The EU must massively step up spending through joint borrowing to fund investments as it lags dangerously behind the US, a keenly awaited report said yesterday.
European Commission President Ursula von der Leyen last year asked Mario Draghi, a former head of the European Central Bank, to report back on how the 27-country bloc can increase its competiveness amid rising global insecurity and economic challenges.
The report called for additional investment of at least 750 billion to 800 billion euros (US$829.32 billion to US$883.54 billion), almost 5 percent of the EU’s GDP.
Photo: AFP
“For the first time since the Cold War, we must genuinely fear for our self-preservation and the reason for a unified response has never been so compelling,” Draghi told a news conference in Brussels to present his report.
Introducing his blueprint for a “new industrial strategy” based around about 170 proposals, Draghi said “the investment needs that all this entails are massive,” but that “radical change” was needed.
Citing the bloc’s historic COVID-19 recovery fund, the former Italian prime minister said it should issue new “common debt instruments ... to finance joint investment projects that will increase the EU’s competitiveness and security.”
The EU resorted to joint borrowing for 800 billion euros to support member states’ economies hit hard by the pandemic — but the concept remains controversial.
The idea’s biggest supporter is France, but other countries including Germany and the Netherlands oppose such action, fearing they would be forced to contribute more money to make up for southern European countries.
Aware of the difficulties of his proposal, Draghi said common loans would only be possible if “the political and institutional conditions are met.”
Another solution is to better mobilize private capital in the bloc, advocating for progress on the long-stalled push for an EU “capital markets union,” he said.
Von der Leyen in July won a second five-year at the helm of the bloc’s executive arm and hopes to use the report to shape her next mandate.
Europe is entering a new era, confronted by more competition from abroad, but with reduced access to foreign markets as rivals increasingly throw up barriers to free trade, Draghi said in his report.
He pointed to the “wide gap” in economic growth that has “opened up between the EU and the US, driven mainly by a more pronounced slowdown in productivity growth in Europe.”
Draghi’s report pointed to the EU’s weakness in the emerging technologies that will drive future growth — with only four European companies among the world’s top 50 tech firms.
“Europe must become a place where innovation flourishes,” Draghi told reporters, saying the bloc was “punching under our power.”
“We could do much more if all these things were done as if we acted as a community, but we lack focus on key priorities. We don’t combine our resources to generate scale. And we do not coordinate the policies that matter,” he said.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US