Mario Draghi calls for a new industrial strategy for Europe – €800 billion in annual investments needed

Mario Draghi, the former Italian Prime Minister and ex-President of the European Central Bank, has called for a "new industrial strategy for Europe" in a groundbreaking report. In order to prevent the EU from falling further behind the USA and China, Draghi urged the EU to make annual investments of €800 billion. These investments are intended to finance comprehensive and rapid reforms. The report proposes a fundamental realignment of Brussels' economic policy direction. Key recommendations include the relaxation of competition rules to promote market consolidations, particularly in the telecommunications sector, the integration of capital markets through centralized market oversight, enhanced joint procurement in the defense sector, and a new trade agenda to strengthen the EU's economic independence. In his report to the President of the European Commission, Ursula von der Leyen, Draghi emphasizes the urgency of a unified response: "Never before in the past have the scales of our nations appeared so small and inadequate in relation to the challenges." These challenges include economic stagnation, a state of full-scale war on the Union's borders, and the rise of far-right parties. Draghi warned that without massive new investments, supported by private and public funds, as well as increased productivity, Europe would continue to fall behind. To boost the EU's competitiveness, additional investments of up to 4.7 percent of EU GDP are necessary – a level not reached since the 1970s. He stressed that the private sector could not finance the bulk of these investments without public sector support and underscored the need for joint funds for key innovations as well as joint European infrastructure projects and coordinated defense procurement. Though such measures might face resistance, particularly from countries like Germany and the Netherlands, they are to be pursued by the new Commission team, which will be presented on Wednesday. Draghi pointed out that failure to increase productivity and growth could lead to declining living standards in Europe. Reforms in the competition area would include a radical change in the approach to merger assessments to ensure that rules do not become a barrier to European goals. Particularly in the fragmented defense sector, he emphasized the importance of better coordination of national procurements and joint defense projects to enhance efficiency through market consolidations.