Philippe Aghion Proposes Voluntary European Capital Market to Boost Growth Amid US Disparity

Nobel laureate Philippe Aghion has called for a transformative economic strategy within the European Union to address the widening growth gap with the United States. Highlighting the stark figures from the third quarter of 2025, Aghion noted that the US economy expanded by 4.3%, while the Eurozone managed a mere 0.3% growth rate. He attributes this gap largely to insufficient innovation investment and research funding in Europe, despite the continent's advantage in attracting North American talent.

Aghion advocates for a coalition of willing EU member states to establish a single European capital market, reviving a proposal first put forward by Mario Draghi in 2024. Unlike an all-encompassing approach, this voluntary market would allow countries such as Germany and Sweden to collaborate more swiftly, bypassing the current rigidities of EU competition policies which Aghion views as restrictive for a strong industrial policy. Additionally, he draws inspiration from the American Defense Advanced Research Projects Agency (Darpa) model to finance new technological ventures, urging a renewed prioritization of research and education in EU budgets rather than treating them as mere fiscal adjustments.

In a related perspective, Nobel economist Paul Krugman stresses that while Europe’s productivity growth has been slower than that of the US, this is largely due to rapid advancements in the American tech sector rather than an inherent European economic decline. Economist Gabriel Zucman also counters disparaging remarks made by the US ambassador to the EU, who likened parts of Europe to impoverished US regions, asserting these characterizations are inaccurate and rely on flawed statistics.

Together, these views underscore the complexity of Europe’s economic challenges and potential paths forward. Aghion’s proposal for a flexible, innovation-focused capital market among willing EU nations represents a significant attempt to revitalize Europe’s competitive edge while embracing cooperation. Meanwhile, Krugman and Zucman highlight the need for nuanced analyses of economic data to avoid misleading narratives about Europe’s position relative to the US.