The European Central Bank published a speech by Executive Board member Isabel Schnabel titled “Escaping stagnation”, which frames the euro area’s recent weak growth as being driven by structural constraints on productivity and competitiveness. The remarks focus on why the euro area has lagged peers and what policy areas could help lift medium-term growth. The speech points to the euro area’s failure to fully reap the productivity gains of the digital revolution, with a widening gap in IT-related capital stock versus the United States and digitalisation benefits accruing to a limited set of firms. It also highlights that recent weakness has been concentrated in a small number of countries, including Germany, and argues the euro area’s export-led model faces headwinds from higher energy prices relative to the United States, China’s move up the value chain, and elevated trade policy uncertainty. Potential growth supports cited include green innovation and technological leadership, increased cross-border trade in services and deeper financial market integration, measures to address labour scarcity linked to demographics and changing preferences, and public investment aimed at boosting productivity while maintaining public debt sustainability.
European Central Bank 2025-02-11
European Central Bank’s Schnabel sets out digitalisation, competitiveness and labour supply priorities in speech on escaping stagnation
The European Central Bank released a speech by Executive Board member Isabel Schnabel, titled “Escaping stagnation”, addressing the euro area's weak growth due to structural productivity and competitiveness constraints. Schnabel highlights the region's lag in digital productivity gains compared to the U.S., with challenges in countries like Germany. She suggests growth supports, including green innovation, technological leadership, and deeper financial market integration.