EU, Draghi: “Investment and Innovation or Slow Agony”
The former ECB president and former Italian prime minister presented his recipe for Brussels's competitiveness
Either Europe will change, or it will be destined for a slow agony. Mario Draghi presented his recipe for making the European Union competitive again. Brussels needs a more coordinated industrial policy, quick decisions, and, above all, massive investment, between 750 and 800 billion euros per year, which is about 4.7% of continental GDP, if it wants to keep pace with economic rivals – the United States and China.
“The situation at the moment is really worrying,” Draghi told a news conference in Brussels after presenting a competitiveness report requested a year ago by the European Commission led by Ursula von der Leyen. “Growth in Europe has been slowing for a long time, but we ignored it… Now we can no longer ignore it. Now the conditions have changed.” There is more protectionism now, and cheap energy from Russia is a distant memory. In a 400-page report, for example, Draghi said Europe needs even more investment than the Marshall Plan provided to rebuild Europe after World War II.
The response to the current situation in different countries has limited effectiveness due to lack of coordination; different levels of subsidies between countries disrupt the single market, fragmentation limits the creation of global scale industries (the only virtuous example worth emulating is Airbus), and decision-making is slow. That’s why most of the sectors need a qualified majority vote rather than unanimity.
This will require new sources of common finance, which in the past the “Nordic” countries, led by Germany, have struggled to accept, and in fact German Finance Minister Christian Lindner was the first to point out that a common loan would not solve the EU’s problems.
The report also includes suggestions for 10 sectors including energy, artificial intelligence, pharmaceuticals, and space. Also part of the former central bank governor’s recipe are incentives for innovation, the need to lower energy prices, while continuing decarbonization, reduction of dependence, particularly on China, for essential and rare minerals, as well as increasing investment in defense.
