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ECB’s Lagarde: “Europe Is Not a Key Source of Global Imbalances”

18 October 2025

ECB’s Lagarde: “Europe Is Not a Key Source of Global Imbalances”
Christine Lagarde, president of the European Central Bank, at the ECB Governing Council press conference on July 24. Photo by the ECB under CC BY-ND-NC 2.0.

By David Barwick – WASHINGTON (Econostream) – European Central Bank President Christine Lagarde on Saturday called anew for reducing internal European barriers to trade and denied that Europe bore chief responsibility for global imbalances.

Addressing the 40th Annual International Banking Seminar of the Group of Thirty, Lagarde said that while the focus in terms of imbalances had been on the US and China, “Europe is also in the spotlight, suspected of pursuing unfair trade policies.”

However, she said, “Europe is not a key source of global imbalances and its contribution has been steadily declining.”

The largest surpluses of the euro area were not with the US or China, but rather with the UK, non-euro European countries and a variety of other countries globally, she said. Meanwhile, European trade with the US was “broadly balanced,” she said.

The current account surplus of China and the US had been widening lately, in contrast to Europe’s, she said.

Strong European performance on global markets and domestic fiscal consolidation had pushed Europe’s current account into surplus in the 2010s, but these drivers of European surpluses had been “fading away” since the pandemic, she said.

“So, policies in Europe are contributing to the rebalancing, and this, I would argue, stands in sharp contrast to developments elsewhere,” she said, citing China and, above all, US fiscal policies.

Therefore, she argued, “aggressive trade measures against Europe” would not bring about the rebalancing the US seeks, she said.

“Europe should continue to pursue measures that would strengthen internal demand,” she said, observing that among other effects, this would help offset the impact of US tariffs.

“The world should see Europe as a stable and trusted partner,” she said. If the world sees Europe as an adversary, she said, “we have strategies that we can pursue to shield our economies.”

In other comments, Lagarde said that Europe disposed of high savings. “Europeans are saving like crazy,” she said, suggesting that the current savings rate was approximately 15%.