Subscribe here: [ Ссылка ] The EU should fear for its self-preservation as it faces a “slow and agonising decline”, according to a hard-hitting report by the former Italian prime minister Mario Draghi that calls for an €800bn-a-year spending boost to end years of stagnation.
Warning that the Covid pandemic and Ukraine war had changed the rules of international trade to the EU’s detriment, he said the bloc needed additional investment of €750bn-€800bn a year – equivalent to 5% of the EU’s annual economic output – to build a more resilient economy and regain previously high rates of productivity growth.
“We are already in crisis mode and to ignore this is to slide into a situation you don’t want to have,” said Draghi, who is also a former head of the European Central Bank.
Mario Draghi urges EU to catch up rivals or face 'slow agony'! The European Union needs far more coordinated industrial policy, more rapid decisions and massive investment if it wants to keep pace economically with rivals the United States and China, Mario Draghi said on Monday in a long awaited report.
The European Commission asked the former European Central Bank chief and Italian prime minister a year ago to write a report on how the EU should keep its greening and more digital economy competitive at a time of increased global friction.
"The situation at the moment is really worrisome," Draghi told a news conference in Brussels.
"Growth has been slowing down for a long time in Europe, but we've ignored (it)... Now we cannot ignore it any longer. Now conditions have changed."
Trade protectionism was increasing, the supply of cheap energy from Russia was gone, the bloc needed to pay more for its defence, and its population was shrinking.
In his nearly 400-page report, Draghi said the bloc needed investment of 750-800 billion euros ($829-884 billion) per year, up to 5% of GDP - far higher even than the 1-2% of EU GDP in the Marshall Plan for rebuilding Europe after World War Two. And the bloc must act on several fronts.
"It's 'Do this' or it's a slow agony," Draghi warned.
EU countries had already responded to the new realities, Draghi's report said, but it added that their effectiveness was limited by a lack of coordination.
Differing levels of subsidies between countries was disturbing the single market, fragmentation limited the scale required to compete on a global level, and the EU's decision-making process was complex and sluggish.
The report suggested so-called qualified majority voting - rather than a need for unanimity - should be extended to more areas, and as a last resort that like-minded nations be allowed to go it alone on some projects.
While existing national or EU funding sources will cover some of the massive investment sums needed, Draghi said new sources of common funding - which countries led by Germany have in the past been reluctant to agree to - might be required.
German Finance Minister Christian Lindner said joint borrowing would not solve EU problems and Germany - the biggest economy in the 27-nation bloc - would not agree to it.
Analysts said the EU may well drag its feet on Draghi's suggestions.
"Political difficulties in Germany and France, and longstanding divisions among other EU member states, will likely prevent a significant leap forward in integration that Draghi prescribes," analysts at Eurasia Europe said.
"Furthermore, recent political developments in France, notwithstanding (Michel) Barnier's appointment as PM last week, make us much more sceptical about the EU’s capacity to deliver meaningful fiscal ambition..."
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