“TAKE TIME”
The report’s big takeaway is that Europe must invest up to €800 billion (US$863 billion) more a year to avoid falling further behind the US.
But there is a lot in the 400-page tome for the leaders to digest before lunch.
Besides his call for more investment to improve economic output, Draghi controversially called for common borrowing – an idea torpedoed by Germany – as well as reforming the EU’s approach to competition policy to encourage big spending.
In a draft declaration seen by AFP, the leaders stress “the pressing need for decisive action” and back Draghi’s proposals to deepen the single market, build the capital markets union that would better mobilise private capital as well as a trade policy that defends Europe’s interests.
They agree on “mobilising both public and private financing”, adding they would explore “all instruments … to match our goals”, a controversial inclusion that will likely spark long discussions.
Germany and other frugal northern European countries strongly reject taking on joint debt to finance investments despite the success of the pan-EU €800 billion COVID-19 recovery plan and Draghi’s proposal, backed by France.
German Chancellor Olaf Scholz said the report contained “many improvements and innovations that (Europe) needs”, yet without appearing to echo Draghi’s sense of urgency.
Minds have been focused in Europe after Trump repeatedly professed his love for tariffs on the campaign trail, threatening to target the bloc in particular.
That could trigger a damaging trade war between the US and Europe, with economists warning that even 10 per cent tariffs could hit European economic output.
SPARKING DEBATE
Raising Europe’s investment capacity could involve more public financing via the EU’s own budget or turning to the bloc’s own lender, the European Investment Bank.
The discussions however come at a difficult time as many countries in the EU scramble to bring under control their debt and deficit which ballooned during the coronavirus pandemic.
Friday’s talks only kickstart the conversation and concrete proposals are expected to come months later, with implementing reforms set to take even longer.
EU states all agree on the poison hurting Europe but the antidote, despite being clearly laid out by Draghi and others, has been harder for countries to accept.
The strong message from Draghi is to deepen the bloc’s cooperation overall by forming a capital markets union and creating single markets for telecoms, defence and energy. But whether leaders will act is another question.
