WASHINGTON: Declining incomes for European youth since the global financial crisis are dimming their prospects, and IMF chief Christine Lagarde on Wednesday urged governments to take action to ensure they do not fall further behind.
A new International Monetary Fund study showing that while average income inequality in the EU “has remained broadly stable there since 2007,” Lagarde said the data reveal “a worrying trend: the gap between generations in Europe has widened significantly.”
“Working-age people, and especially the young, are falling behind. Without action, a generation may never be able to recover,” Lagarde said in a blog post that accompanied the release of the report.
Strong European safety nets helped older workers, whose pensions were also protected, but incomes for young people declined due to high unemployment, which spiked to 24 percent in 2013, and one-in five are still looking for work.
IMF research shows that an employment gap can lead to longer-term wage loss or “scarring” that erodes potential earnings, she said. A worker with less experience is less likely to find a job, and those lost wages cannot be saved.
“Wages not earned and savings not put aside can be extremely difficult, if not impossible, to recover later in a person’s career,” she warned.
That gap also can lead to rising levels of poverty among younger workers.
The solution, Lagarde said, is replicating policies such as those used in Germany and Portugal, including apprenticeship and training programs, and exempting first-time job holders from social security taxes for three years.
Measures to “create jobs and incentivize work” could include reducing taxes on low-wage workers, investing in education and training, and protecting younger workers with unemployment and non-pension benefits, she said.
Another strategy would be to focus on wealth taxes, which she said are lower today than they were in 1970, including inheritance taxes, to fund programs for younger citizens.
“Let me underline again: this is not about one age group versus another,” Lagarde said. “Building an economy that works for young people creates a stronger foundation for everyone” since young people with jobs with productive contribute to social safety nets.
“We can help heal the scars of the crisis.”
IMF’s Lagarde urges action to improve prospects for EU youth
IMF’s Lagarde urges action to improve prospects for EU youth
Saudi banking sector outlook stable on higher non-oil growth: Moody’s
RIYADH: Saudi Arabia’s banking sector outlook remains stable as stronger non-oil economic growth and solid capital buffers support lending and profitability, Moody’s Ratings said, forecasting continued expansion despite liquidity constraints.
In its latest report, credit rating agency Moody’s said the Kingdom’s non-oil gross domestic product is projected to expand by 4.2 percent this year, up from 3.7 percent recorded in 2025.
In January, S&P Global echoed a similar view, saying banks operating in Saudi Arabia are expected to sustain strong lending growth in 2026, driven by financing demand tied to Vision 2030 projects.
Fitch Ratings also underscored the healthy state of Saudi Arabia’s banking system last month, stating that credit growth and high net interest margins are supporting bank profitability in the Kingdom.
Commenting on the latest report, Ashraf Madani, vice president and senior credit officer at Moody’s Ratings, said: “We expect credit demand to remain robust, but tight liquidity conditions will continue to limit the sector’s lending capacity.”
Madani added that operating conditions in Saudi Arabia will continue to support banks’ strong asset quality and profitability.
“The operating environment for banks remains buoyant, underpinned by a forecast increase in non-oil GDP growth, robust solvency and continued progress toward the government’s economic diversification goals,” he added.
Moody’s said authorities in the Kingdom are introducing business-friendly reforms to bolster investment and private sector activity, while implementing key development projects and preparing for major global events.
Saudi Arabia continues to advance reforms including full foreign ownership rights, simplified capital market registration procedures and improved investor protections, which could accelerate credit growth to 8 percent this year.
Problem loans are expected to remain near historical lows at around 1.3 percent of total loans, supported by ongoing credit growth, favorable operating conditions and lower interest rates, which collectively strengthen borrowers’ repayment capacity.
Retail credit risk remains controlled in Saudi Arabia because most borrowers are government employees with stable income streams.
“Concentration of single borrowers and specific sectors remains high although the growing proportion of consumer loans — now nearing 50 percent of overall sector lending — continues to reduce aggregate concentration risk,” added Moody’s.
The report said profitability is expected to remain solid among Saudi banks, supported by sustained loan growth and fee income.
Margins are expected to remain stable despite lower asset yields as banks take advantage of credit demand to widen loan spreads on existing and new lending.
Moody’s expects net income to tangible assets to remain stable at 1.8 percent to 1.9 percent this year.
The report added that Saudi banks benefit from a very high likelihood of government support in the event of any failures.
“We assume a very high likelihood of government support in the event of a bank failure. This is based on the government’s track record of timely intervention,” Moody’s said.
It added that Saudi Arabia remains the only G-20 country that has not adopted a banking resolution framework. However, it is the only Gulf Cooperation Council member to have introduced a law for systemically important financial institutions.
