Mario Draghi demands increase in European investment

Mario Draghi has urged Europe to adopt a new industrial strategy and to increase investment by at least €800 billion each year in order to keep up with the United States and China.

In a report for the European Commission, the former boss of the European Central Bank said the bloc had the foundations in place to be a highly competitive economy but was not realising this potential.

He painted a picture of a difficult future as the foundations that had underpinned Europe’s growth in the past crumbled away with the region facing political instability, a shrinking workforce, slowing global trade and the loss of Russian energy.

All the while, he said, Europe was failing to keep up in the technologies of the future and to grow companies that could compete with the scale of those in America. He said Europe needed to close the innovation gap with other global superpowers but was stifling technology companies “at every stage by inconsistent and restrictive regulation”.

Draghi, who the commission described as “one of Europe’s great economic minds” in its preamble to the document, was asked to examine his “personal vision on the future of European competitiveness”.

He has had a long career in European public life, leading key institutions through some critical periods of its recent history. He was president of the ECB from 2011 to 2019 during the European debt crisis and then was prime minister of Italy from 2021 to 2022. He also has worked for the World Bank, Goldman Sachs and the Bank of Italy.

“On a per capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000,” he said, arguing that European living standards had suffered because of a “wide gap” in GDP with America caused by slowing in productivity growth.

In the 69-page document, Draghi said the sizeable investment he proposed of between €750 billion and €800 billion a year was feasible without overstretching economic resources.

His key recommendations included increasing Europe’s self-sufficiency so that it is less dependent on other powers for goods and technology; boosting innovation and technological advances, including by cutting red tape; and developing a joint plan for decarbonisation that supports industry.

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