Tasked by European leaders with preparing a report on how to boost the competitiveness of the European economy, Mario Draghi today transmitted a message of extreme urgency to the economic ministers of the European Union meeting in Ghent.
“The global economic order has undergone profound changes in recent years. These changes have consequences, and a very clear one is that we are going to have to invest an enormous amount of money in a very short time in Europe” and “not only public,” declared the former president of the European Central Bank (ECB) upon his arrival in Ghent. Inside, behind closed doors, he has been more categorical and has warned of “dramatic consequences” if the EU is not capable of making decisions to make the necessary investments in the field of energy transition and digitalization (about 600,000 million euros per year during several exercises) and defense.
Draghi has been the star guest at the informal Ecofin meeting organized by the Belgian presidency of the Council to reflect on possible ways to mobilize financing, both public and private, national and European, to face these challenges. “If you are not able to respond to these financing needs, Europe’s productivity will fall even further behind with dramatic consequences for our prosperity and security,” the former Prime Minister of Italy has warned the representatives of the Twenty-Seven, community sources explain. . “Do something!” He told them at another point in the debate.
On the table of the Twenty-seven, a wide range of instruments that could include a new issuance of common debt to finance new community aid programs, in line with what the Union did in response to covid, for example to boost investments in defense that the EU is considering making in response to the Russian invasion of Ukraine. “We opened that path and I see no reason not to have common financing for our common objectives,” defended the European Commissioner for Economy, Paolo Gentiloni, in favor of replicating the Recovery Fund model and the SURE program, which helped finance the unemployment subsidies in Spain and Italy during the pandemic, to promote new European priorities, including rearmament.
Draghi has spoken about the possibility of financing investments in energy and defense with European money but has not told ministers what his recommendations will be. The support of a personality as respected as the Italian for the idea of ????launching new issues of common debt to obtain the necessary financing for certain investments could be decisive in obtaining the support of Germany and other countries. For Vincent Van Peteghem, Belgian Finance Minister and host of the meeting, “it will be important to take advantage of the presentation of this report and use that momentum, that impulse to make decisions” on his own initiative and not, for example, in “crisis” mode. after the US elections.
There are no “taboos”, Van Peteghem has assured in reference to Eurobonds. But there are no “magic solutions” but rather different elements on which to work to respond to the weaknesses of the European economy, for example by creating a true union of capital markets. Current financial fragmentation is considered one of the main causes of the investment gap between Europe and the United States. Now that the debt crisis is becoming a distant memory, there is also talk of improving the “financial education” of Europeans, who are much less inclined to invest than Americans. The objective, to awaken the dormant savings of European households. Draghi has asked ministers to reflect on “how to mobilize them much more than in the past.”
