In his much-anticipated report on the future of the European Union's competitiveness, the former president of the European Central Bank Mario Draghi noted that the block's economic growth has been persistently slower than in the U.S. over the past two decades, while China has been rapidly catching up.
He also outlined three areas for action to reignite the region's growth, specifically 1) refocusing efforts on closing the innovation gap with the U.S. and China, especially in advanced technologies, 2) creating a joint plan for decarbonisation and competitiveness, and 3) increasing security and reducing dependencies.
The ECB's former boss also estimated that to digitalize and decarbonize the EU economy and increase its defence capacity the block would have to raise its investments by about 5 percentage points of GDP - the levels last seen in the 1960s and 70s.
Draghi warned that if the EU could not become more productive, it would be forced to choose as it would not be able to become, at once, a leader in new technologies, a beacon of climate responsibility and an independent player on the world stage. "We will not be able to finance our social model," he added." We will have to scale back some, if not all, of our ambitions. This is an existential challenge."
According to Draghi, a minimum annual additional investment of EUR750-800 billion is needed to meet the objectives laid out in this report, based on the latest European Commission's estimates, corresponding to 4.4-4.7 per cent of the EU's GDP in 2023.