The European Union needs a “massive” investment of up to 800,000 million euros (equivalent to 4.7% of GDP in 2023) to reverse its economic decline and regain lost competitiveness. This is the main conclusion of the highly anticipated report prepared by the former president of the European Central Bank (ECB), Mario Draghiwho handed it over to the President of the Commission on Monday, Ursula von der Leyenafter a year of work.
Draghi demands a “a radical change”“urgent” And “concrete“in the EU’s economic strategy if it does not want to continue losing ground to the United States and China. A plan that must refocus on promoting the most cutting-edge innovation, reducing the energy bill as an axis of industrial policy and improving For this reason, his report presents a total of 170 proposals (with multiple sub-proposals spread over 400 pages), which he believes could be implemented in the short term.
But the former Italian Prime Minister also warns that The private sector cannot finance this ambitious plan alone. For comparison, Marshall Plan investment in Europe between 1948 and 1951 was equivalent to between 1 and 2% of EU GDP, compared with the 4.7% assumed today. To achieve the required increase, the EU’s share of investment would have to rise from around 22% of GDP today to 27%, reversing a decades-long decline in the major EU economies.
[Alemania y los ‘frugales’ tratan de acallar el debate sobre otra emisión de eurobonos para defensa]
For Draghi, the solution must come through Eurobond issue (which in their report are called common safe assets) to be able to finance projects of European interest in areas such as innovation or energy interconnections. The former president of the ECB is also calling for common European financing for defence purchases, based on the model of the funds New generation.
Draghi’s new call for eurobonds runs into opposition total opposition from Germany, the Netherlands and the rest of the “frugals”. These countries have already joined forces in recent months to silence any debate on new European debt to invest in defense, even after the shortcomings revealed by Russia’s war of aggression against Ukraine.
Former Italian Prime Minister Says Eurobonds “They are not an objective in themselves, but an instrument”The aim is to be able to finance joint projects “essential for increasing productivity”, but also to complete the union of capital markets, which would facilitate access to financing for European companies.
Von der Leyen thanked Draghi for his work and assured that Many of his proposals are already included in his government programme for the 2024-2029 legislature, while others will be included in the definition of the tasks of the various commissioners. The president avoided commenting on eurobonds, although she also admitted that more public funding will be needed to implement the new productivity plan.
