Contribution by Piero Cipollone, Member of the Executive Board of the ECB, to the Centre for European Reform’s annual economics conference on “A European path to higher economic growth”

Ditchley Park, 15 November 2024

Thank you for inviting me to discuss whether a “hot” economy can drive productivity growth.

A lot has been said recently about the structural reasons for the productivity gap between Europe and the United States, notably in Mario Draghi’s recent report.^[1]

But this gap has worsened in the post-pandemic period, as productivity growth accelerated in the United States and stalled in the euro area (Chart 1). The hotter US economy largely explains this, whereas the euro area economy caught a cold as a result of the energy shock to which it was much more exposed.^[2]

So today, I want to discuss how a strong recovery in productivity is critical for the euro area. Beyond its short-term benefit, it is also essential to avoiding a further erosion of the euro area’s…