European Central Bank Executive Board member Isabel Schnabel said Europe's narrative of decline is misleading, pointing to the continent's high quality of life, strong institutions and social protection as evidence of deliberate societal choices that have produced better life outcomes than GDP per capita figures suggest. Speaking in Frankfurt, she noted that happiness and life satisfaction in Europe consistently rank among the highest globally, while a child born in Spain or Italy can expect to live five years longer than one born in the United States despite lower healthcare spending as a share of GDP.
Schnabel acknowledged that euro area GDP per capita adjusted for purchasing power ranks below other advanced economies, but argued the gap reflects three factors: Europeans work around 40 fewer days per year than Americans, income gains in the US are heavily concentrated among the top 10% of earners who capture 37% of national income versus 27% in the euro area, and productivity growth has persistently lagged peer economies over three decades due to less capital deepening, smaller firms and poor technology diffusion. She said if Europeans worked US hours, euro area real GDP per capita would be 21% higher, closing two-thirds of the income gap.
The ECB board member highlighted the transformation of southern European economies as proof that structural reforms deliver results, noting that Spain, Portugal and Greece are now among the fastest-growing euro area countries with projected potential growth above the average. Spain has become a renewable energy leader with significantly reduced wholesale electricity prices, while Ireland has emerged as a global hub for technology and life sciences. Schnabel credited political choices, social resilience and instruments like Next Generation EU for supporting investment and reforms in countries with limited fiscal space.
She warned that economic headwinds are now felt most acutely in the traditional core, citing stalled fiscal consolidation in France due to political resistance and Austria's recession in both 2023 and 2024 with only moderate growth in 2025. Schnabel argued that unlocking the Single Market's full potential through a "28th regime" would be a game changer, giving firms seamless access to the entire European market and allowing Europe to compete as one economy rather than 27, creating a true "Made in Europe" brand to convert innovation into economic growth.
Source: European Central Bank. Read the original report ↗