Fabio Panetta: Investing in Europe's future - the case for a rethink

Speech by Mr Fabio Panetta, Member of the Executive Board of the European Central Bank, at the Institute for International Political Studies (ISPI), Milan, 11 November 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
15 November 2022

Thank you to Jean Francois Jamet, Laurent Abraham, Jacopo Cimadomo, Ettore Dorrucci, Maximilian Freier, and Agnieszka Trzcinska for their contributions.


The Italian Institute for International Political Studies (ISPI) was founded 88 years ago in the middle of the Great Depression and during a period of geopolitical upheaval. At that time, the American New Deal marked the onset of fundamental change in the United States' economic system.

Similarly, the sheer size and type of shocks we are experiencing today call for changes to our growth model in Europe. They reveal the dependencies we have built up and the investments we have not made. Today we are paying a high price for this.

Nevertheless, the COVID-19 crisis has shown that by joining forces at European level, we can change course. The EU response, with the Next Generation EU (NGEU) recovery instrument at its core, was built on the premise that acting together to cushion the shock and invest in common objectives is in the best interests of all Member States. This allowed the European economy to recover swiftly.

Today I will argue that our response to the new shocks we are facing should include measures to make up for the lack of public investment in the period between the global financial crisis and the start of the pandemic. Specifically, we should aim to boost investment to fulfil objectives, such as energy security and the green transition, which constitute European public goods. This could take the form of a European fiscal capacity dedicated to investment that would build on the experience of NGEU.