Former President of the European Central Bank (ECB) Mario Draghi is calling for radical reforms and huge investments to make the European Union (EU) economically resilient. In doing so, the former Italian Prime Minister also wants to strengthen the international competitiveness of the EU.
In a vision for the future drawn up by Draghi at the request of Commission President Ursula von der Leyen, it is argued that the EU lags behind the United States and China in terms of innovation, productivity and economic growth. He believes there is an urgent need for a joint European strategy to close this gap.
Initially, the authoritative Draghi was supposed to present his recommendations just before the European parliamentary elections (end of April, beginning of May), but postponed that until just before the appointment of a new European Commission. Commission President von der Leyen is said to be coming to Strasbourg next Tuesday with her first nominations for new Commissioners.
According to Draghi, the EU should invest around €800 billion annually, which amounts to around 4.5% of the EU’s annual GDP. The investments should be focused on strategic sectors such as technology, green energy, and industrial modernization. This is necessary to compete with the fast-growing economies of the US and China.
To pay for this, he proposes joint debt issuance via so-called Eurobonds. This should help to jointly finance European public expenditure such as infrastructure, defense and innovation. Although such a proposal was successfully implemented after the corona crisis with the European Recovery Fund, it is now (still?) encountering resistance from some member states, including Germany, the Netherlands and the Scandinavian countries, who are wary of taking on joint debt.
Draghi stresses the need for a strong EU on the world stage, especially in the economic field. The EU risks being overshadowed by the US and China if no action is taken soon. Europe’s technological lag is a particular concern.
Only four of the world’s 50 largest technology companies are European, while promising European start-ups often move to the US in search of better funding and market opportunities. Draghi warns that Europe risks a “slow death” if it does not act soon.
Draghi also advocates an end to national vetoes within the European Council, in order to be able to make decisions more quickly and to steer a more effective joint economic course. He believes that the meeting circuit and the decision-making machine in Brussels must be much more effective. This is often discussed every five years during EU elections, but compromises and decisions on this are rarely made.