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ECB-CONFIDENTIAL
Macroeconomic,
fiscal and financial
stability in a shock-
prone world 1
2nd BMWE Symposium on European Competitiveness,
14 September 2026
Isabel Schnabel
Member of the Executive Board
of the ECB
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Macroeconomic, fiscal and financial stability are closely interconnected
Macro stability Fiscal stability
Financial stability
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Sources: Eurostat, ECB staff projections (September 2026) and ECB
staff calculations based on ECB-BASE model simulations.
Notes: The vertical line indicates the start of the September 2026
projection horizon.
Latest observation: Q2 2026.
GDP growth
Euro area economy has remained resilient despite large shocks
Source: Eurostat.
Latest observation: July 2026.
Unemployment rate
Sources: Eurostat, ECB staff projections (September 2026) and
ECB staff calculations based on ECB-BASE model simulations.
Notes: The vertical line indicates the start of the September 2026
projection horizon.
Latest observation: August 2026.
HICP
(year-on-year percentage change) (percentage of labour force) (year-on-year percentage change) 6
6.5 7
7.5 8
8.5 9
2018 2020 2022 2024 2026
2018 2020 2022 2024 2026 2028
HICP inflation
September 2026 ECB staff projections
Milder scenario
Adverse scenario
Severe scenario
-16
-12
-8
2018 2020 2022 2024 2026 2028
GDP growth
September 2026 ECB staff projections
Milder scenario
Adverse scenario
Severe scenario
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-1.0
0.0
1.0
2.0
3.0
4.0
Jan-18 Jul-19 Jan-21 Jul-22 Jan-24 Jul-25 Jan-27
Realised DFR Pre-Iran war forward curve
Latest forward curve
Median sacrifice ratios
during tightening phases 4
Decisive monetary policy brought inflation back to target without causing a recession
(ratio, sample of 24 advanced economies)
0.0
0.1
0.2
0.3
0.4
0.5
1970-84 1985-98 1999-07 2008-19 2020-24
Source: Forbes, K., Ha, J. and Kose, M. (2025) “ Tradeoffs over Rate Cycles: Activity, Inflation
and the Price Level”, NBER Working Paper No. 33825.
Notes: Sacrifice ratio is the absolute value of the accumulated negative output gap relative to
the reduction in headline inflation from the peak to subsequent trough for each economy over
each tightening phase (including a 12-month lag after the tightening phases ends). HP filter as
gap measure.
Realised and implied DFR
(percent per annum)
Sources: Bloomberg and ECB calculations.
Latest observation: 10 September 2026.
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Sound regulation allowed banks to act as shock absorbers rather than amplifiers 5
Capital ratios of banks
(percent)
Sources: Bloomberg L.P. and ECB calculations.
Notes: Tier 1 capital ratio as a percentage of risk -weighted assets, based on an unbalanced
sample of up to 76 euro area banks.
Latest observation: Q2 2026.
Euro area banks’ return on equity (RoE)
(percent)
Sources: ECB supervisory data and ECB calculations.
Notes: The sample are all SSM significant institutions.
Latest observation: Q2 2026. 5 7 9 11 13 15 17 19 21 2007 2007 2008 2008 2009 2010 2010 2011 2011 2012 2013 2013 2014 2014 2015 2015 2016 2017 2017 2018 2018 2019 2020 2020 2021 2021 2022 2022 2023 2024 2024 2025 2025 2026
Tier1 ratio (median)
Interquartile range
Subprime
crisis
Sovereign
debt crisis
COVID-19
pandemic 0 2 4 6 8 10 12 14 16
Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Q1 2026
RoE (weighted average)
Interquartile range
COVID-19
pandemic
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Public balance sheets have absorbed shocks, while leverage declined in private sector
Source: IMF Spring 2026 Forecast.
Notes: EA includes the 21 countries of the euro area. Dashed lines indicate projection
period.
Latest observation: 2025, projection: 2031.
Public debt ratio
Sources: ECB (QSA) and ECB calculations.
Notes: Debt for firms is the sum of bank loans to firms, debt securities issued by firms and
insurance, pension and standardised guarantee schemes of firms minus intercompany
loans. Debt for households is the sum of bank loans to households and debt securities
issued by households.
Latest observation: Q1 2026.
Private debt ratio
(percent of GDP) (percent of GDP)
MAY
Please show for EA as a whole
private debt/GDP, if possible
split into corporate and HH,
1999 2004 2009 2014 2019 2024
Debt over GDP for firms Debt to GDP for households
20%
40%
60%
80%
100%
120%
140%
160%
1999 2003 2007 2011 2015 2019 2023 2027 2031Germany Spain France Italy EA
Projection
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Structural factors pose threat to stability and increase fiscal burden
Macro stability Fiscal stability
Financial stability
Structural factors
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Demands on public budget rise: defence, interest rates, ageing, climate change,…
Defence spending
(% of GDP)
Sources: COFOG, European Commission Spring 2026 Forecast and ECB staff calculations.
Notes: For the euro area, the dotted dark blue line represents the flexibility allowed under an activated
national escape clause (NEC), equivalent to 1.5% of GDP. This flexibility can be applied if a Member
State requests activation, based on their selected base year, and is added to the 2027 spending path
for 2028. For most of the 14 countries using the NEC, 2021 serves as the base year, while ES, BG and
GR use 2024. The dashed-dotted line assumes that all EA countries activate their NEC in 2026 and
increase spending linearly until 2028. The shaded blue area marks the projection period.
Latest observation: Preliminary 2027 data is available for all countries except IE, IT, CY, LV, LT and
MT. Data through 2025 is available for all euro area countries.
Government interest expenditures
(% of GDP)
Source: ESCB DSA based on European Commission Spring 2026 Forecast.
Notes: The figures refer to a hypothetical no fiscal policy change scenario where the structural
primary fiscal balance (i.e. excluding the cyclical impact of macroeconomic developments) remains
constant at 2025 level except for the expected change in ageing cost.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2014 2016 2018 2020 2022 2024 2026 2028
Germany France Italy Spain EA
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
EA IT FR ES DE
2025 Difference 2025 - 2028
Projection
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Potential growth is slowing with structural headwinds to global competitiveness
Global export market shares
(non-energy goods volumes,
percentage point change since 2010)
Sources: CPB, TDM and ECB staff calculations.
Notes: Long-run trends in export market shares in volume terms should be interpreted with caution. Euro area
export volumes and world import volumes are not fully consistent, as each statistical office employs specific
methodologies for deflating and outlier cleaning. Methodologies may differ in terms of outlier detection,
replacement and quality adjustment. Based on this, volumes (excluding energy) series used to compute export
market shares shown are calculated by taking CPB (Netherlands Bureau for Economic Policy Analysis) volumes
(in 2005 chain linked billion euros) and subtracting the share of energy exports. This share of energy exports is
based on TDM (Trade Data Monitor) values and includes HS2 sectors 25, 26, 27, 97, 98, 99.
Latest observation: 2025.
-8
-6
-4
2010 2013 2016 2019 2022 2025
Euro area United States China
Potential GDP growth
in the euro area
(annual change in % and percentage point contributions)
Source: European Commission Spring 2026 Forecast.
Notes: The projections start in 2026, with a cut-off date of April 2026.
-0.5
0.0
0.5
1.0
1.5
2.0
2.5 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Projection
Labour contribution Capital contribution
TFP contribution Potential growth
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Europe risks falling behind on innovation amid low venture capital investment
Patents by technology
(number of patent applications in 2021)
Source: OECD.
Notes: The chart reports the number of patent applications submitted to the World Intellectual
Property Organization.
Venture capital investment
(% of GDP)
Source: ECB calculations based on Pitchbook data.
Latest observation: 2025. 0
5,000
10,000
15,000
20,000
25,000
30,000
Biotech ICT AI Green
EU US China
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2013 2015 2017 2019 2021 2023 2025
United StatesEuro area
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Fiscal package supports growth, with impact depending on the allocation of spending
Germany: Impact of additional defence and
infrastructure spending on real GDP growth
(percentage points)
Germany: Impact of additional defence and
infrastructure spending on public debt
(percent of GDP)
Sources: Bundesbank Monthly Report – June 2026 Vol. 78 No. 6 and June 2026 Eurosystem staff macroeconomic projections (left chart), COM projections and ECB staff calculations (right chart).
Notes: Right-hand side chart is based on the European Commission’s Autumn Forecast up to 2027. Three scenarios are considered:(i ) Partial SGP compliance with investment-led package (blue:
100% productive public investment, positive impact on potential growth); (ii) partial SGP compliance with mixed composition ( yellow: 50% government consumption, lower growth impact);(iii) no
additional consolidation (red: same package composition as yellow, fiscal stance unchanged aside from the cost of the package). Under minimum SGP compliance, Germany is assumed to comply
with SGP requirements while still using the full flexibility (total allowed deviation of 0.6% GDP, national escape clause for extra +1.5% of defence spending).
50%
60%
70%
80%
90%
100%
110%
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
No Fiscal Adjustment - 50% Consumption share
Minimum Compliance - Investment driven package
Minimum Compliance - 50% Consumption share
0.0
0.1
0.2
0.3
0.4
0.5
0.6
2026 2027 2028
Defence spending Infrastructure spending
Total Total Euro area
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Debt stabilisation requires large fiscal adjustments amid shortening maturity structure
Source: Darvas, Z., Huertas, G., L. Welslau and J. Zettelmeyer (2025), “What will it take to
stabilise debt in advanced countries?”, Working Paper 28/2025, Bruegel.
Notes: SPB refers to structural primary balance.
Structural primary balance: adjustment
requirements and historical precedents
(% of GDP, percent) 0 6 12 18 24 30 36 0 1 2 3 4 5 6
Adjustment to reach SPB (% of GDP, lhs)
Relative frequency - own country (percent, rhs)
Government bill issuance
(% share of gross borrowing)
Sources: OECD (2026), Global Debt Report 2026: Sustaining Debt Market Resilience Under Growing
Pressure. 0 10 20 30 40 50 60 70
2015-2019 2025
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European growth agenda should foster integration, innovation and sovereignty
Source: Eurostat.
Latest observation: 2025.
Intra-EU and extra-EU trade
(% of GDP)
Goods Services
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Adoption speed as
other GPT
Observed speed of
adoption
TFP impact of AI
(increase in % over 10 years)
Source: ECB calculations based on CES data.
Notes: The blue bars indicate the range of estimates across scenarios
reflecting different assumptions about the share of the economy exposed
to AI, which may remain constant over time (at either a low or high level)
or increase as AI capabilities improve.
Historical
adoption speed
Share of energy consumption
from renewables in EU
(in %)
Source: European Environment Agency.
Notes: The dotted line presents a linear trajectory to
the minimum EU target for renewable sources of
42.5% by 2030.
Latest observation: 2025 20 25 30 35 40 45 50 55
2013 2017 2021 2025EU-27 Extra-EU 10 11 12 13 14 15 16 17
2013 2017 2021 2025
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2005 2009 2013 2017 2021 2025 2029
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