Radically changing the European economy is more urgent than ever after US threats of a trade war with the EU, the author of a seminal report, Mario Draghi, warned Tuesday.
Published in September, Draghi’s report starkly illustrated the challenges the European Union’s ailing economy faces to catch up with China.
Weak growth and low productivity will cause the bloc to fall further behind unless it reforms and ploughs hundreds of billions of euros more into its economy, it concluded.
The report focused minds in Brussels to heed the wake-up call.
Next week, the EU will present a much-anticipated, broader plan to strengthen energy-intensive sectors with measures for affordable energy as well as ways to build a booming clean tech sector to drive greater economic growth.
“The sense of urgency to undertake the radical change that the report advocated has become even greater,” Draghi told the European Parliament.
Draghi listed the challenges including the rapid progress of artificial intelligence, high energy costs and Trump’s move to hit extra customs duties on US trading partners.
“When the report was written, the main geopolitical theme was the rise of China. Now, the EU will face tariffs by the new US administration in the coming months — coming weeks probably — hindering our access to our largest export market,” Draghi said.
He warned higher US tariffs on China would mean more goods flooding into Europe, which would hurt European firms unable to keep up with the cheaper prices.
Draghi also said Washington wants to expand industrial capacity and therefore there could unleash policies to attract Europe’s firms to produce in the United States, “based around lower taxes, cheaper energy and deregulation”.
Last month, the EU unveiled a hotly awaited blueprint that represented a shift towards a more business-friendly Brussels after five years of heavy focus on green goals.
Draghi welcomed the roadmap as “a much-needed reorientation of key European policies”.
