Fabian Bohnenberger

Mario Draghi gave an interesting speech last week, which offers further insights into his upcoming report on EU competitiveness. The key themes are:

1. The EU needs to close the productivity gap with the United States. This requires us to:

⚡ reduce the price of energy by “building a genuine European energy market” (also to facilitate digitalisation, which Draghi identifies as the key driver of the productivity gap)

🔬 prioritise research and innovation, invest in skills, increase investment in new technologies and diffuse them faster through the economy.

📈 adapt competition policy to create economies of scale “in tune with the evolving market and geopolitical contexts”

2. All this needs substantial public and private investment:

💸 More national spending on grids and innovation “is likely to fund itself.” More common EU financing would yield “enormous benefit”. In addition, we “need to mobilise private savings on an unprecedented scale.”

3. The EU needs a “genuine foreign economic policy” and industrial strategy to:

🌍 coordinate EU trade agreements and investments with resource-rich nations, increase stockpiles in critical areas, use industrial partnerships to secure key supply chains

🏭 reduce our dependencies, coordinate public procurement (and EU spending) to scale up EU industrial capacity and apply “more explicit local content requirements for EU-produced products and components”

🛡️ protect EU manufacturing from unfair foreign competition (especially China) but in a “pragmatic, cautious and consistent” way. Tariffs and subsidies need to maximise productivity growth and also be balanced with consumer interest.

The full transcript of the speech is here.