Former European Central Bank Chief Mario Draghi has issued a warning that the European Union is at risk of falling further behind the United States and China in terms of competitiveness. In a report commissioned by EU Commission President Ursula Von der Leyen, Draghi outlines the necessity for the EU to adopt a new industrial strategy, emphasizing the urgent need for radical changes. The report advocates for an increase in industry investments by up to 5% of the EU’s GDP, which amounts to nearly 800 billion euros annually. It highlights the lag in disposable income growth, productivity, and innovation in the EU compared to the US, alongside the challenges posed by the decarbonization of industry and the preservation of traditional industrial sectors.
- Mario Draghi warns the EU’s competitiveness is diminishing compared to the US and China.
- The report calls for an increase in industry investments by up to 5% of the EU’s GDP, approximately 800 billion euros annually.
- Disposable income per capita in the US has grown almost twice as fast as in the EU since 2000.
- There is a need for more expenditure on innovation and the decarbonization of industry in the EU.
- The report criticizes the EU for focusing too much on preserving traditional industrial heavyweights, such as German car makers.
- It suggests that the EU’s own resources could be used for financing, which involves the EU taking on debt rather than individual governments.
- Draghi’s report warns that by 2042, 2 million people per year will be dropping out of the EU’s workforce, impacting growth.
- The diversification seen in the economies of China and the US contrasts with the EU, where the biggest companies remain unchanged from 20 years ago.
- Thirty percent of the EU’s unicorns (startups valued over a billion dollars) relocate to the US, affecting Europe’s job market and growth.
- Fears exist that the report’s recommendations might be used to drive down workers’ wages in Europe.
- Draghi insists finding the investments is essential for maintaining the high quality of life in the EU.
- There is skepticism in France and Germany, key EU countries, about increasing spending and shared debt as suggested in the report.
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