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Draghi's suggestions for the EU: Increase investments by 800 billion euros. Facilitate competition

2024-09-10 14:03:28Kosova&Bota SHKRUAR NGA REDAKSIA VOX

Draghi's suggestions for the EU: Increase investments by 800 billion euros.

The former Italian prime minister calls for a "new industrial strategy". Mario Draghi has called for a "new industrial strategy for Europe", calling on the European Union to increase investments by 800 billion euros per year, to finance radical and rapid reforms, to encourage Europe not to fall behind the US- and China.

As well as advocating a general overhaul of how the EU raises investment funds, including "new joint financing and joint assets", the former Italian prime minister's much-anticipated EU-commissioned report makes appeal to Brussels to advance an important reorientation of economic policy.

Key recommendations include easing competition rules to enable market consolidation in sectors such as telecommunications; capital markets integration by centralizing market supervision; greater use of joint procurement in the defense sector; and a new trade agenda to increase the EU's economic independence.

"Never in the past has the level of our countries seemed so small and insufficient in relation to the size of the challenges," Draghi wrote in the report to European Commission President Ursula von der Leyen. "The case for a unified response has never been more compelling – and in our unity we will find the strength to reform."

Draghi said "We have reached the point where, without action, we will have to compromise our well-being, our environment or our freedom." The report comes as the commission prepares for a new five-year term marked by economic stagnation, a full-scale war on its border and the rise of far-right parties across the bloc. The former European Central Bank president, known for saving the euro during the currency crisis more than a decade ago, warned that he saw a surge in new investment - supported by private and public financing - and improved productivity.

Draghi said that addressing the EU's lagging competitiveness would require 750-800 billion euros of additional annual investment, equivalent to 4.4-4.7% of the EU's GDP. This would bring investment in gross domestic product to a level not seen since the 1970s. He repeated calls for a secure common asset and common EU financing to support "European public goods". such as common energy infrastructure and common defense procurement, while acknowledging that the political will is not yet present, as well as new EU-level taxes to finance more effective spending through the common budget.

But any push to contribute more taxpayer money, or to raise the EU's new common debt, would prompt resistance from more frugal governments, in countries such as the Netherlands and Germany, which oppose more funding. from the EU. While "pooled funds will be needed for some common European projects" such as defense and cross-border energy infrastructure, she said they could be paid for by additional national contributions or EU-level taxes flowing into the bloc's common budget. , said Von Der Leyen.

If Europe fails to raise productivity and growth rates, it risks seeing living standards fall, Draghi said. "We will have to scale back some, or all, of our ambitions," he added. "This is an existential challenge." As for competition policy, Draghi advocates a radical change in the approach to company merger assessments, so that the rules do not "become an obstacle to Europe's goals". In the highly fragmented defense sector, Draghi emphasized that "in the absence of common European spending", the focus should be on the coordination of national procurements and joint defense projects, as well as on greater market consolidation "when the growth of scale would give efficiency".

Draghi also argued for an overhaul of the energy market so that the price of renewable energy is no longer dictated by the cost of more expensive fossil fuels. Brussels proposed some reforms to the bloc's electricity market in the wake of its 2022 energy crisis, but changes in the market have been slow. /FinancialTimes


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