In his long-awaited report on European competitiveness, published this week, former European Central Bank President Mario Draghi made a powerful statement about the dangers of lagging growth and productivity in the European Union. The lack of both, he explained, directly threatens Europe’s ambitions, independence and social model. “Never before has the size of our countries seemed so small and inadequate compared to the scale of the problem,” he warned. To overcome the crisis, Draghi believes, an increase in investment across the continent of more than $880 billion a year is needed.
“Competitiveness” has entered the lexicon of EU leaders as a catch-all term for Europe’s woes. At its core, it describes the worry that Europe is being left behind. The bloc is outpacing both the United States and China in growth. Europe pales in comparison to the United States when it comes to tech superstars, for example.
But competitiveness is also a geopolitical issue. A Europe that cannot compete economically will be dangerously exposed to price shocks from energy suppliers or those it will rely on for a green transition, for example, and will not play a meaningful role on the world stage. A focus on European growth should be seen through this geopolitical lens as much as through a purely economic or political one.
Without growth and competitiveness, Europe will find it increasingly difficult to finance its social programmes and provide quality of life for its citizens. The report identifies three critical issues – innovation, climate and security – where Europe is not leveraging its size and scale due to fragmentation and lack of coordination.
The report includes a large section on building EU security and resilience and reducing Europe’s dependence on Russia and China for certain raw materials and other critical resources.
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