Draghi: Europe Needs Huge Investments for Transition and Competitiveness

Europe prospered through decades of international stability, but has now lost ground and must invest to be competitive. And a lot, more than 500 billion euros per year. That’s the recipe of Mario Draghi, former prime minister of Italy and former president of the European Central Bank, the man chosen by EU Commission President Ursula von der Leyen to write the Union’s competitiveness report.

“There have been many profound changes in the global economic order in recent years, and these changes have had a number of consequences, one of which is clear: huge amounts of money will have to be invested in Europe in a relatively short period of time, and I look forward to discussing what finance ministers are thinking and preparing on how to finance these investment needs.” These words, as reported by the Italian news agency ANSA, Draghi said in Ghent, Belgium, where an informal meeting of finance ministers of European countries was held.

The purpose of the meeting is to discuss the present and future competitiveness of the European Union, and Draghi made clear the path to follow: investment. Not only public money, but we also need to find a way to “mobilize private resources.” According to French government estimates reported by the Italian economic newspaper Il Sole 24 Ore, at the end of 2021, European private savings totaled 35 trillion euros, a third of which remained in bank accounts uninvested. In the USA, the share is much lower and stands at 15%.

The former ECB chairman made a comparison with the USA, starting with the 2010 crisis, when Washington returned to normal in a couple of years, while Europe took nine years. “There is an investment deficit of 1.5% of GDP, equal to 500 billion euros.” This will be the money needed to address the green and digital transition (especially given the rapid success of artificial intelligence), more money will be needed for productive investment and defense. In short, “bold action” should be taken.