Mario Draghi Warns of EU’s Existential Risk, Calls for Stimulus Measures

Mario Draghi, former President of the European Central Bank (ECB), has sounded the alarm on the European Union’s (EU) competitiveness, warning that it is at ‘existential risk’. He has called for stimulus measures, including an annual investment of 800 billion euros, to boost the EU’s high-tech industries and prevent it from falling behind the United States and China.

Draghi presented the ‘Future of EU Competitiveness’ report in Brussels, Belgium, highlighting the need for urgent action to address the EU’s lagging development in artificial intelligence (AI) and semiconductors. The proposed investment of 800 billion euros is approximately 4.7% of the EU’s gross domestic product (GDP), a significant figure considering the scale of the Marshall Plan, an economic revival plan proposed by the United States to Europe in 1948.

The report, prepared at the request of European Commission President Ursula von der Leyen, highlights the EU’s struggles in producing innovative companies and attracting investment. Draghi noted that no European company with a value of more than 100 billion euros has emerged in the past 50 years, and that 30% of European unicorn companies left Europe after the 2008 global financial crisis.

The EU’s market capitalization of major listed companies and the size of its capital market have become incomparable to those of the United States. Meanwhile, the United States continues to move ahead by actively attracting investment from foreign companies through successive introductions of the ‘Inflation Reduction Act (IRA)’ and the CHIPS Act.

Draghi emphasized the need for a ‘pan-European semiconductor strategy’, urging the entire EU to strengthen semiconductor investment and collaborate to defend themselves from semiconductor export regulations from countries including the United States.

As a renowned economist, Draghi has a track record of successfully resolving economic crises. During his term as finance minister in Italy, he was called ‘Super Mario’ for reducing chronic fiscal deficits through strong restructuring measures. He also successfully resolved the economic crisis in Southern Europe during his tenure as president of the ECB.