A Europe that is moving slowly, bogged down by bureaucracy and far behind its main competitors, notably the US and China, said former ECB president and former Italian prime minister Mario Draghi, speaking in Brussels today at a high-level conference on EU competitiveness to mark one year since the publication of his report.

“Without faster growth, Europe will not be able to deliver on its climate, digital and security goals, not to mention financing its ageing population,” the former ECB President warned.

According to him, “one year later, Europe is in a more difficult position.” He explained that “our growth model is weakening, vulnerabilities are increasing and there is no clear path to finance the investments we need.” According to Mario Draghi, the trade confrontation with the United States and the debt of European countries “have reminded us in a harsh way that inaction threatens not only our competitiveness but also our sovereignty.”

Draghi stressed that it is necessary to “act together and we need more speed” and underlined the need for “a different course that requires new speed, scale and intensity”. This, he explained, means “we need to act together, not fragment our efforts” and means “producing results in months, not years.”

Governments do not know the gravity of the situation

Asked by the European Commission to provide an initial assessment, twelve months after the publication of its report on the future of European competitiveness, Draghi recalled that he had presented recommendations in three priority areas:

Priorities:
The European Commission has outlined several key priorities for the future.
-bridging the gap in innovation and advanced technologies,
-to chart a decarbonisation pathway, and
–in strengthening economic security.

He underlined that these recommendations are at the heart of the Commission’s agenda and welcomed the actions already taken. However, he expressed regret that “governments are not aware of the seriousness of the situation”, noting that European citizens and businesses appreciate the diagnosis, clear priorities and action plans, but also express growing frustration at the EU’s slow pace and inability to move as fast as the US and China.

No more time to lose

“Too often excuses are made for our slowness,” the former ECB president continued, noting that “sometimes inertia is even presented as respect for the rule of law” – which he called “complacency”. He explained that “competitors in the US and China are much less constrained, even when acting within the law”.

Therefore, he stressed that “business as usual means accepting that we are falling behind”, but “there is no more time to lose” and the real question that needs answering is “how to increase the speed of European action for competitiveness, economic security and independence”.

Removing barriers and regulations, applying AI

According to the former ECB president, the areas requiring urgent action are:

– First, the raising of barriers to the spread of new technologies. As he said, a “28th regime” for the establishment of a new legal entity must become a reality. This would allow innovative companies to operate, trade, and raise finance without barriers in all 27 member states, just as competitors in other major economies can do.

– The second area is regulation. One of the key demands of European companies, according to Mr Draghi, is a radical simplification of the General Data Protection Regulation. As he explained, AI models require huge amounts of public data to be available online. However, legal uncertainty about their use creates costly delays, slowing down their development in Europe.

– The third area is “the vertical integration of AI into industry”. In this area, Europe has a real advantage, according to M. Draghi, yet only about 10% of manufacturing companies used AI last year. Industry and governments need to work together to turn this initial advantage into proprietary European solutions. The Commission’s ‘Implementing AI’ strategy this autumn will be a crucial test.”