Isabel Schnabel: Made in Europe

Speech by Isabel Schnabel, Member of the ECB Executive Board, at the Bank of Lithuania economics conference (Vilnius). She argues that the narrative of a Europe in decline is misleading: the GDP per capita gap with the US is largely explained by fewer hours worked and greater equality, although productivity growth remains weak. Her central proposal is a "28th regime" (EU Inc.), a single, digital and voluntary European corporate framework, adopted by regulation, so that firms can gain scale in the Single Market. It contains no monetary policy messages.

Key points

• If Europeans worked the same hours as Americans, euro area real GDP per capita would be 21% higher, closing about two-thirds of the gap with the US.
• The top 10% of earners take around 37% of after-tax income in the US, against an average of 27% in the euro area.
• The south (Spain, Portugal, Greece, Ireland) leads growth; Germany suffers from weak domestic demand rather than lost competitiveness, and its current account surplus remains well above what its fundamentals justify.
• Internal Single Market barriers are equivalent to tariffs of 96% for services and 67% for goods.
• She calls for the 28th regime to be adopted through a directly applicable regulation, with no room for national gold-plating or cuts to insolvency harmonisation; it would not touch labour law, social security or taxation.

Who is affected

Start-ups and scale-ups, venture capital and private equity investors, EU legislators negotiating the 28th regime proposal; a structural policy message with no direct effect on interest rates.

Deadlines

No deadlines; the 28th regime proposal is under negotiation (Commission Communication of 18 March 2026).

Plain-language version

Summary produced with artificial intelligence from the official publication. It may contain errors: always check the original document.