EX-ECB director claims EU needs immediate economic overhaul
Date
11/11/2024 7:51:55 AM
(MENAFN) Former European Central bank (ECB) President Mario Draghi has warned that the European Union urgently requires a comprehensive economic overhaul to regain its competitiveness on the global stage. Speaking to *Politico* on Friday, Draghi emphasized that the need for reform is even more critical today than when he first highlighted the issue in September, particularly in light of the election of Donald Trump as U.S. President.
Draghi argued that the EU must focus on preventing the further fragmentation of its single market and capital markets, which currently hinder the ability of European businesses to scale and compete internationally. He noted that some of the measures he proposed in his earlier report were pressing even before, but the situation has grown more urgent with recent geopolitical developments.
Among the recommendations in his September analysis, Draghi stressed the need for the EU to make massive investments in its economy—an amount greater than the post-World War II recovery efforts. He estimated that Europe would need to increase investment by around 5 percentage points of GDP to digitalize, decarbonize, and strengthen its defense capabilities, an unprecedented challenge.
Draghi also pointed to the EU's loss of its main energy supplier, Russia, following the escalation of the Ukraine conflict in February 2022, exacerbating the bloc’s economic woes. He warned that without decisive action, the EU could face difficult trade-offs between preserving welfare, protecting the environment, or maintaining freedom.
To address these challenges, Draghi suggested that the EU should consider issuing new debt to finance the necessary investments, framing it as a critical step in confronting the "existential challenge" currently facing the union. This comes amid broader concerns about declining productivity across the EU, as highlighted in a recent report from the International Monetary Fund (IMF).
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