Isabel Schnabel of the ECB highlights Europe’s strengths in quality of life and innovation, emphasizing the need for a 28th regime to unlock the full potential of the Single Market and boost economic growth.
Isabel Schnabel, Member of the Executive Board of the European Central Bank, delivered a speech at a lecture in memory of Eugen Böhm von Bawerk, organized by the Austrian Academy of Sciences.
She discussed the ongoing period of radical transformation driven by technological progress and geopolitical shifts, which are reshaping global growth, trade, and security.
Schnabel argued that despite narratives portraying Europe as in decline, the continent maintains high quality of life, strong institutions, social protection, and adaptability in crises. Europe can become stronger by unlocking the full potential of the Single Market.
A proposed 28th regime would provide firms seamless access to the entire European market, enabling scale, fostering innovation, and creating a genuine “Made in Europe” brand. This would help Europe compete as a unified economy rather than 27 separate markets.
Europe is distinguished by high life satisfaction, better health outcomes compared to the US, and resilient democratic institutions. However, the euro area’s GDP per capita is lower than other advanced economies, partly due to less work hours, more inclusive growth, and slower productivity growth.
European countries in the south have transformed from crisis economies to growth leaders, attracting investment, reducing unemployment, and advancing structural reforms, supported by instruments like Next Generation EU.
Germany faces challenges from demographic change, high energy costs, and global competition, but recent fiscal initiatives and structural reforms aim to boost domestic demand and potential growth. Germany’s strong industrial base and innovation capacity remain vital assets.
Europe’s main challenge is lack of scale, not ideas. Despite high innovation and research output, internal barriers hinder the full integration of the Single Market, especially in services, which account for 75% of gross value added.
The creation of a 28th regime—a unified European corporate framework—would allow companies to incorporate quickly and cheaply under a common set of rules, facilitating cross-border growth, attracting investment, and retaining European firms within Europe.
This regime would not harmonize social or fiscal policies but would reduce legal fragmentation, making Europe more competitive globally. It aims to foster innovation, productivity, and a strong “Made in Europe” brand, essential for future prosperity.
In conclusion, Schnabel emphasizes Europe’s vast potential, resilience, and shared values. The 28th regime offers a concrete way to address the scale issue, enabling innovation, growth, and a stronger European identity.
Thank you.
