Lagarde: the European export model is falling apart, we need to focus on internal demand

Europe, whose post-war growth model based on exports "is falling apart", after the 1.5% increase in 2025 "continued to grow in 2026 despite the energy shock" thanks to internal demand. This can become a permanent growth engine by removing national barriers to capital markets, as it is doing "urgently", and to the size of companies.

The president of the ECB, Christine Lagarde, said this at a panel of the International Business Council of the World Economic Forum in Geneva. European growth was based on three pillars, Lagarde explained: the expansion of international trade, the strength of its manufacturing sector in medium technologies thanks also to low-cost energy, and a stable and rules-based international order.

Today, these pillars are eroding, with geopolitical tensions “bringing greater attention to critical dependencies and bottlenecks, as Europe faces growing security threats at its borders.”

Nonetheless - Lagarde told the WEF body which brings together the major multinationals - Europe "has substantial strengths on which to build" starting from the single market, which with 27 states and 450 million consumers is "the largest among the advanced economies".

According to the president of the ECB, who did not talk about monetary policy in her speech, "we already have many of the necessary ingredients for more solid long-term growth. Transforming the European dimension into a European scale would help innovative companies to grow in the internal market, allow new technologies to spread more quickly and increase productivity. In this way, it would help make domestic demand a more lasting growth engine".