His report was very tense and the conclusions are unequivocal. Europe has suffered an economic decline compared to the United States and should issue new common debts to improve its productivity and strengthen its security, an “existential challenge”, Mario Draghi warned on Monday, September 9.
After the success of the historic post-Covid recovery plan, the EU should “continue to issue common debt instruments to finance common investment projects aimed at increasing the competitiveness and security of the EU”, said the former Italian Prime Minister, highlighting the economic “gap” that has widened with the United States.
“The investment needs are enormous,” he stressed at a press conference in Brussels in the presence of European Commission President Ursula von der Leyen. Stressing the need for a “radical change” in the European approach, he presented some of his “170 proposals.”
A red line for many countries
The idea of issuing a new common loan, supported in particular by France, remains a red line for many northern European countries such as Germany and the Netherlands, which fear being asked to contribute more heavily to make up for the delays of the southern countries. Mario Draghi acknowledges that such a project will only be possible “if the political and institutional conditions are met”.
First, it highlights the need to mobilize private capital to finance innovation through the creation of a true “Capital Markets Union.”
“Real disposable income per capita has increased almost twice as much in the United States as in Europe since 2000,” warns the former president of the European Central Bank (ECB), in this 400-page document commissioned by Ursula von der Leyen.
The report is intended to inspire the work of the new European Commission for the next five years. The EU has been mired in economic stagnation for a year and a half. It has weathered the crisis caused by the pandemic in 2020 less well than the United States, as was already the case with the financial crisis of 2008.
This drop is explained “mainly by the more marked slowdown in productivity in Europe” and represents a threat to its social model, underlines Mario Draghi.
“If Europe fails to become more productive, we will be forced to make choices. We will not be able to become a leader in new technologies, a model of climate responsibility and an independent player on the world stage. We will not be able to finance our social model. We will have to scale back some, if not all, of our ambitions. This is an existential challenge,” he stresses.