The European Central Bank published a speech by Executive Board member Isabel Schnabel on reviving growth in Europe, arguing that the euro area has fallen behind on productivity after missing the digital revolution and now faces competitiveness pressures from China alongside elevated energy prices. She framed the response around three closely linked pillars: integration, innovation and sovereignty. On integration, she pointed to internal barriers in the single market and incomplete financial integration, and argued that helping firms scale up could measurably raise productivity. She highlighted the concept of a “28th regime”, an EU-wide legal form intended to allow businesses, particularly start-ups and scale-ups, to expand across the EU more easily, with corporate, insolvency, tax and labour law as critical components. On innovation, she stressed the importance of risk capital, noting lower venture capital investment in the euro area than in the United States, and linked ageing populations and growing labour constraints to a greater need for immigration. On sovereignty, she argued for stepping up defence and technology and for de-risking supply chains and payment systems, alongside strengthening the euro’s international role.
European Central Bank 2025-10-20
European Central Bank’s Isabel Schnabel outlines integration, innovation and sovereignty pillars to revive euro area growth
ECB Executive Board member Isabel Schnabel discussed Europe's growth challenges, citing productivity lags from missed digital opportunities, competitiveness pressures from China, and high energy costs. She proposed integration, innovation, and sovereignty, emphasizing an EU-wide legal framework for business expansion, increased venture capital, and strengthened defense and technology sectors. Schnabel also stressed de-risking supply chains and enhancing the euro's international role.