Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Mark Schrörs and Alexander Weber on 25 November 2024

27 November 2024

Euro area business activity slipped deep into contractionary territory in November, according to the S&P Purchasing Managers’ Index (PMI). Is a soft landing becoming less likely and is the risk of stagnation or even recession increasing?

I wasn’t all that surprised by the PMI data, given all the uncertainty we’re facing with the US elections and political issues in some of the larger euro area countries. In combination with hard data, the surveys suggest that the euro area economy is still stagnating. It’s facing a combination of cyclical and structural weaknesses in a very volatile and uncertain global environment. On the cyclical side, we continue to expect a consumption-driven recovery helped by rising real incomes and falling interest rates. But we’re also facing structural headwinds, and that could mean that…