Isabel Schnabel, a member of the Executive Board of the European Central Bank, delivered a speech in Vilnius on 13 November 2026, challenging the narrative that Europe is in decline. Speaking at an Economics Conference hosted by the Bank of Lithuania, Schnabel argued that while Europe is often portrayed as squeezed between geopolitical rivals, this view is misleading. According to the European Central Bank, Europe maintains high quality of life standards grounded in strong institutions and social protection, providing a foundation that can be strengthened.
Schnabel identified the key to future growth as unlocking the full potential of the Single Market. She stated that Europe currently lacks scale, not talent or ideas, and that a unified regulatory framework would allow firms to access the entire market seamlessly. "A 28th regime would be a true game changer in this respect," Schnabel noted, according to the ECB document. This approach would enable Europe to compete as a single economy, facilitating the conversion of innovation into economic growth and establishing a distinct "Made in Europe" brand identity.
The speech addressed the transatlantic prosperity gap, noting that while the euro area ranks below the United States in GDP per capita, this metric does not fully capture living standards. Schnabel explained that Americans work approximately 40 days more per year than Europeans. If Europeans worked the same hours, real GDP per capita would be 21% higher. However, she emphasized that Europe’s lower average income reflects deliberate choices regarding leisure time and social protection, as well as greater income equality. In the US, the top 10% of earners account for 37% of national income, compared to 27% in the euro area.
Schnabel highlighted divergent economic trajectories within the currency union. Southern European nations like Spain and Portugal have emerged as growth leaders, attracting record investment and reducing unemployment, aided by common resources like Next Generation EU. Conversely, Germany faces stagnation due to subdued domestic demand and an export-driven model that is less viable in a fragmented world. Real private consumption in Germany has grown by less than 1% annually since 1999. To address this, Schnabel welcomed Germany’s largest fiscal impulse since the Second World War, arguing that targeted public investment can boost potential growth.