This proposal sets out a structural econometric approach to the problem of real convergence between the principal European economies. This is a key policy issue in the run up to EMU. The proposal builds on work already undertaken by myself on the UK economy which forms the basis, for the London Business School model of the UK economy. A structural approach to the problem maximizes the efficiency of estimation. It also provides a relatively straightforward interpretation of the results since the work is based on explicit microfoundations. Such an approach also enables the possible the use of the work for forecasting and scenario analysis in the context of a macroeconometric model.