IMF warns Europe's debt could double to 130% of GDP by 2040

(ECNS) -- The IMF warned that Europe's sovereign debt could surge to 130% of GDP by 2040 – double today's level – unless the region enacts sweeping fiscal reforms.

In a Monday paper, IMF economists said piecemeal fiscal approaches are insufficient amid aging populations, the energy transition, and rearmament. Annual public spending could climb by 5% of GDP by 2040, with weak growth and low public appetite for tax hikes or spending cuts.

Policymakers must adopt "a more deliberate, forward-looking strategy" combining reforms and fiscal consolidation, they said. 

A "moderate" reform package would close only a third of the gap; pension overhauls would have the largest impact.