Economic growth of the Eurozone: the vision of Mario Draghi, ex-head of the European Central Bank
Mario Draghi, the ex-head of the European bank, known for saving the Eurozone during the debt crisis, faced a new challenge. The President of the European Commission, Ursula von der Leyen, instructed him to prepare a report on the competitiveness of the EU, designed to prevent Europe’s global backwardness. Currently, the 400-page draft report is ready. It contains recommendations for 10 key sectors of the economy and is quite controversial.
The document highlighting the economic growth potential of the Eurozone has already been published excitement in the info field. It is a response to the numerous challenges that the EU has recently faced and proposes concrete steps to overcome them.
The report focuses on the future competitiveness of the EU. Thus, Draghi calls on the countries of the eurozone to increase investments to 800 billion euros per year to develop advanced technologies, achieve climate goals and strengthen defense. The report talks about the need to reduce the cost of energy for industry, which currently exceeds the American one.
The former head of the European Central Bank believes that Europe should increase investment in innovation, because American companies invest much more. The report proposes sweeping changes in economic policy similar to the American “New Deal” of the 1930s. The expert emphasizes the importance of EU unity for carrying out reforms and maintaining competitiveness.
Should the EU abandon free trade?
As the US and China move away from free trade, the EU struggles to compete globally. Business lobbyists and EU legislators are wondering how bold the report will be on revising competition and trade rules. The report will recommend strategies to reduce dependence through trade agreements, particularly on raw materials, and to strengthen joint procurement efforts.
Why some countries are concerned about the EU’s position on free trade
Some countries are concerned that the EU may abandon its traditional stance on free trade due to Draghi’s recent hints about using tariffs to counter protectionist policies by the US and China. They fear that adopting a more protectionist approach could lead to trade wars, disrupt global supply chains and hurt economic growth. In addition, it could undermine the EU’s role as a champion of free trade, which has been a cornerstone of its economic policy.
The EU includes strict environmental and sustainability standards in its trade agreements. Although they are intended to promote sustainable development, some countries are concerned that these restrictions could act as non-tariff barriers, making it difficult for them to access the EU market.
The EU’s strong position on free trade risks provoking economic imbalances. For example, countries with less competitive industries may find it difficult to compete with EU products, hurting their local economies.
It is clear that the EU’s trade policy often reflects its broader geopolitical goals. This can create tension with countries that have different political or economic priorities. For example, the EU’s compliance with certain international agreements or its position on human rights may be controversial.
Some states believe that EU trade agreements favor European companies by giving them better access to markets while imposing stricter conditions on foreign businesses. This can create the impression of unfair competition.
Public and political scrutiny of the EU’s latest trade agreements – the Transatlantic Trade and Investment Partnership and the Comprehensive Economic and Trade Agreement – could make it difficult to negotiate and implement new agreements.
These concerns highlight the difficult balance the EU must strike between promoting free trade and respecting environmental, economic and geopolitical considerations.
New rules to encourage risky investments
The EU faces structural challenges in defense and energy, and needs to address long-ignored issues such as underinvestment in innovation. According to Draghi, the EU lags behind the US in productivity mainly because of lower investment in innovation. American companies annually invest 700 billion euros more than European ones, especially in technology and telecommunications.
Draghi’s report proposes new banking rules to encourage risky investments. In addition, the authoritative economist believes that major changes in technological strategy are necessary to bring new technologies to the market. This could be crucial for the future of Europe.
The EU introduced clean technology rules last year, but it lags behind in producing affordable green technologies and lacks a coherent energy strategy. The upcoming report will advocate for increased production and demand for high-quality clean technology products and offer comprehensive solutions to the energy challenge.
It is worth noting that Draghi proposes to increase investment in energy networks, which is likely to receive support. However, energy-intensive industries are pushing for significant changes to current pricing mechanisms that depend on expensive and polluting fossil fuels.
What areas should be invested in first of all
Draghi emphasizes the need for large-scale investments in decarbonization, digital innovation and infrastructure. He believes that private capital should take the lead, but did not reveal public sources of funding. It is worth noting that the EU countries differed in their opinions regarding the restructuring of the budget and the increase in the amount of borrowing. Economists of the European Central Bank estimate a state financing deficit of 900 billion euros for 2025-2031.
Tatyana Morarash
