ECB's Schnabel urges action to boost Europe's growth potential
Isabel Schnabel, Member of the Executive Board of the European Central Bank, delivered a speech on January 28, 2026, outlining strategies to foster economic growth in Europe. She addressed the need to overcome challenges such as declining potential growth and digital transformation gaps.
Three Pillars for Europe's Growth
Isabel Schnabel emphasized that Europe's potential GDP growth has significantly lagged behind other advanced economies, a trend exacerbated by a missed digital revolution and declining global export market shares.
To address this, she outlined three interconnected pillars essential for fostering sustainable growth: Integration, Innovation, and Sovereignty.
Integration aims to deepen the single market and facilitate cross-border scaling for European firms.
Innovation is critical for boosting productivity and requires substantial investment in risk capital, especially in green and digital technologies, alongside addressing demographic shifts.
Sovereignty focuses on enhancing strategic autonomy in defence and technology, de-risking critical supply chains, and establishing the digital euro as a public anchor.
Behind Europe's Growth Lag
Isabel Schnabel emphasized that Europe's potential GDP growth has significantly lagged behind other advanced economies, partly attributed to a missed digital revolution.
This is evident in the comparatively lower real IT-related capital stock in the euro area versus the United States.
Additionally, Europe's global export market shares have fallen sharply, with China emerging as a key competitor.
The rising fiscal burden from government expenditures, particularly interest payments, further underscores the urgency to revive growth through structural reforms.
These factors highlight the need for the outlined pillars of Integration, Innovation, and Sovereignty.
Ambitious Vision, Hard Road Ahead
Schnabel's speech offers a clear diagnosis of Europe's structural growth challenges, moving beyond cyclical factors.
While the proposed pillars of Integration, Innovation, and Sovereignty are conceptually sound, their implementation faces significant political hurdles and requires sustained commitment.
The true challenge lies in translating these ambitious frameworks into concrete, coordinated policy actions to genuinely reverse Europe's long-term growth trajectory.
Source: Isabel Schnabel: How to foster growth in Europe
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