Either we act now or Europe is heading towards a slow agony. It is not a sudden death, but the well-being of its citizens, already eroded over the last decades, is at risk. This is the alarm bell launched in Brussels by former ECB President and Prime Minister Mario Draghi. His report on the future of European competitiveness, entrusted to him a year ago by Commission President Ursula von der Leyen, is now a reality. A document of almost 400 pages that will serve as a guide, together with the Letta Report on the Single Market, for the next term of the European Commission. The idea is that the Old Continent has fallen behind other major global players, starting with the US and China, and that its citizens are becoming poorer. We must act.
“We should abandon the illusion that only procrastination can preserve consensus. It has only produced slower growth and we have certainly not achieved more consensus. Our freedom,” Draghi writes. The main challenges revolve around a few axes, starting with the need to accelerate innovation: “The productivity gap between the EU and the United States is largely explained by the technology sector. Only four of the world’s 50 largest technology companies are European.” The need to increase productivity is also dictated by Europe’s demographic decline. “The EU is entering the first period in its recent history in which growth will not be supported by population growth. By 2040, the workforce is expected to shrink by almost 2 million workers every year,” Draghi notes. Secondly, Europe must reduce high energy prices by continuing to decarbonise and move towards a circular economy, but the transition moves must be coordinated, otherwise they will be counterproductive, Draghi warns. Finally, Europe must react to a world of less stable geopolitics, where dependencies are becoming vulnerabilities and it can no longer rely on third parties for its security. In short, more strategic autonomy, starting with raw materials and defence.
Then there is the simplification of rules for companies, the extension of qualified majority voting in many areas that now require unanimity, and the completion of the Single Market, as also illustrated by Enrico Letta. To do all this, unprecedented investment is needed, which takes us back to the post-war period. Annual investment of at least €750-800 billion is needed, based on the Commission’s latest estimates, corresponding to 4.4-4.7% of EU GDP in 2023. This is substantially more than double the Marshall Plan which, mutatis mutandis, between 1948 and 1951 envisaged an investment volume equal to 1-2% of EU GDP at the time. The investment share should increase from around 22% of GDP today to around 27%, reversing a decades-long decline in most major EU economies, the report notes. How to do this? For Draghi, in favour of a new common debt, the path is that of safe common assets, community public bonds that raise private capital on the market, Eurobonds, on the model of the Next Generation EU. With an issue that must remain “mission and project specific”. An idea that registers the caution of von der Leyen, who speaks of “common financing for some common European projects”, but to be collected through new national contributions or new own resources, the two sources of the EU budget.
Source: IL Tempo
Emma Fitzgerald is an accomplished political journalist and author at The Nation View. With a background in political science and international relations, she has a deep understanding of the political landscape and the forces that shape it.
