a need for responsible fiscal policy, given the levels of public debt. some countries should take advantage of the ongoing recovery and favourable financial conditions to reduce debt burdens, whereas countries with fiscal space should increase their public investment. likewise, significant steps should be taken on the structural policy side, with a view to increasing potential growth in the medium term. measures to improve the functioning of labour and product markets and to strengthen procedures for the correction of macroeconomic imbalances take prominence here. a robust economy relies on sound economic governance. reforms at the national and eu level are needed to uphold a stable financial system and a resilient monetary union. a common stabilisation function, which − in the spirit of a true counter - cyclical fiscal policy instrument – would maintain convergence in the event of large shocks, is an overriding priority. completing the banking union with the establishment of edis, its third pillar, and firm moves towards capital markets union, promoting deep and liquid bond and equity markets, are necessary reforms of the financial sector. attaining these goals is highly relevant for financial stability, further integration, private risk - sharing and economic growth. thank you for your attention. 4 / 5 bis central bankers'speeches 1 see also camba - mendez, g. and forsells, m., “ the recent slowdown in euro area output growth reflects both cyclical and temporary factors ”, economic bulletin, issue 4, ecb, 2018. 2 carmassi, j., dobkowitz, s., evrard, j., parisi, l., silva, a. and wedow, m. ( 2008 ), “ completing the banking union with a european deposit insurance scheme : who is afraid of cross - subsidisation? ”, occasional paper series, no 208, ecb, frankfurt am main, april. 5 / 5 bis central bankers'speeches

christine lagarde : hearing of the committee on economic and monetary affairs of the european parliament speech by ms christine lagarde, president of the european central bank, at the hearing of the committee on economic and monetary affairs of the european parliament, brussels, 4 december 2024. * * * charts accompanying the speech i am pleased to return to this committee to discuss the ecb's monetary policy at such a critical juncture for europe. we are witnessing a rapidly shifting geopolitical landscape, but also enduring major structural challenges to our economic model. europe's response must be swift. it should focus on spurring investment, fostering innovation and raising productivity. this will require bold policy action and, together with the new european commission and the council, this parliament will have an important role to play. in my remarks today, i will discuss an important element of this response – the new economic governance framework – which you have chosen as one of the topics of this hearing. but i would like to start by updating you on the ecb's assessment of the euro area economy and our monetary policy stance. the economic outlook and the ecb's monetary policy stance the euro area saw moderate growth in the first half of this year, following five quarters of stagnation. real gdp growth was largely driven by exports and government consumption. domestic private demand remained weak amid high economic policy uncertainty and the effects of past monetary policy tightening. more recently, in the third quarter, real gdp rose by 0. 4 %, driven in part by temporary factors such as the paris olympics. however, survey - based data suggest that growth will be weaker in the short term, on the back of slowing growth in the services sector and a continued contraction in manufacturing. further ahead, the euro area's economic recovery should start to gather some steam. consumer spending is expected to pick up as real incomes rise, and investment is expected to recover as the impact of past monetary policy tightening fades. the euro area labour market has so far proven resilient. the unemployment rate remained historically low at 6. 3 % in october, while employment expanded by 300, 000 jobs in the third quarter. at the same time, surveys point to slowing employment growth and further moderation in the demand for labour. the medium - term economic outlook is uncertain, however, and dominated by downside risks. geopolitical risks are elevated, with growing threats to international trade. high degrees of trade openness and integration into global