ContextRemarks at the European Commission's College seminar on competitiveness in Leuven; the IMF advises and lends to its 191 members to keep the global economy stable.
Why it mattersArgues Europe's convergence engine is stalling and urges a finished single market, a 28th corporate regime and a savings and investment union, estimating EU productivity could rise 20 percent.
- Europe's economy and productivity are falling behind the United States.
- Regulatory fragmentation makes cross-border trade, labor mobility and energy costly.
- A banking and capital market split into 27 pieces keeps risk capital short.
- Complete the single market, with a 28th pan-EU legal regime adopted as a Regulation.
- Integrate energy grids and issue more joint EU debt for shared public goods.
- Build a unified savings and investment union and set a hard deadline.
Read the speech summary
1. A stalling convergence engine
Speaking to the Commission's competitiveness seminar in Leuven, Georgieva said Europe's convergence engine is stalling because the single market is unfinished and complacency about competing has set in, while threats mount: Russia's war to the east and a dented transatlantic alliance to the west, where a trade breakdown could cost the Union around 0.3 percent of output on top of half a point already lost.
2. Three hard facts
Europe's economy is shrinking in relative terms, since EU output once matched America's; it has lost its productivity lead in both technology and other sectors; and its firms are less competitive and struggle to grow, with promising startups moving abroad. The core objective must therefore be much faster productivity growth, through national structural reforms and completion of the single market.
3. Where regulation and fragmentation bite
Regulatory barriers to trade inside the Union are two to three times those between American states, moving workers is roughly eight times costlier, energy costs about double American levels, and a banking system split into twenty-seven pieces leaves a sixty-trillion-euro financial system holding timid money. She called for a deep regulatory clean-up, an end to national gold-plating, a 28th corporate regime created by Regulation rather than Directive, easier labour mobility through recognised qualifications, portable social security and flexible housing, one energy blueprint with interconnectors and faster permits, more joint EU borrowing for shared goods such as defence, and one unified financial system.
4. The payoff and three practical steps
Cutting internal frictions to American levels could raise EU productivity by about twenty percent, and Cyprus, Greece, Ireland, Portugal and Spain show reforms pay. She also backed rules-based trade and recent deals with Mercosur and India. Her three suggestions: make the single market a single-minded obsession under one empowered coordinator, set a hard deadline and plan backwards, and replace the image of a regulatory superpower with one that sweeps away obsolete rules, using AI for the clean-up.