EU faces existential crisis without urgent investment and reform, says former European Central Bank president

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Mario Draghi’s idea to issue common bonds to finance an additional 800-billion euros a year in spending may be a non-starter

Mario Draghi was asked by the European Commission to write a report on Europe’s ability – more precisely, inability – to compete as it is squeezed by U.S. and Chinese innovation and manufacturing prowess. Mr. Draghi is a former president of the European Central Bank and a former prime minister of Italy.There is a reason the European Commission tapped Mario Draghi to write a report on Europe’s ability – more precisely, inability – to compete as it is squeezed by U.S.

In the report itself, which runs to nearly 400 pages, he wrote, “Never in the past has the scale of our countries appeared so small and inadequate relative to the size of the challenges … We have reached the point where, without action, we will have to either compromise our welfare, our environment or our freedom.”

His plea makes sense. His report calls for investment spending to rise to almost 5 per cent of GDP, a level not seen in Europe since the 1960s and 1970s, when the continent was still rebuilding industries destroyed in the Second World War and creating global champions ranging from Mercedes and Airbus SE to BASF and Roche. Today, some of these companies are going in reverse. Last week, once-mighty Volkswagen said it might close German car factories for the first time in its 87-year history.

 

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