America is running away from Europe. “A large GDP gap has emerged between the EU and the United States, driven largely by a more pronounced slowdown in productivity growth in Europe. Real income per capita has grown almost twice as much in the US as in the EU since 2000,” the authors note. report“For most of this period, the slowdown was seen as an inconvenience, but not catastrophe” – they write and point out that Europe should change its way of thinking about its own economy.
“We will have to curb our ambition”
“In a world of stable geopolitics, we had no reason to fear growing dependence on countries we expected to remain our friends. But the foundations on which we built are now shaky. The previous global paradigm is fading. The era of rapid growth in world trade appears to be over, and EU companies face both greater competition from abroad and less access to foreign markets,” it continues.
Among the sins of Europeans, Mario Draghi lists missing the technological revolution. Only 4 of the 50 largest technology companies in the world are European.
“If Europe does not become more productive, we will be forced to make a choice. We will not be able to become a leader in new technologies, a leader in climate responsibility and an independent player on the world stage at the same time. We will have to scale back some, if not all, of our ambitions,” the Italian predicts pessimistically.
Mario Draghi: We need 800 billion euros for investments
He identified three areas in which Europe should start acting to remain competitive on global markets. He indicated: developing innovative solutions based on mature technologies, linking climate goals with the development of European industry, and investing in security and reducing Europe's dependence on global partners. The authors of the report calculated that an additional 750 to 800 billion is needed to effectively achieve these goals. euro annually.
Where to suddenly find such funds? The team that worked under the Italian's supervision has several ideas. First of all, the European Union should finance investments through further issuance of common debt, following the example of the Reconstruction Fund. These would be money obtained by the European Commission from markets in the form of loans. According to experts, this should lead to a deeper and more liquid EU bond market, which in turn could support the integration of capital markets – a private source of financing for investments in the EU.
“The EU can meet these investment needs without putting too much strain on the resources of the European economy, but the private sector will need public support to finance this plan. The required stimulus for private investment will have some impact on finances public, but increased productivity may ultimately reduce fiscal costs,” the report said.