Previous European Central Bank President Mario Draghi gave a speech at the European Parliament yesterday enouraging European leaders and politicians to act as a cohesive and one country on strategic matters. Mario Draghi was commissioned by the European Union to write a report on potential measures and policies that can improve Europe’s competitive. In his report, Mario Draghi proposed among other things a capital union to increase efficiency in energy and gas purchases.
The previous head of the ECB warned that incoming US tariffs may not only restrict Europe’s largest export market, but may also expose it to increased Chinese imports. He also said that European savings need to be further funneled to European research as Europe still lacks investment opportunities. He also referred to the brain drain of the best European scientists leaving for the United States. Europe can have an advantage in research via government funding and also said that the price of electricity in Europe is still too high.
Draghi also encouraged Europe to increase its production of natural gas by reducing taxation, barriers and coordinate in procurement. On defence, Draghi also criticised fragmentation and encouraged the EU to coordinate better a cohesive and unified European defense industry. Unifying traditional European industries needs the removal of capital barriers and highlighted that steel and metal industries are now also important for strategic and defensive reasons.
His report has been welcomed by many European leaders and MPs, but there has been no effective action about the issue of the fragmentation of Europe’s energy market. Earlier this year, the EU Commission announced it will begin the process to create a capital and banking Union, along with an increased investment in the artificial intelligence industry, with a document called the European Compass. Mario Draghi supported this initiative. However Draghi insisted that the EU must act fast to avoid further stagnation.
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