Speech by Christine Lagarde, President of the ECB, at the 35th Frankfurt European Banking Congress
Frankfurt am Main, 21 November 2025
I would like to start with a quote:
“The world around us does not stand still. In recent years, the global environment has been transformed in ways that none of us could have imagined. We have seen the post-war global order fracturing, the rise of new – and some old – powers, rapid changes in technology, and an uncertain outlook for global trade and finance. Uncertainty abounds and conventional wisdom is being challenged, in politics, in diplomacy and in economics. And, unavoidably, this calls on Europe to consider its place in the world and reset its ambitions.”
This may sound like the kind of passage you have heard in many speeches this year. But, in fact, it is from the first speech I gave as ECB President – at this very conference in November 2019.[1] In that speech, I urged Europe to recognise that its old growth model – built on export-led growth – was coming under strain. And I called for a shift: to focus instead on developing our domestic economy as a source of resilience in an uncertain world.
My point was not to argue for protectionism or inward-looking policies. It was about realism: recognising the world as it is. And it was about acknowledging that the solution was already in front of us: the untapped potential of our own internal market. Six years on, that diagnosis has only become clearer and stronger. Europe has become more vulnerable, also due to our dependency on third countries for our security and the supply of critical raw materials. Global shocks have intensified, with rising US tariffs, Russia’s invasion of Ukraine and stiffening competition from China.
At the same time, our internal market has stood still, especially in the areas that will shape future growth, like digital technology and artificial intelligence, as well as the areas that will finance it, such as capital markets. And yet – as Galileo famously said – “it moves.” Europe continues to show resilience, revealing sources of strength that could grow if only we allow them to. So the question I would like to address today is: how do we move from being resilient but vulnerable to being genuinely strong? And what will it take to do so?
Vulnerabilities in Europe’s growth model
Europe’s vulnerabilities stem from having a growth model geared towards a world that is gradually disappearing.
We embraced globalisation more than any other advanced economy. In the two decades before the pandemic, external trade as a share of GDP almost doubled in the EU, while in the United States it barely moved.[2] This deep integration brought significant benefits: the number of jobs supported by EU exports[3] rose by 75%, reaching almost 40 million[4] – and for many years, this was a source of resilience. But today, that same openness has become a vulnerability. Exports have become a far less reliable engine of growth, reflecting the changing global landscape.
In mid-2023, for instance, ECB staff expected exports to grow by around 8% by mid-2025. In reality, they have not grown at all. And looking ahead, exports are projected to subtract from growth over the next two years.[5] This has been felt most acutely in countries with large manufacturing sectors, which have faced a prolonged slump in industrial production. As a result, growth across the euro area has become more uneven.
At the same time, this export-led growth model has resulted in a persistent current account surplus, increasing our reliance on other countries to generate our wealth – especially the United States. Euro area residents now hold nearly 10% of their total equity investments in US stocks, totalling €6.5 trillion – about two times the amount they held at the end of 2015.[6] This has been a rational response: US markets have delivered returns roughly five times higher than Europe’s since 2000. But it has created a vicious circle.
As US markets channel European savings into high-productivity sectors, the performance gap between our economies widens – prompting yet more European savings to flow across the Atlantic. The result is stagnating productivity at home and growing dependence on others. Finally, we now face a new form of vulnerability shared by all major economies: the weaponisation of dependencies on key raw materials and technologies.
ECB analysis shows that more than 80% of large euro area firms are no more than three intermediaries away from a Chinese rare earth supplier.[7] Recent supply shocks – for example, the shortage of automotive chips – have shown how a single chokepoint can stall entire sectors. These vulnerabilities do not trigger dramatic crises. Instead, they erode growth quietly, as each new shock nudges us onto a slightly lower trajectory. Over time, the cumulative effect of this “lost growth” and lost productivity becomes material.
In mid-2023, ECB staff projected that the economy would expand by 3.6% cumulatively by mid-2025. In reality, it has grown by only 2.3% – a shortfall equivalent to an entire year of growth in normal times, and productivity has turned out worse.
Sources of resilience in the domestic economy
Yet even as this changing world has exposed our vulnerabilities, 2025 has revealed Europe’s latent strengths. Our experience this year has shown that a resilient domestic economy can shield Europe against global turbulence. Three sources of domestic strength have helped cushion the impact of global shocks – our people, our potential and our policy.
First, our people.
We have benefited from an unusually strong labour market – one that has remained remarkably resilient even as growth has slowed. Typically, employment tends to grow at roughly half the pace of real GDP. Yet since the end of the pandemic, that relationship has been almost one-to-one in Europe.[8] This strength has created a virtuous circle: rising employment has supported consumption, which in turn has sustained services output and created still more jobs – particularly in labour-intensive sectors.[9]
Second, our potential.
Despite the notion that Europe is lagging behind in AI, European firms are moving quickly through the digital transition – and that is making investment more resilient to global uncertainty. While tangible investment has fallen in the past two years as manufacturing has weakened, intangible investment has risen sharply[10], keeping overall business investment broadly stable. Firms continue to invest in AI and digital infrastructure because, for any company that wants to stay competitive, these are no longer optional.
Third, our policy.
Fiscal policy, in particular, has acted countercyclically, buffering the economy rather than amplifying downturns, as we saw after the financial crisis. The fiscal packages now being implemented for defence and infrastructure – especially here in Germany – are coming at the right time for Europe and will have a measurable effect on growth. ECB staff estimate that higher government investment between now and 2027 will offset around one-third of the trade shock.[11]
The ECB is also playing its part by delivering price stability. We have cut interest rates by 200 basis points from their peak, and this is increasingly feeding through into easier financing conditions, which is helpful to support demand. We will continue to adjust our policy as needed to ensure that inflation remains at our target. Together, these three sources of resilience will help anchor growth at home. Domestic demand is set to become the main engine of expansion in the years ahead.[12] And this shift should also help narrow Europe’s current account surplus, which has already halved since its peak in 2018.[13]
The potential of the domestic market
This experience underlines the power of a resilient domestic economy, strengthened by open strategic autonomy. But it also exposes how much potential Europe continues to leave untapped. Today, despite more than 30 years of the Single Market, trade barriers within the EU remain too high in key areas.
ECB analysis finds that internal barriers in services and goods markets are equivalent to tariffs of around 100% and 65%, respectively.[14] Of course, we should not expect these barriers to disappear altogether: not all products are equally tradeable, and national preferences will always play a role. Policy can reduce certain frictions, but it cannot eliminate them entirely.[15]
But we should expect two things. First, that barriers are low enough for the sectors that will shape future growth to operate in a truly European market. This is clearly not the case for digital services, which will drive future innovation, and capital markets, which must finance it. Second, we should expect that being inside the Single Market offers a clear advantage over being outside it – in other words, that internal barriers are lower than external ones.
But this is also not currently the case for services: over the past 20 years, barriers to cross-border trade within Europe have been declining no faster than those faced by international firms seeking to operate here. This helps explain why, even though services now account for three-quarters of Europe’s economy, trade in services within the EU makes up only about one-sixth of GDP – roughly the same as our trade in services with the rest of the world.
This is a vast waste of potential – especially at a time when we must rely more on ourselves than on others. And the key point is that achieving these gains would not require radical change. Our analysis shows that if all EU countries were merely to lower their barriers to the same level as that of the Netherlands, internal barriers could fall by about 8 percentage points for goods and 9 percentage points for services.[16] If we only did a quarter of that, it would be sufficient to boost internal trade enough to fully offset the impact of US tariffs on growth.[17]
So the question we must now ask is: why are we not taking these steps?
Towards a new governance
The answer comes down to governance.
Fully harmonising all national laws and regulations is not realistic, nor is it always even necessary. But we lack effective tools to overcome barriers in the areas where progress matters most. I believe that three steps can help us move forward. The first is to revive the principle of mutual recognition – the very engine of liberalisation that powered the Single Market in the 1980s. Mutual recognition means that if a good or service is lawfully provided in one Member State, it should be allowed to circulate freely across the EU without the need to comply with every other country’s rules.
For example, in the EU there is a system of automatic recognition of professional qualifications for a number of sectoral professions. Such mutual recognition is also visible in financial services. Today, banks benefit from a passporting system: a single licence granted by the ECB enables them to provide services across Europe. But they still face different rules in foundational elements of the framework they operate in. Completing the banking union and deepening our capital markets would therefore be transformative, accelerating our path towards a truly integrated home market.
The same logic applies to the digital economy. Just as passporting embodies mutual recognition in banking, the mutual recognition of digital identities, trust services and other credentials would dramatically improve interoperability and eliminate hidden costs that are slowing the growth of Europe’s digital markets. The second step is to streamline decision-making – by extending qualified majority voting to the areas on which Europe’s future growth depends.
While qualified majority voting has been instrumental in driving integration, it has now largely reached its limits. In several critical fields, the continued requirement for unanimity in the European Council still prevents meaningful progress towards completing the Single Market. Taxation is the clearest example. Reforms such as harmonising VAT rules or establishing a common consolidated corporate tax base remain stuck because of national vetoes, leaving firms to navigate a maze of fragmented tax regimes. This fragmentation is especially damaging in a world of digital business models and intangible assets, where tax policy cannot be managed within national borders alone. For example, a digital platform providing cloud or software services across Europe must currently comply with 27 different VAT systems, each with its own definition of where value is created for tax purposes.
This complexity tilts the playing field towards large US firms that can absorb the associated costs – exactly the opposite of what Europe needs if it wants to nurture its own digital champions. Moving to qualified majority voting, using the passerelle clause where necessary – which allows the European Council to shift specific areas from unanimity to majority voting without changing the Treaties – could help break this deadlock. The third step is to take a more radical approach to simplification – and I do not mean simply trimming regulations through the Omnibus packages.
The fastest way to achieve genuine simplification is not by repealing existing rules, but by creating new “28th regimes” – optional EU legal frameworks that sit alongside national law rather than replacing it. These frameworks would allow firms to opt into a single European rulebook in specific areas, without requiring full harmonisation across all Member States. A prime candidate is company law[18], as proposed in the Letta and Draghi reports. A European company law regime would provide firms – in particular start-ups and scale-ups – with a simpler path to operate across borders, cutting through the complexity of 27 different national systems.
This approach has worked before. The EU Trademark (1993) and Community Design (2001) were both 28th regimes, offering optional EU-wide intellectual property titles alongside national rights. And both have been widely adopted, especially by firms active across multiple markets. Their success shows how an optional EU framework can reduce fragmentation and even generate healthy “systems competition”: when firms choose the EU rules, national systems are put under pressure to adapt. The European Commission is planning to present a 28th regime proposal as part of its renewed and welcome ambition to set clear deadlines for removing barriers identified in the “Single Market Roadmap to 2028”. But progress will depend on political will.
The first step may be modest – such as creating a digital business identity, giving firms a single trusted profile to register and operate online across the EU – but it could set a powerful precedent for broader reforms to follow. If we get this right, firms that could grow based on genuinely European regimes would also be best placed to access pan-European financing, helping to channel our vast savings into productive investment. Completing the Single Market – in the real economy and in finance – is therefore a mutually reinforcing project, strengthening Europe’s competitiveness and its capacity to invest in the future.
Conclusion
The world will not slow down for Europe – but we can decide how we move forward. If we make our Single Market truly single, Europe’s growth will no longer depend on the decisions of others, but on our own choices. This was my message six years ago. Today, that message has only grown more urgent. Another six years of inaction – and lost growth – would not just be disappointing. It would be irresponsible.
But the experience of this year should also give us confidence. It has shown that our economy has real sources of strength – and that, if we act, those strengths can be multiplied. The steps we need to take are not beyond our reach. They require no new treaties, no radical rewiring of our Union – only the political will to use the tools we already have.
If we can summon that will, Europe can move from being merely resilient to being genuinely strong.

Lagarde, C. (2019), “The future of the euro area economy”, speech at the Frankfurt European Banking Congress, Frankfurt am Main, 22 November.
External trade as a share of GDP rose from 26% to 43% in the EU, whereas it increased from 23% to just 26% in the United States.
To non-EU countries.
Rueda-Cantuche, J.M., Piñero, P. and Kutlina-Dimitrova, Z. (2021), EU Exports to the World: Effects on Employment, Publications Office of the European Union, Luxembourg.
See footnote 12 for details.
ECB (2025), “Euro area quarterly balance of payments and international investment position:fourth quarter of 2024”, statistical release, 4 April.
Banin, M., D’Agostino, M., Gunnella, V. and Lebastard, L. (2025), “How vulnerable is the euro area to restrictions on Chinese rare earth exports?”, Economic Bulletin, Issue 6, ECB.
Between the end of 2021 and mid-2025, cumulative employment rose by 4.1% – an increase of 6.3 million of people in employment – while real GDP increased by 4.3%. See Lagarde, C. (2025), “Beyond hysteresis: resilience in Europe’s labour market”, opening panel remarks at the annual Economic Policy Symposium “The policy implications of labour market transition” organised by the Federal Reserve Bank of Kansas City in Jackson Hole, 23 August.
Anderton, R., Aranki, T., Bonthuis, B. and Jarvis, V. (2014), “Disaggregating Okun’s law: decomposing the impact of the expenditure components of GDP on euro area unemployment”, Working Paper Series, No 1747, ECB, December.
Excluding volatile Irish assets.
Lagarde, C. (2025), “Trade wars and central banks: lessons from 2025”, keynote speech at the Bank of Finland’s 4th International Monetary Policy Conference, Helsinki, 30 September.
Cumulatively, ECB staff expect domestic demand to add 3.1 percentage points to growth between the second quarter of 2025 and the fourth quarter of 2027, while exports are projected to subtract 0.6 percentage points. See ECB (2025), ECB staff macroeconomic projections for the euro area, September.
Lagarde, C. (2025), “Opening remarks”, remarks at the panel on the “Global Economic Outlook” at the 40th Annual G30 International Banking Seminar, Washington DC, 18 October.
Bernasconi, R., Cordemans, N., Gunnella, V., Pongetti, G. and Quaglietti, L. (2025), “What is the untapped potential of the EU Single Market?”, Economic Bulletin, Issue 8, ECB (forthcoming). These “tariff equivalents” should be understood as measures of estimated trade frictions rather than actual policy-imposed tariffs. They reflect a combination of policy-related barriers and structural or cultural factors – such as consumer preferences and taste differences – that cannot be directly addressed through policy alone.
Head, K. and Mayer, T. (2025), “No, the EU does not impose a 45% tariff on itself”, VoxEU column, Centre for Economic Policy Research, 13 November.
Bernasconi, R. et al (2025), op. cit.
According to ECB simulations, this reduction in barriers would raise trade within the EU by around 3%, offsetting the 0.7 percentage point reduction in GDP growth between 2025 and 2027 caused by US tariffs and the related uncertainty.
So far, most legal reforms aimed at improving the business environment have relied on soft coordination, voluntary standards or limited harmonisation directives. This approach reflects national sensitivities in certain areas (e.g. company law, tax law and labour law) that remain primarily a Member State competence. However, previous attempts at soft convergence have only led to modest results.

 
Compliments of the European Central BankThe post ECB | From resilience to strength: unleashing Europe’s domestic market first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

70 projects are receiving over €600 million in EU grants to electrify and decarbonise road, maritime, inland waterway and air transport along the trans-European transport network (TEN-T). These projects will deploy alternative fuels supply infrastructure such as electric recharging stations, hydrogen refuelling stations, electricity supply and ammonia and methanol bunkering facilities across 24 EU countries.
Europe’s transport network will be electrified through the installation of more than 1 000 electric recharging points for light-duty vehicles with a capacity of 150 kW. 2 000 new recharging points for heavy-duty vehicles will deliver a capacity of 350kW and 586 recharging points with a 1 MW power output. Additionally, 16 European airports will electrify their ground handling services, making a key contribution towards reducing aviation emissions.
The hydrogen economy will also be boosted through the installation of 38 hydrogen refuelling stations for cars, trucks and buses. Finally, 24 maritime ports will benefit from the integration of greener technologies, including Onshore Power Supply (OPS), electrification of port services and ammonia bunkering facilities to fuel maritime vessels.
Commissioner for Sustainable Transport and Tourism Apostolos Tzitzikostas said:
“We are currently supporting 70 projects with €600 million in EU funding to accelerate the deployment of alternative fuels infrastructure across Europe. These investments will strengthen our competitiveness and help make the transition to zero-emission mobility easier and more accessible for all citizens.”
Paloma Aba Garrote, Director of the European Climate, Infrastructure and Environment Executive Agency added:
“This significant EU support for public and private organisations will accelerate the transport sector’s transition toward a sustainable future. With these new projects, more than €2.5 billion in EU grants has been allocated to alternative fuels projects through AFIF since 2021. This demonstrates EU’s ambition to make zero-emission mobility an everyday reality.”
Next steps
Following the approval of the 70 selected projects by the EU Member States on 13 November 2025, the European Commission will adopt the award decision. The European Climate, Infrastructure and Environment Executive Agency (CINEA) is starting the preparation of the grant agreements with the successful projects.
Due to the exhaustion of funds, the third cut-off will be cancelled. The Commission will now assess the potential reflows and subsequently prepare a new work programme and call for proposals in the coming months.
Background
The projects have been selected under the second cut-off of the 2024-2025 AFIF call which closed on 11 June 2025. The total awarded grant for these projects is €600 million: €505 million under the General envelope and €95 million under the Cohesion envelope.
A total budget of €1 billion was available under this Call: €780 million under the General envelope and €220 million under the Cohesion envelope. This call supports the objectives for publicly accessible electric recharging pools and hydrogen refuelling stations across the EU’s main transport corridors and hubs as set out in the Regulation for the deployment of alternative fuels infrastructure (AFIR), in the ReFuelEU aviation regulation and in the FuelEU maritime regulation.
AFIF also aims to improve alternative fuels infrastructure in ports by investing strongly in OPS. This facilitates the transition to renewable and low-carbon fuels by ships, which is also a main priority outlined in the Sustainable Transport Investment Plan. Regarding heavy-duty vehicle charging infrastructure, the Automotive Action Plan encourages the adoption of zero-emission vehicles by speeding up the deployment of necessary infrastructure.
 
Compliments of the European CommissionThe post European Commission | EU awards over €600 million to alternative fuel projects to boost zero-emission mobility first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

WASHINGTON, Nov. 18, 2025 – The World Bank Group today announced the appointment of Paschal Donohoe as Managing Director and Chief Knowledge Officer. Donohoe has served as Ireland’s Minister for Finance since January 2025, and as President of the Eurogroup of finance ministers since July 2020. His extensive experience spans both the public and private sectors, including nearly a decade at Procter & Gamble.
“Paschal brings more than twenty years of public service, and knows firsthand how good policies can unleash private capital mobilization, boost growth, and generate jobs,” said World Bank Group President Ajay Banga. “He also brings extensive knowledge of how investors, private sector, financial companies, technology firms, and others operate – from his near decade of experience in the private sector. This combination will be invaluable at ensuring the World Bank Group delivers more impact at scale.”
As Chief Knowledge Officer, Donohoe will lead on shaping, managing, and leveraging the institution’s Knowledge Bank—a force multiplier in the mission to fight poverty and improve quality of life in emerging markets and developing economies. He will ensure that the World Bank Group offers its sovereign and private clients proven solutions that can be used at scale, based on the best combination of expertise in regulations, technological advances, and development innovations. He will also be responsible for the World Bank Group’s strategic engagement with governments, civil society, foundations and philanthropies.
“It is a tremendous honor to take up this role at the World Bank, as Managing Director and Chief Knowledge Officer,” said Paschal Donohoe. “In more than twenty years as a public representative, my motivation has been to improve the lives of all of the people I represent and to foster engagement and cooperation as the best means of progressing vital issues.”
“By encouraging collaboration with, and between, governments and global institutions we can make progress and meet the challenges we face head-on. This has been a key and continuous theme of my public life and the work that I have done. The need for this has never been greater than it is today. I look forward to playing a central role at the World Bank in making the case for this cooperation at a time of great change in our world.”
Donohoe has been recognized with several honors, including European of the Year by the European Movement of Ireland, and the prestigious Chevalier de la Légion d’Honneur from the French Government.
He will start in the new role on November 24.
 
Compliments of the World Bank GroupThe post World Bank Group Appoints Paschal Donohoe as Managing Director and Chief Knowledge Officer first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

By Alessandro De Sanctis, Roberto A. De Santis, Daniel Kapp and Francesca Vinci
To bridge Europe’s investment gap, we need both public and private funding. Well-designed EU investment programmes can act as a major catalyst for private capital. As this blog post shows, every euro invested by the EU is matched by private finance, thereby doubling its impact.

Europe is facing an unprecedented need for investment to support its green, digital and defence transitions. On current estimates, this will require additional spending of around €1,200 billion a year between 2025 and 2031. That is a significant increase from the €800 billion estimated just one year ago.[1]
To meet this challenge, public and private financing are both essential.[2] Even under optimistic assumptions, the combined national fiscal space available for additional government spending and the existing EU resources would still leave a substantial funding gap of over €100 billion a year. EU investment programmes can play a decisive role in bridging this gap. In this blog post, we look at how these programmes can help unlock private investment and boost productivity. Among other findings, we show that every euro invested by the EU is matched by private capital, more than doubling its impact.
The role of EU programmes
Amounting to just 1% of the total gross national income of all the Member States, the EU budget is modest compared with its national counterparts. Its effectiveness in supporting investment thus depends on its ability to harness additional resources. With this in mind, various budget instruments have been designed not only to finance public investment but also to mobilise private capital.
The European Structural and Investment (ESI) funds are central to these efforts. For over 25 years, they have served as the EU’s primary investment instrument. These funds help drive progress by supporting infrastructure, innovation and business development across the Union. ESI funds fulfil a dual purpose. First, they promote regional convergence by channelling more resources to less developed regions. Second, they enhance competitiveness by financing investments aligned with key policy priorities, such as fostering innovation, advancing digital technologies and accelerating the green transition.
Moreover, ESI funding is designed to leverage additional financial resources thanks to mandatory national co-financing. This ensures that EU investments are consistently complemented by domestic funds.[3]
“Crowding in” versus “crowding out”
When a government increases investment, the effects can ripple across the economy. Projects such as high-speed rail systems, digital networks and renewable energy grids can enhance productivity and stimulate additional private investment. This phenomenon of public investment attracting private activity is known as “crowding in”. However, large-scale public investment can also increase the demand for resources, potentially leading to higher prices and greater borrowing costs. This can discourage private sector initiative – a phenomenon referred to as “crowding out”.
The actual outcome ultimately depends on the economic setting and the quality of the public investment. Well-planned and carefully executed projects can yield lasting productivity gains that outweigh possible short-term pressures on demand. Conversely, poorly designed investment projects are more likely to raise the risk of crowding out, thus undermining the intended economic benefits.
Evidence from recent research
In a recent study, De Santis and Vinci (2025)[4] provide empirical evidence on the impact of ESI funds on private investment across EU regions between 2000 and 2021. Using advanced econometric methods, their research finds significant crowding-in effects. Over a two-year period, every euro of ESI funding generated €1.10 of private investment and €0.10 of business research and development (R&D) (see Chart 1). These findings underscore the effectiveness of ESI funds as a catalyst for private investment and innovation. European investment contributes significantly to long-term economic growth, while also advancing the EU’s green and digital transitions.

Chart 1
Impact of ESI funds on private investment and R&D

a) Private Investment

b) Business R&D

(estimated effect of €1 of ESI funds)

(estimated effect of €1 of ESI funds)

Source: De Santis, R.A. and Vinci, F. (2025), “Private investment, R&D and European Structural and Investment Funds: crowding-in or crowding-out?”, Working Paper Series, No 3098, ECB, Frankfurt am Main, August. Illustrations replicate the results presented in Tables 4 and 5.
Notes: The estimation entails a local projection, regressing the change in ESI funding on the change in private investment and business research and development (both scaled by regional gross value added (GVA), with an instrumental variable approach. The change in predicted ESI funding is employed as the instrument. This is constructed, for a given region, as the average ESI funds absorption rate in a given year in regions with similar characteristics but located in other countries, multiplied by the ESI funds allocation to the region at the beginning of the programming period. The specification controls for previous-year regional GVA growth, the one-year lag of the dependent variable, contemporaneous changes in government spending (normalised by previous-year real GDP) and changes in each country’s ten-year sovereign yield, as well as year and region fixed effects. The top and bottom 2% of observations are winsorised. The sample covers 24 EU Member States over the period 2000-21. Confidence intervals are reported at the 90% level.

ESI funds boost firms’ productivity
A small share of ESI funds is allocated directly to firms. This gives us a unique opportunity to assess their impact on firm-level outcomes and see how effective the EU programmes are in improving firm performance.
So just how effective are ESI funds in enhancing investment and productivity?
An ECB paper by De Sanctis, Kapp, Vinci and Wojciechowski (2025)[5] looks at these questions, focusing on firms’ performance during the 2014-2020 programming period for EU funding. Their research reveals that ESI-funded firms steadily increased their capital stock by 15%. In other words, they continued to invest in and expand their fixed assets year after year. These firms also experienced long-lasting gains in productivity, which rose by 3% over four years (Chart 2, panels a and b). Moreover, the study finds that financially constrained firms increased their debt and capital to a greater extent. These findings suggest that ESI funds do indeed play a pivotal role in facilitating access to finance (Chart 2, panels c and d).

Chart 2
Impact of receiving ESI funds on firms’ outcomes

a) Capital

b) Total factor productivity

(percentage)

(percentage)

c) Heterogeneity: impact on capital for financially constrained vs non-financially constrained firms

d) Heterogeneity: impact on leverage ratio for financially constrained vs non-financially constrained firms

(percentage)

(percentage)

Source: De Sanctis, A., Kapp, D., Vinci, F. and Wojciechowski, R. (2025), “Unlocking growth? EU investment programmes and firm performance “,Working Paper Series, No 3099, ECB, Frankfurt am Main, August.
Notes: The estimation uses a local projection difference-in-differences approach to evaluate the impact of receiving EU funding through the ESI funds on firms’ outcomes, specifically changes in capital and total factor productivity. The control group consists of firms who have not yet received funding, with time measured relative to the year of first funding within the 2014–20 programming period. A coefficient of 0.01 corresponds to a 1% growth effect. Confidence intervals are reported at the 99% level. The regression includes controls for the lagged values of total assets, sales growth, current ratio, capital-to-labour ratio, sales-to-assets ratio and firm age, as well as year, sector and region (NUTS 2) fixed effects. The variable “finc” indicates financial constraints: “finc = 1” denotes constrained firms and “finc = 0” unconstrained firms. The leverage ratio is defined as the ratio of a firm’s debt to its total assets.

Policy takeaways
As we have seen, synergies between private investment and targeted public investment are critical to addressing Europe’s significant investment needs. ESI funds have proven to be an effective public investment tool, not only in driving infrastructure and regional development but also in enhancing firms’ investment capacity and productivity. Admittedly, there is still room for improvement, particularly in areas such as governance, the timely allocation of resources and the promotion of cross-border investment. And yet, the positive overall experience offers valuable lessons for future initiatives, and ESI funds can serve as an important benchmark when designing new programmes. As the EU prepares its 2028-34 budget, it is vital to prioritise investment programmes that crowd in private capital and boost productivity across Europe.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.
Check out The ECB Blog and subscribe for future posts.
For topics relating to banking supervision, why not have a look at The Supervision Blog?

See Bouabdallah, O., Dorrucci, E., Nerlich, C., Nickel, C. and Vlad, A. (2025), Time to be strategic: how public money could power Europe’s green, digital and defence transitions, The ECB Blog, ECB, 25 July.
While private capital remains a cornerstone of investment, the additional burden on national and EU budgets has risen sharply to €510 billion a year. It now accounts for 43% of total investment needs, largely owing to a heavier dependence on public budgets for defence spending.
The EU also uses other instruments to finance investment and innovation, many of which are based, to some degree, on the ESI model. The Next Generation EU programme, launched in response to the pandemic crisis, scaled up EU support for investment. The InvestEU programme, which started operating in 2021, aims to reduce the risks of financing innovative or long-term projects through the European Investment Bank and other partners by leveraging EU budget guarantees. The Horizon Europe programme, in place since 2021, supports frontier research and innovation that is often too risky for private finance alone.
De Santis, R.A. and Vinci, F. (2025), “Private investment, R&D and European Structural and Investment Funds: crowding-in or crowding-out?”, Working Paper Series, No 3098, ECB, Frankfurt am Main, August.
De Sanctis, A., Kapp, D., Vinci, F. and Wojciechowski, R. (2025), “Unlocking growth? EU investment programmes and firm performance“, Working Paper Series, No 3099, ECB, Frankfurt am Main, August.

 
Compliments of the European Central BankThe post ECB | Unlocking private investment and boosting productivity with EU programmes first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The OECD has released an update to the Model Tax Convention on Income and on Capital, providing new and detailed guidance on short-term cross-border remote work and on the taxation of income from natural resource extraction. The update, approved by the OECD Council, aims to provide greater certainty for governments and businesses worldwide.
The 2025 Update to the OECD Model Tax Convention on Income and on Capital clarifies when remote work across borders, such as from a home office, creates a taxable presence for business. This responds to the rise in such arrangements following the COVID-19 pandemic. The update also introduces a new alternative provision setting out how income from activities connected with the extraction of natural resources such as oil, gas and minerals should be taxed, a measure that is particularly relevant for developing and other resource-endowed economies. These changes aim to enhance tax certainty and support fair and efficient cross-border business taxation.
• Remote working: Clear guidance on how cross-border “home office” arrangements are treated under tax treaties, providing certainty for employers and employees.
• Natural resources: A new alternative tax treaty provision to ensure that income from activities connected with natural resources extraction is taxed where it occurs, reinforcing source-country rights and supporting resource-endowed developing economies.
• Other improvements: Additional refinements to enhance consistency in treaty interpretation and strengthen tax certainty.
“By clarifying the rules for remote work and reinforcing source taxation for extractive industries, this update helps countries and businesses navigate a rapidly evolving global landscape,” said OECD Secretary-General Mathias Cormann. “It also demonstrates the importance and continued relevance of multilateral co-operation in delivering practical solutions to modern tax challenges.”
Used by governments, tax authorities, businesses, and practitioners in both OECD and non-OECD Member countries, the OECD Model Tax Convention is a cornerstone of the international tax system, helping to reduce tax obstacles and promote cross-border trade and investment. These updates reflect the realities of a global economy where remote work and digital mobility are here to stay. They also underline the importance of multilateral co-operation in addressing shared challenges and ensuring that tax systems keep pace with economic change.
The updates published today will be reflected in revised condensed and full editions of the OECD Model Tax Convention to be released in 2026. A webinar presenting the 2025 Updates will be hosted by the OECD on 10 December featuring Manal Corwin, Director of the OECD Centre for Tax Policy and Administration, alongside OECD experts.
 
Compliments of the Organisation for Economic Co-operation and DevelopmentThe post OECD updates Model Tax Convention to reflect rise of cross-border remote work and clarify taxation of natural resources first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

The European Commission welcomes the provisional political agreement reached today between the European Parliament and the Council on the EU Talent Pool. Once in place, the EU Talent Pool will be the first EU-wide platform to facilitate international recruitment of jobseekers residing outside the EU. This is a key step in making the EU more attractive to skilled talent from outside the EU, and hence more competitive globally.
As part of the EU’s comprehensive approach to migration set out in the Pact on Migration and Asylum, the Talent Pool will offer opportunities for labour mobility and contribute to the EU’s competitiveness agenda  by helping Member States attract and retain global talent. Participation in the Talent Pool is voluntary for Member States.
This new platform will make it easier for employers across the EU to identify and recruit jobseekers from non-EU countries for occupations facing labour shortages within the EU. Jobseekers from third countries will be able to register their profiles on the platform and showcase their skills, qualifications, work experience and language knowledge. This will give EU employers access to a broader pool of talent. The job vacancies of EU employers from participating Member States will be available in the EU Talent Pool, allowing jobseekers to find jobs that match their skills.
The Talent Pool will also support the implementation of Talent Partnerships, a Commission initiative to match  the skills of workers from countries outside the EU with the labour market needs inside the EU, while engaging partner countries strategically on broader migration management cooperation including the prevention of illegal migration. Jobseekers who have developed their skills under a Talent Partnership will be able to flag them in their profiles on the EU Talent Pool platform.  In addition, the Talent Pool will also support the implementation of future European legal gateway offices, starting with the EU-India pilot, aimed to facilitated skilled labour mobility.
Next Steps
The regulation must now be formally adopted by the European Parliament and the Council. As soon as the regulation enters into force, the Commission will develop the platform, with the aim of making it operational as soon as possible.
Participating Member States will set up National Contact Points to support the implementation of the tool.
Background
The EU Talent Pool proposal was presented in 2023 as part of the Commission’s Skills and Talent Mobility package, delivering on President Ursula von der Leyen‘s commitment to make the EU more attractive to talent from outside the EU. It is also a deliverable of the Union of Skills and part of the comprehensive approach to migration under the Pact on Migration and Asylum.
 
Compliments of the European CommissionThe post European Commission | EU welcomes political agreement on the EU Talent Pool, making the EU more attractive to skilled talent from outside the EU first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

Inflationary Pressures Ease, But Geopolitical Tensions Cloud Outlook
WASHINGTON, October 29, 2025—Global commodity prices are projected to fall to their lowest level in six years in 2026, marking the fourth consecutive year of decline, according to the World Bank Group’s latest Commodity Markets Outlook. Prices are forecast to drop by 7% in both 2025 and 2026, driven by weak global economic growth, a growing oil surplus, and persistent policy uncertainty.
Falling energy prices are helping to ease global inflation, while lower rice and wheat prices have helped make food more affordable in some developing countries. Despite the recent declines, however, commodity prices remain above pre-pandemic levels, with prices in 2025 and 2026 projected to be 23% and 14% higher, respectively, than in 2019.
“Commodity markets are helping to stabilize the global economy,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics. “Falling energy prices have contributed to the decline in global consumer-price inflation. But this respite will not last. Governments should use it to get their fiscal house in order, make economies business-ready, and accelerate trade and investment.”
The global oil glut has expanded significantly in 2025 and is expected to rise next year to 65% above the most recent high, in 2020. Oil demand is growing more slowly as demand for electric and hybrid vehicles grows and oil consumption stagnates in China. Brent crude oil prices are forecast to fall from an average of $68 in 2025 to $60 in 2026—a five-year low. Overall, energy prices are forecast to fall by 12% in 2025 and a further 10% in 2026.
Food prices are also easing, with declines of 6.1% projected in 2025 and 0.3% in 2026. Soybean prices are falling in 2025 because of record production and trade tensions but are expected to stabilize over the next two years. Meanwhile, coffee and cocoa prices are forecast to fall in 2026 as supply conditions improve. However, fertilizer prices are projected to surge 21% in 2025, reflecting higher input costs and trade restrictions, before easing 5% in 2026. These increases are likely to further erode farmers’ profit margins and raise concerns about future crop yields.
Precious metals have reached record highs in 2025, fueled by demand for safe-haven assets and continued central bank purchases. The price of gold—widely viewed as a safe haven during times of economic uncertainty—is expected to increase by 42% in 2025. It is projected to increase by a further 5% next year, leaving gold prices at nearly double their 2015-2019 average. Silver prices are also expected to hit a record annual average in 2025, rising by 34% and further 8% in 2026.
Commodity prices could fall more than expected during the forecast horizon if global growth remains sluggish amid prolonged trade tensions and policy uncertainty. Greater-than-expected oil output from OPEC+ could deepen the oil glut and exert additional downward pressure on energy prices. Electric-vehicle sales, which are expected to increase sharply by 2030, could further depress oil demand.
Conversely, geopolitical tensions and conflicts could push oil prices higher and boost demand for safe-haven commodities such as gold and silver. In the case of oil, the market impact of additional sanctions could also lift prices above the baseline forecast. Extreme weather from a stronger-than-expected La Niña cycle could disrupt agricultural output and increase electricity demand for heating and cooling, adding further pressure to food and energy prices. Meanwhile, the rapid expansion of artificial intelligence (AI) and growing electricity demand to power data centers could raise prices for energy and for base metals like aluminum and copper, which are essential for AI infrastructure.
“Lower oil prices provide a timely opportunity for developing economies to advance fiscal reforms that promote growth and job creation,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group. “Phasing out costly fuel subsidies can free up resources for infrastructure and human capital—areas that create jobs and strengthen long-term productivity. Such reforms would help shift spending from consumption to investment, rebuilding fiscal space while supporting more durable job creation.”
The report’s special focus section examines the history of international commodity agreements in the context of today’s volatile commodity markets. It finds that while many past efforts—such as inventory controls, production quotas, and trade restrictions—helped stabilize prices for some commodities in the short term, few achieved lasting results. The most enduring international commodity agreement, the Organization of the Petroleum Exporting Countries (OPEC), has struggled to sustain market power especially when prices are high—because higher prices tend to draw new competitors into the market. Instead of using price-control schemes, the report recommends that countries foster more diverse and efficient production, invest in technology and innovation, improve data transparency, and promote market-based pricing to build long-term resilience to price volatility.
 
Compliments of the World Bank GroupThe post World Bank | Commodity Prices to Hit Six-Year Low in 2026 as Oil Glut Expands first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.