The long-awaited European competition report, commissioned by the European Commission and authored by Mario Draghi, was published on Monday, September 9. Titled “The Future of European Competitiveness,” the report by the former Italian Prime Minister and ex-head of the ECB presents a stark assessment of the EU economy’s current state. It calls for significant, pan-European investments in research and development, defense, and decarbonization—up to 4-5% of the EU’s GDP annually. As Draghi points out in an article in The Economist accompanying the report: “The EU has reached a point where, without action, it will have to compromise either its welfare, the environment, or its freedom.”
The report incisively analyzes the EU’s drift towards a lower-tech, low-competitiveness future, highlighting issues like high energy prices and urging the EU to leverage its position as a major consumer of natural gas to negotiate lower prices. Reuters provides a summary of the report’s key points.
One of the most significant proposals in the report is for the EU to issue new common debt to fund its industrial and defense needs. However, this suggestion was promptly rejected by the German government, which remains committed to the principle of non-mutualization of debt, even in the face of potential economic decline.
This highlights a broader issue within EU governance, where Draghi’s proposals may appear more cosmetic than transformative. The existing organizational structure is unlikely to bring about substantial improvements. As federalists, we argue that a truly effective European strategy—whether in competitiveness or any other area of governance—can only be realized through a radically new European federal constitutional framework.