Europe has suffered an economic downturn relative to the United States this year, which should force it to issue new joint debt to improve its productivity and strengthen its security. An “existential challenge,” Mario Draghi warned on Monday in a much-awaited report.
Following the success of the historic €800 billion post-Covid recovery plan, the EU should “continue to issue common debt instruments to finance joint investment projects aimed at increasing the EU’s competitiveness and security,” the former Italian Prime Minister said, highlighting the widening economic “gap” with the United States.
170 proposals
“The investment needs are enormous,” she insisted during a press conference in Brussels in the presence of the President of the European Commission, Ursula von der Leyen. Insisting on the need for a “radical change” in the European approach, she presented some of her “170 proposals”.
However, the idea of issuing a new common loan, supported in particular by France, remains a red line for many northern European countries, such as Germany or the Netherlands, which fear receiving a larger contribution to compensate for the delays in southern countries.
Mario Draghi acknowledges that such a project will only be possible “if the political and institutional conditions are met”. Firstly, he stresses the need to mobilise private capital to finance innovation by creating a true “Capital Markets Union”.
“Real disposable income per capita has increased almost twice as much in the United States as in Europe since 2000,” warns the former president of the European Central Bank (ECB), in this 400-page document commissioned by Ursula von der Leyen. The report should inspire the work of the new European Commission over the next five years.
A worrying slowdown in productivity
The EU has been mired in economic stagnation for a year and a half. It weathered the crisis caused by the pandemic in 2020 worse than the United States, as it did with the financial crisis of 2008.
This drop-out is mainly explained by “the more marked slowdown in productivity in Europe” and represents a threat to its social model, underlines Mario Draghi.
The 20 euro area countries recorded growth of 0.2%, instead of 0.3% in the second quarter of 2024. Growth slightly revised downwards on Friday by the European statistics agency Eurostat
Source: BFM TV
