Mario Draghi is calling for up to 800 billion euros a year in additional investment from EU member states so that the EU can regain the competitiveness of its economy and avoid being trapped in the US and China. The former president of the European Central Bank and former prime minister of Italy presented his long-awaited report (some 330 pages) on the competitiveness of the European economy, commissioned by European Commission President Ursula von der Leyen, in Brussels tonight.

Mr. Draghi, who is seen by many as the man who saved the eurozone during his eight-year tenure at the ECB, is calling on EU member states to readjust their economic and industrial models immediately, by relaxing competition rules to make it easier to merge in sectors such as telecoms, the completion of the capital markets union, better use of the money member states spend on defence procurement and a new, updated trade agenda.

Mario Draghi argues that for the EU to regain its competitiveness and close the growing productivity gap with the US, investment of up to €800 billion a year is needed. It is worth noting that the European economy is 50% of that of the US, whereas only 15 years ago they were almost equal. This new investment that the former ECB president is complaining about is equivalent to about 4.5 of European GDP, much higher even than the Marshall Plan for rebuilding Europe after World War II.

On the big question of where this money will come from, Mario Draghi once again advocated for joint European lending and a more active role for the European Investment Bank. “The private sector is unlikely to be able to finance the lion’s share without the participation of the public sector,” Draghi said.

However, just weeks before the new European Commission takes office, the issue of new, short-term borrowing or an increase in national contributions to the EU budget may provoke a backlash from so-called “thrifty countries” such as Germany and the Netherlands.

As several European economists have repeatedly pointed out, the EU is facing a spiral of challenges, not only related to the Russian invasion of Ukraine and inflation, but also a competitiveness deficit with the US and China, as Beijing subsidizes critical industrial sectors with huge amounts of money, such as electric vehicles, while Washington gives serious financial incentives to companies operating in the green transition sectors, with the result that the EU is balancing between free trade and economic protectionism, looking for a way to compete with the world’s two largest economies.

To find a way to find the best way to compete with the world’s two largest trading partners.

Earlier in the day, European Commission President Ursula von der Leyen stressed that “the only way to ensure our long-term competitiveness is to move away from fossil fuels and towards a clean, competitive and circular economy. The second principle is that our competitiveness efforts must go hand in hand with increased prosperity for everyone in Europe.

As the Commission President stressed, “there are three main points I want to focus on. First, to be competitive, we need to master the clean and digital transition. Second point, we absolutely agree that we need more skills, because technologies are only as good as the people who design them, produce them and, of course, operate them. So we need to boost investment and skills and we need to get more people into the labour market with the skills needed for the clean and digital transition. And finally, let’s not forget that to be competitive, we need to be resilient. We have been through many shocks in recent years and we are working to build more.”