EU Productivity Gap Narrows if Large Firms Dominate

The European Central Bank (ECB) has released an analysis indicating that the EU's productivity gap with the US would shrink by one-third if it matched the US proportion of large to small firms.

According to the ECB, workers in the EU produce 20% less output per hour than their US counterparts. Large companies generate significantly more value per worker than smaller ones, with firms having at least 250 employees producing an average annual value added of 86,800 euros per worker, while those with fewer than 10 employees produce less than half that amount.

The ECB attributes the EU's weaker productivity performance to factors such as lower innovation, fragmented regulation, and underdeveloped capital markets. The central bank supports the proposed EU Inc corporate law framework, which aims to reduce barriers to cross-border business activity and create a single legal structure across the bloc.