Commissioned by the European leaders to draw up a report on how to boost the competitiveness of the European economy, Mario Draghi yesterday conveyed an extremely urgent message to the Ministers of Economy of the European Union gathered 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 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) in his arrival in Ghent. Inside, behind closed doors, he was more categorical and warned of “dramatic consequences” if the EU is not able to take decisions to make the necessary investments in the field of energy transition, digitalization (around 600,000 million euros in the year for several years) and the defense.
Draghi was the star guest at the informal Ecofin meeting organized by the Belgian presidency of the Council to reflect on possible ways to mobilize funding, 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 Italian prime minister told representatives of the Twenty- i-set, 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 issue of common debt to finance new community aid programs, in line with what the Union did in response to the covid, for example, to boost the defense investments that the EU is considering making in response to the Russian invasion of Ukraine. “We are opening this path and I see no reason not to have common funding for our common goals”, defended the European Commissioner for the Economy, Paolo Gentiloni, in favor of replicating the model of the Recovery Fund and the SURE program, which helped to finance unemployment benefits in Spain and Italy during the pandemic, to boost new European priorities, including rearmament.
Draghi talked about the possibility of financing investments in energy and defense with European money, but did not tell the ministers what his recommendations would be. The support of a personality as respected as the Italian to 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 Minister of Finance and host of the meeting, “it will be important to take advantage of the presentation of this report and use the momentum, the impetus to make decisions” on your own initiative and not, for example, as if was a “crisis” after the US elections.
There are no “taboos”, assured Van Peteghem in reference to Eurobonds. But there are no “magic solutions”, but different elements on which to work to respond to the weaknesses of the European economy, for example, by creating a true union of the capital markets. The 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 beginning to be a distant memory, there is also talk of improving the “financial education” of Europeans, who are much less inclined to invest than Americans. The aim is to awaken the dormant savings of European households. Draghi asked the ministers to reflect on “how to mobilize them much more than in the past”.
