Aggregate productivity growth in Europe has disappointed over the last two decades, fuelling concerns about competitiveness. This column argues that firm-level evidence points to a more optimistic picture. Productivity differences between firms have stopped widening, and initially low-productivity firms have started moving up the productivity ladder. To speed up productivity convergence within industries, policies should reduce regulatory and administrative barriers to entry and expansion, strengthen competition enforcement, and deepen the Single Market. Investing in a European harmonised framework for firm-level data is also key for understanding productivity developments and devising economic policy.



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