The EU faces a key debate over new financing instruments to meet investment needs that will boost its competitiveness, the 800 billion euros annually estimated by former Italian Prime Minister Mario Draghi. The objective is to be able to continue to compete with the United States, says the president of the Eurogroup, Paschal Donohoe. In an interview with the Economists, On the eve of the American elections, the Irishman claims that The race for the White House forces the EU to get its act together to strengthen its economy, increase their productivity and industrial competitiveness.
It seems that a Donald Trump victory would be worse for the European economy…
I think there are clear differences between Vice President Harris and former President Trump in their attitudes toward Europe. As always, we will work with whomever the American people choose, but we are at a crossroads regarding the future of global trade and transatlantic relations. This is just one of the reminders to Europe to strengthen its economic foundations and develop its economy. I want us to maintain a close partnership with the United States. I want us to be able to continue to convince the United States that it needs allies in a world that has changed so much and become so unstable. But we can debate better and more effectively with an economically strong Europe. Our work on competitiveness and the Capital Markets Union is part of this framework.
Can the outcome of the US elections affect the EU’s competitiveness roadmap?
It’s another reminder of why Europe needs to be more competitive. As important as these elections are for Europe, I believe that the global consensus on trade relations and views on how tax and trade policies are implemented are evolving. And I want Europe to be at this table economically stronger than it is now. It is a fundamental part of our position in the world.
Do you think that there is a sense of urgency in Brussels that is not there in the capitals in terms of competitiveness?
No, I think the problem is that there are still divergent views on how to achieve this goal. In my opinion there is agreement on the destination of this trip. But it must be recognized that there are debates about what this journey should be.
Is the vision of Brussels and the capitals on the road different then?
No, I would say that some countries are very much in line with some of the opinions currently being expressed on the future of Europe. And other countries are warning of the need to continue protecting the single market. I think more attention has been paid to private capital, as opposed to the idea that this journey continues to be dependent on the taxpayer. This is a well-known debate among finance ministers. But I see clear unity in the need to improve our growth in a new world.
To close the competitiveness gap with the United States, how can we move forward if there is no desire for public financing from certain capitals?
In our report we talk about linking public financing to European public goods. This is an important point. We are in the middle of a debate on EU financing instruments and all this is linked to the negotiation of the next EU budget. Finance ministers established the link between forms of financing and public goods in the EU. This is, I would say, an important step forward. On a practical level, part of these discussions will take place within the framework of the new EU budget: how it will be structured and what it will be used for.
What do we mean by public goods?
I am referring to activities capable of improving the competitiveness of the EU as a whole, of a single Member State or of a group of Member States. This is something we can all benefit from.
Is there a possibility that this funding will arrive before 2028, before the next community budget?
In my opinion, any discussion of new funding would be within the parameters of the new budget level. For the moment, I do not see any desire to advance this debate beyond the preliminary discussions on the next multiannual financial framework.
He spoke out against a group of countries moving forward alone in the capital markets union. Do you still see it that way?
I would say a little more positively. I prefer all countries to move forward together, but I accept that countries have the right to think about how they can work together to move forward. If there is a group of countries willing to do something together, that should be a catalyst, because without progress we will end up with more fragmentation.
Is there a risk that a group of countries will move forward alone?
I think there is pressure for a smaller group of countries to act together. And this interest is growing. This is why I insist on the importance of credible progress visible to all in 2025.
There is a risk that what is achieved at the level of the Twenty-Seven will be disappointing compared to a smaller group of countries…
This risk is there. It is questionable whether the benefits that a small group of countries can enjoy are greater than those that they would all obtain together. It is very positive that we are making this progress at a national level, but ultimately it must be a coordinated project that benefits everyone.
