Mario Draghi, the former Governor of the European Central Bank and Italian Prime Minister, warned that the European Union is rapidly falling behind its global competitors in economic growth and that European governments still do not grasp the magnitude of the challenges and the gravity of the current moment.
Draghi, who prepared a comprehensive report on competitiveness at the request of the European Commission, explained that the traditional growth model in the EU is quickly fading and that vulnerabilities are exacerbating over time, in the absence of a clear plan to finance the essential investments that the European economy needs to reclaim its position in the global race.
In his speech in Brussels, attended by European Commission President Ursula von der Leyen, Draghi noted that the plans put forth by the Union seem ambitious on paper but are progressing far too slowly, which poses a risk to Europe’s economic standing. He added that continuing on the current path means surrendering to decline, while the situation requires urgent action and closer cooperation among member states, instead of fragmenting efforts.
He highlighted the new challenges facing the Union, foremost among them the pressures resulting from U.S. tariffs, in addition to the trade deficit with China, which has increased by 20% since December 2024. He confirmed that these challenges put the European economy under increasing pressures that are difficult to manage with traditional mechanisms.
In the technology sector, Draghi emphasized that the EU is still significantly behind in the field of artificial intelligence, as the United States produced 40 new core models over the past year, compared to 15 models in China, while the EU's production did not exceed three models only.
He also considered that the high energy prices, particularly for natural gas, which is about four times more expensive than prices in the United States, represent an additional obstacle to technological development in Europe. He predicted that the electricity demand generated by artificial intelligence would jump by 70% in Europe by 2030, exacerbating the crisis and increasing the pressures on the European economy.
Draghi saw that current measures such as supporting energy prices may alleviate burdens temporarily but are not a long-term solution, stressing that Europe needs deeper structural reforms to attract more private capital and reduce reliance on public financing. He added that the rest of the world has already broken many economic taboos while Europe remains hesitant, which threatens its competitive position if it does not act swiftly.
