The European Union (EU) Regular EconomicReport (RER), is an annual publication of the World BankGroup and covers economic developments, prospects, andeconomic policies in the European Union. The report findsthat while growth is back on track, the bottom 40 percent ofthe income distribution is lagging behind in the EU’srecovery. This is likely caused by the interaction betweeninvoluntary increases in part-time work, technologicalchange, a decline in the bargaining power of labor, anageing population and weak overall productivity growth.However, absolute poverty (estimated using a poverty linedefined specifically for this report) should continue tofall in Europe, driven by strong poverty reduction incentral Europe. The special section of this Regular EconomicReport assesses the impact of the Common Agricultural Policyon inclusive growth - past and present. The report arguesthat the process of structural transformation in the EU islargely on track, with the decoupled and non-marketdistorting components of the CAP playing a positive role inthe reduction of poverty and the creation of better jobs forfarmers. The gap between agricultural incomes and incomes inother sectors is also closing, while across the EUagricultural incomes are converging with each other. Thesuccessful transformers, about half of the Member States,have turned agriculture into a key sector for sharedprosperity in rural areas: agriculture is no longerassociated with poverty. The other half—the incompletetransformers—still have some way to go, which includesensuring that the basic conditions for agriculture to thriveare in place: roads, advisory services, secure propertyrights, and access to health and education. This will ensurea more efficient use of CAP resources.
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