EU Economic Gap with US Could Close by a Third with More Large Firms

The European Central Bank has pointed out that the EU's economic underperformance compared to the US could be significantly reduced if it had more large companies. According to ECB staff, if Europe had a similar distribution of large and small firms as the US, the productivity gap between the two regions would shrink by roughly one-third.

The current gap is significant: EU workers produce 20% less output per hour than their US counterparts, according to academic studies. The gap has been narrowing over time - they were almost on an even keel in 1995.

The ECB attributes the weaker productivity performance of European companies to several factors, including lower innovation, fragmented regulation, and less developed capital markets. This makes it harder for companies to grow and compete internationally.