 70 80

DK SE UK NL DE FI CZ IE BE EE HU LU AT FR ES SK LV GR MT SI HR PL LT IT CY BG PT RO Financial Literacy Score EU 27 average

Source: S&P Global FinLit Survey, 2015

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Renewable energy share targets and progress as of 2015

20 Note: 'Renewable energy share' is the share of energy from renewable sources in gross final consumption of energy.

Source: Bruegel based on European Commission 0%

10%

20%

30%

40%

50%

60%

Renewable energy share

RES share in 2015 Amount missing from country-specific 2020 target Amount exceeding country-specific 2020 target EU 2020 target

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Old-age dependency ratio

% of GDP, change 2020-2050

21

54%

-35%

-15%

5%

25%

45%

65%

85%

105%

SK ES PL IE PT GR CY RO SI BG LT AT DE EE LV HR HU CZ IT NL LU UK MT FR BE DK FI SE

Old-age dependency ratio (change 2020-2050)

EU28, old-age dependency ratio (change 2020-2050)

Source: Demertzis and Batsaikhan (2018)

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Pension expenditure, 2015, % GDP

22 0

2 4 6 8 10 12 14 16 18 20

IE LT LV MT RO EE BG CZ SK HU LU HR CY SI SE UK DE PL ES BE NL FI DK AT PT FR IT EL

Old age pension Anticipated old age pension

Partial pension Disability pension

Early retirement benefit due to reduced capacity to work Survivors pension Early retirement benefit for labour market reasons EU 27 Average

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Youth unemployment rate, % active population

Source : Eurostat 23 0 5 10 15 20 25 30 35 40 45 50

Greece Spain Italy Croatia Cyprus Portugal France Finland Belgium Slovakia Romania Sweden Latvia Luxembourg Poland Ireland Lithuania Bulgaria United Kingdom Estonia Slovenia Denmark Hungary Malta Austria Netherlands Czech Republic Germany

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Net fixed capital formation,

% GDP

Source : Eurostat 24 -10%

-5%

0%

5%

10%

15%

20%

25%

MT SE CY EE LT PL AT LU BG CZ HU UK HR FR NL RO DK FI BE ES DE SK IE IT PT SI LV GR 2007 2017 EU 27 average, 2007 EU 27 average, 2017

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The Rule of Law

Source: World bank

25

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The Rule of Law

Source: World bank

26

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The Rule of Law

Source: World bank

27

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Institutions matter

Institutional quality and GDP per capita PPS Institutional quality and ease of doing business

Source: World Bank and AMECO, 2016 Source: World Bank Ease of doing business (DB2018) and World Governance Indicators

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Thank you!

29

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Income Inequality: Gini Coefficient

(disposable income)

Source: World Bank, Poverty and Equity database.

(31)

Greenhouse gas emissions reduction targets and progress as of 2015

31 -30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Greenhouse gas emissions reduction (relative to 2005)

Emissions reduction in 2015 Amount missing from 2030 target Amount exceeding 2030 target

EU 2020 target EU 2030 target 2020 target

Note: 'GHG emissions' are emissions from non-ETS sectors (i.e. those covered by the Effort Sharing Decision).

Emissions reduction are measured relatively to 2005 levels.

Negative emissions reductions in 2015 implies that emissions were higher in 2015 compared to 2005.

Source: Bruegel based on European Commission