8 Nov, 2024 16:01
EU needs urgent economic overhaul – former ECB chief
The European Union urgently needs a major economic revamp to restore the bloc’s competitiveness, former European Central Bank President Mario Draghi has warned. The official, who previously also served as Italy’s prime minister, originally presented a gloomy report on the state of the EU’s economy back in September.
Speaking to Politico on Friday, Draghi argued that while “some of [his report’s] suggestions... were urgent even before because the European economy was stagnating, they are even more urgent today,” with Donald Trump having been elected US president.
According to the former bank chief, Brussels should first and foremost focus on preventing further “fragmentation of the single market and a fragmentation of the capital markets.” Draghi said that the current state of affairs is preventing European businesses from scaling up to compete internationally.
In the analysis published in early September, Draghi called on the EU to invest heavily in its economy – more than twice as much as it did after World War II.
“To digitalize and decarbonise the economy and increase our defense capacity, the investment share in Europe will have to rise by around 5 percentage points of GDP,” he wrote, acknowledging that the task was “unprecedented.”
The Italian economist argued that with the geopolitical environment “in flux” and the prospect of less US protection down the road, the EU needs to quickly funnel large sums of money into defense.
Compounding the economic outlook for the bloc is the fact that it “has abruptly lost its most important supplier of energy, Russia” in the wake of the Ukraine conflict escalation back in February 2022.
“We have reached the point where, without action, we will have to either compromise our welfare, our environment, or our freedom,” Draghi wrote in his report.
The former ECB president suggested that the bloc should issue new debt in order to rise to the “existential challenge” it is currently facing.
While on the campaign trail, Trump repeatedly threatened to slap a universal 10% tariff on imported goods, claiming that “our allies have taken advantage of us.”
Back in 2018, during his first term in office, the Republican imposed 25% tariffs on imports of European steel and 10% on aluminum.
Meanwhile, late last month, the International Monetary Fund (IMF) reported that productivity was declining across the EU.
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