Former Prime Minister of Italy and ex-President of the European Central Bank, Mario Draghi, has recently released a report calling for increased collaboration and joint borrowing among EU member states to boost economic competitiveness against global giants like the United States and China. The report, drafted in collaboration with the European Commission, emphasizes the need for radical change and an investment of €800 billion annually to bridge the productivity gap with the US. Draghi highlighted the urgency of the situation, pointing out that China is emerging as a major competitor and emphasizing the need to address declining productivity in Europe.
One of the key recommendations of the report is to focus on closing the innovation gap with the US and China, particularly in advanced technologies. Draghi pointed out that Europe lags behind in emerging technologies, with only four of the world’s top 50 tech companies being European. The report also emphasizes the importance of linking decarbonisation efforts with industrial competitiveness to build a greener planet while benefiting businesses. With the EU aiming for net-zero carbon emissions by 2050, the report warns that a lack of policy coordination could hamper competitiveness and growth.
Another crucial aspect of Draghi’s vision is the development of an EU foreign economic policy that aims to reduce dependencies on China for critical minerals and secure key supply chains. This involves coordinating preferential trade agreements, investing in critical areas, and creating industrial partnerships to safeguard the supply chain of key technologies. The report sets the tone for the next EU Commission and underscores the importance of innovation and global competitiveness in the coming decades.
While experts applaud the comprehensive and honest assessment provided by the report, some express skepticism about political challenges and opposition from certain member states. The idea of joint funding for investments in key European public goods faces resistance from countries like Germany, who have rejected calls for more debt and subsidies for poorer EU partners. The concept of common funding, akin to Eurobonds, could be perceived as wasteful or subject to fraud, creating hurdles to its implementation.
Despite the potential obstacles, Draghi’s ideas have found support from EU Commission President Ursula von der Leyen, who acknowledges the need for common funding for certain projects. The success of such initiatives will depend on the political will of member states to overcome differences and prioritize collective growth and competitiveness. As Europe seeks to navigate economic challenges and retain its position in the global market, collaboration and strategic investments will be crucial for driving innovation, sustainability, and industrial competitiveness in the years to come.
