Christine Lagarde calls for productivity reforms to boost Eurozone growth

European Central Bank President Christine Lagarde has stated that economic growth in Europe is ‘not a lost cause,’ provided there is a ‘vigorous and rapid response’ to improve productivity across the eurozone.

In recent interviews, Lagarde emphasized that while demographic shifts and an aging population pose significant challenges, they can be offset by increasing efficiency and effectiveness. She noted that Europe possesses significant assets, including high levels of education, talent, and savings capacity, but these resources are currently underutilized.

The ECB forecasts eurozone growth to reach 0.9% in 2026. These remarks follow the ECB's decision to raise interest rates to combat inflation, which has remained above the 2% target, recently sitting at approximately 3.3%. While intended to ensure price stability, the higher rates have increased borrowing costs for households and businesses, impacting mortgage access and corporate investment.