EU-US economic productivity gap

Research from the European Central Bank indicates that the European Union could close approximately one-third of its productivity gap with the United States if its corporate structure mirrored the American distribution of company sizes. Currently, EU labor productivity is roughly 20 percent lower than that of the U.S., largely because the EU lacks a sufficient number of large-scale enterprises. While micro-enterprises account for twice the share of employment in the EU compared to the U.S., large EU firms generate roughly twice as much value added per worker due to economies of scale and higher R&D spending.

Mario Draghi has expanded on these concerns, warning that European productivity growth has fallen to approximately half the rate of the United States. He identified fierce competition from China and rising American protectionism as primary drivers of this shift. Draghi argued that without structural overhauls—such as accelerating the capital markets union, completing the single market, and investing heavily in artificial intelligence—European governments will struggle to finance rising public debt.

Systemic factors contributing to this decline include overregulation, high energy costs, fragmented capital markets, and lengthy permitting processes, all of which hinder the ability of European companies to scale globally.