Super Mario’s ideas on how to prevent the European Union’s “slow agony”

On 9 September, Mario Draghi (the previous President of the European Central Bank, whose role in saving the euro during the 2010 debt crisis earned him the nickname “Super Mario”) submitted his report on the future of European competitiveness, which was commissioned one year ago by the President of the European Commission, Ursula von der Leyen. His findings are unequivocal: the European economy is losing ground against the US economy, and is suffering a serious onslaught from China. The GDP per capita gap between the EU and the US rose from 15% in 2002 to 30% in 2023. According to the report, “Around 70% of the gap in per capita GDP with US at PPP is explained by lower productivity in the EU. Slower productivity growth has in turn been associated with slower income growth and weaker domestic demand in Europe: on a per capita basis, real disposable income has grown almost twice as much in the US as in the EU since 2000”. The solution lies in boosting EU productivity, and with this in mind, Mario Draghi calls on its Member States to make an annual additional investment of EUR 750 to 800 billion, i.e. 5% of EU GDP, otherwise the EU will slide into a slow agony. Part A of the report sets out this finding and makes recommendations, whereas Part B, which is over 300 pages long, analyses the weaknesses of the European economy in ten key sectors (including energy, artificial intelligence, semi-conductors, defence and transport), putting forward recommendations for each one, while at the same time developing five horizontal policies to be pursued with a view to restoring competitiveness.
Insofar as it emphasises that competitiveness should not be boosted at the expense of dismantling the European social model, the report is reassuring (see European social model). A European approach must ensure “that productivity growth and social inclusion go hand-in-hand.” “The European welfare state will therefore be critical to provide strong public services, social protection, housing, transport and childcare during this transition”. The EU should also review its approach to skills, and ensure “that all workers have a right to education and retraining, allowing them to move into new roles as their companies adopt technology, or into good jobs in new sectors.” Mario Draghi also emphasises that: “More effective and proactive citizens’ involvement and social dialogue, combining trade unions, employers and civil society actors, will be central in building the consensus needed to drive the changes. Transformation can best lead to prosperity for all when accompanied by a strong social contract”. The report has the merit of painting a realistic picture of the situation and ruling out the usual neo-liberal solutions of recourse to austerity and dismantling labour law, in favour of promoting an investment policy.
The social partners have given the report a cautious welcome. Will it be enough to prompt an appropriate reaction from EU leaders, who will have to discuss this report in the coming months? Nothing could be less certain, as the report invites those in charge to use public borrowing to supplement private investment, a policy likely to deter many Member States.