christine lagarde : opening remarks at the eui ’ s state of the union event opening remarks by ms christine lagarde, president of the european central bank, at the online edition of the state of the union conference organised by the european university institute, 8 may 2020. * * * today marks the 75th anniversary of the end of the second world war in europe, while tomorrow marks the 70th anniversary of europe ’ s response to that cataclysm : the schuman declaration that set us on the path towards deeper european union. the declaration famously maintained that “ europe will not be made all at once, or according to a single plan. it will be built through concrete achievements which first create a de facto solidarity. ” schuman ’ s idea was that europe needed to become so deeply integrated – and so interdependent – that solidarity would become self - interest. and, thereafter, it would become natural to build stronger common institutions that reflected the depth of those ties. by and large, this is the path that integration has followed. when europeans saw that the common market was not delivering in the 1980s, we launched the single market. when we realised the single market was vulnerable to competitive devaluations, we launched the euro. and when the euro members recognised that the single currency was vulnerable to self - fulfilling crises, new institutions were established and new instruments were developed – such as the european stability mechanism ( esm ), the ecb ’ s outright monetary transactions programme ( omt ), and the banking union that still needs to be completed. whenever our “ concrete achievements ” were threatened, we did not backtrack : we made them stronger – because they had created the de facto solidarity that schuman promised. european integration paved the way for prosperity, stability and peace. the coronavirus pandemic today is both confirming and testing this thesis. we are seeing once more how interdependent we have become. if not all countries are cured from this crisis, the others will suffer – and not just in terms of health, but economically too. trade within the euro area accounts for 45 % of gdp. the success of the single market means that supply chain integration is three times tighter within the euro area than with the rest of the world. as a result, analysis by the ecb finds that a common shock is amplified by about 30 % – meaning all countries have to act together to mitigate large crises effectively. so the question we face today is

. it ’ s because the unemployment rate in europe is a very high 11 percent, which is destabilizing the continent. in human and social terms, the costs are enormous and the reactions we see to immigration stem from that. it is very important to reduce unemployment and slack in the economy. fortunately, in the present situation, the price stability objective and the engineering of growth go hand in hand. does slow wage growth present a challenge for the euro zone? countries have been adjusting. now several of those countries are growing. there are other countries in the core of the euro zone where one could see that wages could grow more. wages have been subdued in spite of the recovery. this will end if the recovery continues and that will help later inflation rates to normalize. what is the outlook for the global economy and china? the situation is uncertain. there are three sources of uncertainty. one is the strength of the recovery in the u. s. we need a strong recovery in the u. s. another one is china. we need that china will be able to stabilize the situation and keep growing. then we have the uncertainty of what will be the reaction of emerging markets to the normalization of interest rates in the u. s. if the recovery in the u. s. is stronger than it looks right now, that will be the more important thing for the world economy. china can still stabilize its situation and to keep growth above 6 percent is achievable in the short term. the more uncertain situation is in emerging markets. we don ’ t know what will be the impact of interest rate normalization on the corporate bond market in those countries. are we witnessing a structural shift in the global economy? china and other countries could not continue to grow forever at 9 or 10 percent a year. growth in those countries was bound to decelerate. it is not a structural shift. the potential for growth in emerging markets is still there. what is more difficult to envisage is an acceleration of growth in advanced economies to the level we were used to before the crisis. we are facing this sort of configuration for quite some time. this does not mean that unemployment would continue to increase because we may have enough growth to push bis central bankers ’ speeches down unemployment to more healthy levels. there is growth ( 1. 5 % in euro area, 2. 5 % in us ) and this can accelerate, depending on the international environment. but we will not see the same sort of