Growth “is not a lost cause” if Europe has “vigorous and rapid reaction”

“ Neurope, we have talents, a good level of education and savings capacity, but we have not been able to mobilize it enough,” Christine Lagarde said in an interview with the French daily Ouest-France.

The ECB expects growth of 0.9% for the euro area in 2026.

Asked by the regional newspaper about the possibility of relaunching economic growth “on an aged and already very developed continent”, the former director-general of the International Monetary Fund (IMF) and former minister of the French economy considered the issue “legitimate”.

“Demography plays an important role. But it is possible to counterbalance it by improving productivity”, he said, adding: “Even with less workforce, if we are more efficient, we can generate growth. It is not a lost cause”.

“ We have to take over the situation and I think that the US policy, which has changed dramatically in recent years, must lead us to a vigorous and rapid reaction,” he said.

The ECB increased its reference interest rates on Thursday, a decision taken to help contain inflation, which “should remain significantly above the [its] target over a prolonged period”, but which increases housing credit, loans to businesses and the cost of public funding.

“The ECB’s mission is to ensure price stability,” explains Christine Lagarde, recalling the “ 2% medium-term inflation target”, far from the current level, of “3.3 % in the euro area with a significant shock”, partly related to the Middle East war, and “whose duration will probably be longer” than expected.