On Monday, the former head of the European Central Bank, Mario Draghi, announced his report on the competitiveness of the EU.
12:06•Updated 14:25
BRUSSELS The EU needs an additional 750–800 billion euros for investments every year, he estimates Mario Draghi in his report.
According to him, the EU should continue granting collective debt to projects that improve the competitiveness and security of the Union.
The Union could regularly issue money with which the member countries could make joint investments. At the same time, the capital market would develop, Draghi suggests.
Many of the financed projects last for a long time, and according to him, joint debt would bring a better and more liquid market for Eurobonds over time.
President of the EU Commission Ursula von der Leyen ordered a report from Draghi on improving competitiveness. Europe’s competitiveness lags behind the United States and China. The EU is lagging behind in investments as well.
In the EU, increasing the collective debt has supporters but also opponents such as Finland, Germany and the Netherlands.
At the press conference, von der Leyen did not want to comment on the joint debt. He emphasized that money for the union is collected through member countries’ payments to the common budget and with own funds. Own funds include, for example, taxes and customs duties, and their importance has not been great at the level of the Union.
He stated that the political will of the member countries is needed to promote the common European project.
Von der Leyen is expected to take the goals and means of the Draghi report into the program of the next commission, which is in the works.
The EU needs money for digital investments, green projects and defense. The magnitude of the need for money presented by Draghi is expected.
According to Draghi, the share of EU countries’ investments should increase to 27 percent of gross domestic product. The share has been 22 percent.
In order to get money moving better, the EU’s ongoing capital market union should be put into action.
Investments are needed because Europe cannot afford to stick to old technologies.
In the video below, Mario Draghi explains why it is now necessary to invest significantly more in competitiveness.
According to the report, four fifths of productive investments in Europe have been made by the private sector and the rest by the public sector. However, public support is needed to get investments going.
For example, household savings were higher in the EU than in the United States, but the return on savings was clearly lower in 2022.
Financial markets work poorly in Europe because they are fragmented.
Development is hindered by high energy prices. In some places, electricity costs 2-3 times more than in the United States, and the price of gas can be five times higher. The reason is the lack of natural resources, but partly also market rules.
For the defense industry, Draghi needs more joint procurements from within the EU. In the last couple of years, nearly 80 percent of the EU’s defense purchases were made from outside the EU.
Draghi is an Italian economist who served as the President of the European Central Bank from 2011 to 2019. Draghi took it upon himself to tame the financial crisis “at any cost”, which is why he is considered the savior of the euro. He served as Prime Minister of Italy 2021–2022.
Draghi is widely respected and his opinions are listened to.