The price of electricity and gas has become the main problem facing the European economy. EU countries need investments twice as large as those allocated after the Second World War under the Marshall Plan, writes former European Central Bank President Mario Draghi.
The European Union has long been waiting for a plan to halt the economic decline of EU countries, drawn up by the former president of the European Central Bank. Mario DraghiAnd it appeared, writes Politico.
“This is an existential challenge” — the publication quotes the 328-page report. The plan aims to lift the EU out of the depths of low productivity and weak growth, as EU countries lag behind the United States and China, Politico continues.
Mario Draghi says in the plan that the EU needs an unprecedented level of investment, more than double that associated with the Marshall Plan after World War II and which will result in $13 billion in investment for Western Europe, the equivalent of about $150 billion in today’s dollars.
The former head of the European Central Bank proposes that the EU issue new common debt to finance industrial and defence needs, which several governments oppose. He believes that the EU’s goal of reducing CO2 emissions to zero by mid-century and exporting gives the region the opportunity to create green energy and export its technologies around the world.
“We must abandon the illusion that only delay can preserve consensus,” writes Mario Draghi. “Delay only led to slower growth and certainly did not lead to consensus. We have reached a point where, if we do not act, we will have to put our well-being, our environment or our freedom at risk.”
At the heart of Europe’s economic problems, the author places the cost of energy for industry, which is currently forced to pay 158% more for electricity and 345% more for natural gas than in the United States.
The European Union can “correct its innovation and productivity shortcomings and restore its production potential” with the help of artificial intelligence, believes the former president of the European Central Bank.
The energy crisis hit the European Union in the summer of 2021. It peaked a year later, in August 2022, when the price of gas exceeded $3.5 thousand per thousand cubic meters. The West’s confrontation with Russia has led to a reduction in gas supplies on the European market, and prices are still twice as high as before the crisis. And even higher than in the United States and China.
The result of the price pandemonium was a fall in industrial production in the European Union, which continues to this day. For example, the global petrochemical giant BASF has cut production in Germany but is expanding it in China and the United States, where there is also an anti-inflationary law providing incentives and subsidies for the development of green technologies.
In June, the price of gas at the Dutch TTF hub, which is the most liquid in Europe, was around $400 per thousand cubic meters. At the same time, industrial consumers in the United States paid an average of $128 for electricity, according to the EIA, while the price was roughly the same: between $80 and $85 per MWh.
