Governor Gabriel Makhlouf of the Central Bank of Ireland has issued a stark call to European policymakers: transform the Single Market into a truly barrier-free zone to unlock nearly €10 trillion in household savings for the continent's productive future. Speaking at the Eurofi High Level Seminar on March 27, 2026—delivered online after the in-person event in Nicosia was postponed—Makhlouf argued that Europe's economic prosperity hinges on bridging savings to investment through genuine market integration.

Europe stands at a crossroads, Makhlouf observed, with euro area households holding deposits nearing €10 trillion, fueled by savings rates around 15 percent—still elevated above pre-COVID levels. Yet these funds are not fueling domestic growth. "A significant proportion of these savings continues to be invested outside the European Union," he noted, posing a fundamental question: "Why those returns are perceived to be higher outside Europe, and what we can do about it?" His answer cuts to the core: "Fundamentally, it comes back to the performance of the real economy."

SAVINGS SURPLUS, INVESTMENT GAP

The scale of Europe's savings pool is staggering. Post-pandemic spikes have left households with substantial liquidity, but investment via European capital markets lags. Makhlouf highlighted the EU's looming investment shortfall: an additional €750-800 billion annually by 2030 to meet green, digital, and infrastructure ambitions.

Channelling these savings domestically could bridge that gap, but prudence at the individual level risks macroeconomic drag. This misalignment underscores a "curious position" for Europe: awash in capital yet starved of high-return opportunities at home.

SINGLE MARKET'S UNTAPPED POWER

Makhlouf's prescription starts with the Single Market, now 30 years old but riddled with barriers, especially in services. "The Single Market remains our most powerful and underutilised asset," he declared. "Significant barriers remain, particularly in services. Removing those barriers would not only boost productivity directly; it would also enable a step change in the development of Europe’s capital markets."

His vision demands a multi-pronged push: strengthening growth prospects, completing the Single Market, building integrated capital markets, and preserving Europe's macroeconomic stability. These form the bedrock for attracting capital, which "will always seek out the greatest potential returns."

Beyond rhetoric, Makhlouf repurposed a famous line: "Don’t ask only what the Savings and Investments Union can do for you; ask what a genuinely barrier-free Single Market can do for Europe’s savings and investments." The EU's Savings and Investments Union (SIU), pursued for years, aims to link savings to productive uses and simplify regulations. Yet Makhlouf cautioned its limits: "Financial market reforms cannot substitute for real economy performance." Deeper retail participation—and reduced market fragmentation are essential, but they pale without robust growth supplying high-quality assets.

CALL FOR EUROPEAN SAFE ASSET

In a fragmented global landscape—marked by geopolitical tensions and shifting trade flows—Makhlouf urged creation of a European safe asset to anchor institutional capital. "In a more fragmented world, this matters more than ever," he said, warning that without it, savings will chase alternatives abroad. Supervisory convergence matters, he added, but "it is not the defining feature of a successful capital market. What matters more are deep and liquid markets, supported by strong economic growth."

Makhlouf's intervention positions Ireland as a vocal advocate for EU-wide solutions. His full speech, "Bridge to the Future: Mobilising Europe's Savings in a Fragmenting World," signals rigorous internal preparation.

PATH TO PROSPERITY

Makhlouf's core message resonates broadly: "Mobilising Europe’s savings requires us to ensure that our economy is productive and innovative and operates as a genuine Single Market, creating the prosperity that generates capital, that supports the longer-term wellbeing of Europe’s citizens." By prioritising structural reforms, Europe can retain its savings, foster innovation, and secure stability.

This is no abstract plea. With global fragmentation accelerating, capital flows will favor economies blending stability with opportunity. "By harnessing our Single Market alongside our international openness and leadership," Makhlouf concluded, "we can ensure that Europe’s economic future is not only secure but strong." Policymakers in Brussels, now under renewed pressure post-SIU discussions, must heed the call—or risk Europe's savings powering rivals' growth.