The ex-Italian premier has form for saving the economy “whatever it takes” — but who will pay for his plans?
Former Prime Minister and central banker Mario Draghi is set to produce a long-awaited report on EU competitiveness later today (9 September), which he’s promised will offer “radical change”.
Delayed from June, his findings will come at a key moment in the EU’s political cycle, setting the tone for the next political term just days before European Commission President Ursula von der Leyen hands her new clutch of lieutenants their duties.
During his eight-year term as head of the European Central Bank, Draghi famously pledged to do “whatever it takes” to defend the euro currency from market turbulence – but now von der Leyen has tasked him with saving the whole economy.
He’s already sown a few hints about what’s in his several hundred-page report, which is being produced with the aid of European Commission staff.
He’ll certainly highlight the growing productivity gap with the US – whose economy is now 50% bigger than the EU’s, though the two were peers 15 years ago.
In April, Draghi also spoke of the need to respond to massive subsidies paid by the US and China for strategic green tech, challenging the global trading order.
Leaks from his briefing to EU ambassadors last week suggest he’ll also discuss reducing the bloc’s dependency on the outside world, climate change and social inclusion – and detail recommendations for ten key sectors, such as defence and energy.
In that respect, many of his findings may simply echo those given earlier this year by Enrico Letta, another former Italian Prime Minister who’d been tasked with finding ways to boost the EU’s single market.
One major uncertainty is how Draghi – who headed Italy’s technocratic government from 2021-2022 — intends to pay for his plans.
In April, Letta suggested reserving a portion of national subsidies for EU projects, or using loans from the European Stability Mechanism, a pot originally intended for the banking sector, to fund defence.
Any further proposals Draghi has – such as common borrowing via Eurobonds – could prove the most controversial and contested element of his plans.
His findings will likely face challenges from right-wingers who’ll say he’s ignored the impact of migration, and from the left, who say he’s trying to deregulate and cut workers’ wages.
But they’ll also have to overcome institutional inertia; many are calling the report a wake-up call to a complacent Brussels.
The EU’s Council, which groups member states, has previously blocked many market reforms. But he may also call for a shake-up at the Commission, the EU’s executive responsible for proposing new laws.
Von der Leyen may end up copying-and-pasting his plans into the mission letters she gives her new Commissioners on Wednesday, meaning they could define her five-year term.
