The Sound of Economics Inflation, Iran and the Industrial Accelerator Act
Mar 11, 2026
Jeromin Zettelmeyer, Bruegel director and trade/industrial policy expert; Klaas Knot, former Dutch central bank governor with deep monetary and stability experience. They discuss risks from Middle East energy shocks and euro-area inflation. They debate the Industrial Accelerator Act, its effects on procurement, subsidies and market fragmentation. They examine Dutch structural limits, pensions, and policy choices for productivity and resilience.
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Europe's Cyclical Strength Masks Big Structural Gaps
- Europe has good cyclical momentum but faces persistent structural problems: low trend growth, weak tech adoption, and policy tensions between defense, fiscal consolidation, and social goals.
- Jeromin Zettelmeyer flags geopolitical volatility and rising protectionism as factors complicating structural reform.
Overcapacity Is Serious But China Remains A Structural Competitor
- Overcapacity in China is a serious problem but not the whole story; even absent overcapacity China remains a large structural competitor across many sectors.
- Zettelmeyer argues Europe needs both protection against unfair competition and proactive structural policies to build niches and clusters like Eindhoven/ASML.
Combine Targeted Protection With Structural Upgrading
- Use measured protection like procurement and content rules to shield strategic industries, but combine this with active structural policy to build new capabilities.
- Zettelmeyer praises the Commission for toning down discriminatory measures and warns against WTO-illegal trade discrimination.