Act against European disengagement

LThe report on European competitiveness, written by Mario Draghi and submitted on Monday 9 September to the President of the Commission, Ursula von der Leyen, draws up an implacable assessment of the weaknesses of the European Union (EU). The former President of the European Central Bank (ECB) speaks of a “existential crisis” which must provoke a surge without which Europeans will have to compromise on their standard of living and their sovereignty.

Evolution of disposable income, innovation, productivity: for nearly twenty years, Europe has continued to fall behind the United States and China. When Mr. Draghi extends the statistical curves, the future looks even bleaker. By 2040, Europe will lose an average of two million workers each year. As for productivity, if it remains at its current low level, the continent is condemned to stagnation until the middle of the century while its rivals continue to accelerate.

To reverse the trend, the report calls for an urgent reorientation of economic policy through an investment effort, estimated at 800 billion euros per year, or 4.7% of the European gross domestic product. This funding would be the condition for Europe to improve its productivity in order to be able to finance its social model, maintain its prosperity, support the ecological transition and remain master of its destiny in the face of more efficient and better organized rivals.

The European Achilles heel can be summed up in the EU’s inability to take advantage of its vast market, which is still too fragmented. This is obvious in terms of private investment. The completion of the capital markets union would make it possible to direct European savings towards long-term financing needs. Mario Draghi also calls for more cooperation in the areas of energy, innovation and defence, and calls for a review of competition rules and administrative and legislative simplification.

The report is supposed to inspire the work of the European Commission, which is currently being set up. However, without the political will of the twenty-seven member states, its 400 pages risk remaining a dead letter.

Divergences in fiscal policies

There is no shortage of potential obstacles. The Franco-German engine, which in the past has provided the necessary impetus to move Europe forward, has broken down. Politically weakened, Emmanuel Macron and Olaf Scholz, the German Chancellor, are not in a position to assume the leadership necessary for the aggiornamento advocated by Mario Draghi. France is mired in its political crisis and its deficits. The themes addressed by this report, although crucial, are totally absent from the national debate. Germany, for its part, is on the brink of recession, while its economic model must be completely overhauled.

As for the question of a new common loan for the Twenty-Seven suggested by the former president of the ECB, it comes up against the divergences in the budgetary policies of the member states, between those which, like France, are under an excessive deficit procedure and those which, like Germany, do not spend enough.

Crises have always been effective spurs to advance European construction. The difficulty this time is that the danger of falling behind is a slow poison and barely perceptible in the short term. Europeans must nevertheless convince themselves that by not acting now they would condemn themselves to an inevitable decline.