A window of opportunity for Europe

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Authors’ note

Europe’s economic growth since the start of the financial crisis has been sluggish, and the region faces difficult long-term demographic and debt-level challenges. But a new McKinsey Global Institute (MGI) report, A Window of Opportunity for Europe, finds that the convergence of low oil prices, a favorable exchange rate, and quantitative easing has given these economies a chance to unlock new economic dynamism by undertaking ambitious reforms and stimulating job creation and investment.

Our report identifies 11 growth drivers in three areas—investing for the future, boosting productivity, and mobilizing the workforce—that can help Europe achieve its aspirations. We find that by scaling and speeding reform, mostly at the national level, and stimulating investment and job creation throughout the region, Europe could close its output gap, return to sustained growth of 2 to 3 percent a year over the next ten years, unleash investments of €250 billion to €550 billion annually, and create more than 20 million new jobs (exhibit).