Christine Lagarde urges Europe to speed reforms and unlock growth

Speaking in Frankfurt on Friday, Nov. 21, 2025, she said Europe’s export‑led model is out of step with a world shaped by rising U.S. tariffs, Russia’s invasion of Ukraine and intensifying competition from China.

“Europe has become more vulnerable, also due to our dependency on third countries for our security and the supply of critical raw materials,” Lagarde said. “Global shocks have intensified… At the same time, our internal market has stood still.”

Her remarks followed the European Commission’s recent outlook, which described resilience but only moderate growth and called for action to boost productivity. Lagarde echoed that message, framing this year’s forum as a sharper reprise of themes she first set out in November 2019 when she urged Europe to “reset its ambitions.”

“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,” she said. “Another six years of inaction – and lost growth – would not just be disappointing. It would be irresponsible.”

Lagarde argued that governance, more than money, is the binding constraint. She called for wider “mutual recognition,” so a good or service deemed compliant in one member state is accepted across the bloc, including in the digital economy. She backed streamlining decisions via qualified‑majority voting in more policy areas, and supported use of so‑called “28th regimes,” where an EU‑level legal framework operates alongside national law to reduce fragmentation.

While highlighting vulnerabilities, Lagarde also noted tailwinds. Fiscal programs for defense and infrastructure, she said, are arriving “at the right time for Europe” and should have a measurable impact on growth. But she cautioned that Europe’s structural gaps rarely trigger sudden crises; instead they “erode growth quietly,” with each shock nudging the economy onto a lower path and compounding “lost productivity” over time.

Monetary policy featured only briefly. Lagarde said the ECB has cut interest rates by a cumulative 200 basis points from their peak and that easier financing conditions are feeding through to the real economy. The Governing Council, she added, will continue to adjust policy as needed to ensure inflation returns to target.

As GNcrypto wrote previously, on Nov. 17, 2025 ECB Governing Council member Olaf Sleijpen warned that a run on fast‑growing dollar‑linked stablecoins could force the ECB to revisit interest rates if forced selling of U.S. Treasury‑backed reserves strains Europe’s economy. He said financial‑stability tools should be used before any rate move. Sleijpen noted stablecoins have grown ~48% this year to $300B+ and could transmit U.S. shocks into the euro area; the ECB has held rates steady for five months after eight quarter‑point cuts halved the deposit rate to 2%.