Mario Draghi, former head of the European Central Bank and former prime minister of Italy, has presented his long-awaited report on the European economy, outlining goals and dire warnings about the bloc’s future if action is not taken to tackle the EU’s economic hurdles.
Speaking to reporters in Brussels, Draghi noted that “for the first time since the Cold War, we really have to fear for our self-preservation.”
Draghi is largely credited with tackling the eurozone debt crisis between 2009 and 2010. European Commission President Ursula von der Leyen commissioned Draghi to write the report about a year ago.
Main conclusions
The report calls for a major reorientation of economic policy and massive investment in the European economy. Draghi says these steps are needed to prevent the EU from falling further behind the US and China.
Some of these recommendations include relaxing competition rules to allow market consolidation across sectors, integrating capital markets by centralizing market oversight, joint procurement in the defense sector, and a new trade agenda to increase the bloc’s economic independence. A coordinated push toward decarbonization will also be needed.
According to Draghi, boosting the EU’s competitiveness will require €750-800 billion ($828-883 billion) in additional annual investment, equivalent to 4.4-4.7% of EU GDP. It would be the highest investment-to-GDP ratio in Europe since the 1970s.
He acknowledged that it would be difficult for the private sector alone to foot the bill for this stimulus and that some form of common financing would therefore be needed.
The common financing would also be used to support public goods, such as shared energy infrastructure and defense spending.
Early reactions
Draghi refused to say his recommendations were the only way forward, but said it was: “Do this, or it’s a slow torment.” He added: “We have reached the point where, without action, we will either endanger our prosperity, our environment or our freedom.”
Europe is already struggling with economic stagnation, a war on its borders and the rise of far-right parties across the continent.
However, according to an EU diplomat, the prospect of a common EU debt is “absolutely hopeless” given the existing problems.
German Finance Minister Christian Lindner has responded quickly reject this proposal and also said that combining “risks and liabilities creates democratic and fiscal problems.” He stressed: “Germany will not agree to this.”
“Draghi calls for €800bn in EU investment amid ‘existential’ challenges” was originally created and published by Investment monitora brand of GlobalData.
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