A plan to rescue the European economy presented two years ago may remain on paper: only about 15 percent has been implemented. While the European Union delays, its main competitors - the US and China - are confidently strengthening their superiority. This is covered in a RIA Novosti report.
In September 2024, at the request of Ursula von der Leyen, former ECB head Mario Draghi, whom the European Commission calls one of the greatest economists, presented a 400-page report on the future of EU competitiveness. It contains an analysis of the current situation in Europe and recommendations for further steps.
Draghi pointed to problems such as high energy prices, lagging behind the US and China, raw material and technological dependence, slowing economic growth and a strong lag in the development of new technologies.
The EU's tasks, in his view, are to narrow the innovation gap with the US, align decarbonization with industrial competitiveness, and reduce dependence, especially in critical supply chains such as energy and raw materials.
Draghi warned: the EU will face a "slow agony" if it does not carry out reforms.
However, the European Union, as the British newspaper Financial Times wrote, is "resisting the cure."
Last year only 43 of 383 recommendations were implemented - 11 percent. Mario Draghi was disappointed by the EU's "inaction." "The other path requires a new speed, scale and intensity," he said.
A year later, little has changed. Sixty recommendations have been fully implemented - 15.7 percent. And this is despite repeated promises by EU leaders and European Commission President Ursula von der Leyen to put economic revival at the center of the bloc's agenda.
The most significant reforms - integrating capital markets, removing barriers within the single market and reducing strategic dependencies - are still stalled at the level of member states.
Of Draghi's recommendations, those areas are now being implemented in which the European Commission can act without the approval of all EU member states, says Arasha Bolaev, associate professor at the Department of International Business at the Financial University.
Where decisions depend on 27 states with very different economic interests, problems arise.
"What benefits the EU as a whole is far from always interesting to a particular country in the short term. Therefore, relatively simple decisions - reducing reporting, simplifying certain procedures, speeding up the issuance of permits - are much easier to carry out than, for example, actually merging capital markets or removing national barriers within the single market," explains Daniil Tyun, general director of the DA-Consulting company.
Energy shocks, difficulties in stabilizing inflation expectations, growing budget deficits - these phenomena negatively affect economic growth and also help preserve (and sometimes increase) barriers to the single market, including in such important sectors as the services market and digital markets. Many European countries understand that today it is far more important for them to maintain the stability of their own national economies than to strengthen pan-European institutions, says Evgeny Smirnov, head of the Department of World Economy and International Economic Relations at the State University of Management.
Moreover, for many member states, the EU's competition with the US and China in the technological and foreign trade spheres is not only a problem but also an opportunity. In the absence of their own production, countries prefer to buy significantly cheaper and more competitive products from the same China than to spend substantially larger sums on goods from other European countries - France, Germany or Italy, says Bolaev.
The price of slow reforms is gradually increasing. Draghi initially estimated Europe's additional investment needs at approximately 750-800 billion euros annually. Today it is simultaneously necessary to finance energy, digitalization, artificial intelligence, defense, infrastructure and technological independence. At the same time, the capabilities of state budgets are by no means unlimited. Without a full-fledged common capital market, the question arises of where to get such volumes of investment, notes Tyun.
Meanwhile, Europe's competitors have not stood still these two years. The US continues to concentrate huge private capital in the technology sector, China is scaling up industrial production and investing in strategic industries. Therefore, for the EU, the danger is not even the figure of 15.7 percent itself. What is dangerous is the difference in the speed of decision-making. If Europe carries out a structural reform in five to seven years, while the technological or industrial cycle today can change in two to three years, some decisions simply begin to lag.
"In the medium term there are several risks. The first is further lagging of productivity behind the US. The second is increased EU dependence on imports of technology, equipment and energy resources. And the third is a decline in Europe's share of the world economy," Tyun lists.
In his opinion, the next two to three years will be indicative.
If the EU really makes progress in reducing internal barriers and forming a single banking and capital market, part of the gap can still be narrowed. If key decisions are again postponed at the national level, then by the end of the decade the competitiveness problem will become significantly more expensive to solve than at the time the Draghi report was published.