Draghi Calls for €800bn EU Investment to Compete Globally
The European Union (EU) requires a more coordinated industrial policy, rapid decision-making, and significant investment to remain competitive with the United States and China, according to a report by former European Central Bank chief and Italian Prime Minister, Mario Draghi. The report, commissioned by the European Commission, calls for an annual investment of 750-800 billion euros ($829-884 billion), which is substantially higher than the 1-2% of GDP allocated during the post-World War Two Marshall Plan. The additional investment, equating to up to 5% of the EU's GDP, is deemed necessary to address the EU's slower growth and lower productivity compared to its global rivals.
Draghi's report emphasizes the need for more coordinated industrial policies and streamlined decision-making processes to tackle issues such as higher energy prices and the loss of access to cheap Russian gas. It also recommends extending qualified majority voting to facilitate quicker decisions and suggests exploring new common funding sources for significant projects, including defense and energy infrastructure. Furthermore, the report highlights the importance of enhancing innovation and economic independence through measures such as relaxing competition rules, integrating capital markets, and increasing joint procurement in the defense sector.
While Draghi advocates for ambitious joint EU funding for "European public goods," such as breakthrough innovations and defense investments, there is potential resistance from more frugal member states like Germany and the Netherlands. The report's recommendations aim to prepare the EU for a five-year term marked by economic stagnation and geopolitical tensions, urging member states to take collective action to ensure sustained economic growth and competitiveness on the global stage.
