Many EU countries have weak growth potential and high demographic pressures, according to Moody's Investors Service. EPA
Many EU countries have weak growth potential and high demographic pressures, according to Moody's Investors Service. EPA
Many EU countries have weak growth potential and high demographic pressures, according to Moody's Investors Service. EPA
Many EU countries have weak growth potential and high demographic pressures, according to Moody's Investors Service. EPA

Pace of reform in EU losing momentum, Moody's says


Fareed Rahman
  • English
  • Arabic

The pace of structural reform in the European Union is losing momentum due to its ageing population and high public debt, according to a report from Moody's Investors Service.

The study stressed the importance of reforms in the labour market and the need to boost product and services sectors. Support for innovation was also found to be generally weaker in EU countries compared to global peers.

"Europe faces a significant structural reform challenge," said Sarah Carlson, senior vice president at Moody’s and the report's co-author.

"In the face of often-high levels of public indebtedness and ageing populations, the future creditworthiness of European sovereigns will partly reflect decisions that governments take on reform in the near-term,” Ms Carlson said.

“Structural reform boosts economic growth and increases wealth levels,” the report said.

“Countries which successfully implement structural reform build economic resilience to structural economic shifts, such as those caused by technological change, and are more likely to enjoy stronger economic growth over time. They also create an environment that is supportive of innovation, which can also raise potential output.”

While countries in the Nordic region and United Kingdom need relatively limited labour market reforms as a result of changes implemented decades ago, Spain, France, Italy and Portugal require action despite measures introduced during or since the sovereign debt crisis in the eurozone, Moody's said.

Labour market segmentation, including a high reliance on temporary contracts to supplement permanent employment, is a significant issue in a number of EU countries. It has worsened the plight of younger workers who are disproportionately kept on temporary deals.

Some member states have more than 15 per cent of their labour force on temporary contracts. In Spain, Slovenia, Poland, Portugal, Italy and Croatia, younger workers constitute more than 60 per cent of temporary employees.

“This can have quite lasting implications for a country's economic strength – it weakens labour market equity, lowers worker productivity and concentrates the burden of market adjustments on those employed on temporary contracts.”

In some countries, such as France, the contribution of services to economic activity is more or less in line with levels in the US, but other EU countries – most notably Germany – are well behind, the report said.

German services are strictly regulated by international standards, which is one of the reasons why the sector has had fairly weak productivity growth compared to manufacturing, Moody's said.

The retail sector also performs particularly badly in much of the EU, said the report, listing significant barriers to market entry in many countries, including burdensome authorisation processes, restrictive requirements governing shop size and location, and operating restrictions on discounts, promotions or store hours as reasons.

“Almost all member states would need to record a sizeable productivity boost over the next decade to meet the European Commission's [growth] assumptions, relative to the actual rates observed over the last 20 years,” Moody’s said.

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Al Wasl 1 (Caio Canedo 90 1')

Al Ain 2 (Ismail Ahmed 3', Marcus Berg 50')

Red cards: Ismail Ahmed (Al Ain) 77'

Key facilities
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  • Premier League-standard football pitch
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Director: Rajkumar Hirani

Cast: Ranbir Kapoor, Vicky Kaushal, Paresh Rawal, Anushka Sharma, Manish’s Koirala, Dia Mirza, Sonam Kapoor, Jim Sarbh, Boman Irani

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Siblings: five brothers and one sister

Education: Bachelors in Political Science at the University of Minnesota

Interests: Swimming, tennis and the gym

Favourite place: UAE

Favourite packet food on the trip: pasta primavera

What he did to pass the time during the trip: listen to audio books

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Engine: Dual-motor all-wheel-drive electric

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Company Profile:

Name: The Protein Bakeshop

Date of start: 2013

Founders: Rashi Chowdhary and Saad Umerani

Based: Dubai

Size, number of employees: 12

Funding/investors:  $400,000 (2018) 

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UAE currency: the story behind the money in your pockets
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What the law says

Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.

“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.

“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”

If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.

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The specs

Engine: 5.0-litre supercharged V8

Transmission: Eight-speed auto

Power: 575bhp

Torque: 700Nm

Price: Dh554,000

On sale: now

Sole survivors
  • Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
  • George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
  • Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
  • Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
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Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed 

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Electric scooters: some rules to remember
  • Riders must be 14-years-old or over
  • Wear a protective helmet
  • Park the electric scooter in designated parking lots (if any)
  • Do not leave electric scooter in locations that obstruct traffic or pedestrians
  • Solo riders only, no passengers allowed
  • Do not drive outside designated lanes
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