Mario Draghi publishes report on the future of European competitiveness

17 September 2024: After a few months delay, Mario Draghi has published his report on the future of European competitiveness. The report was long-awaited by the Commission to prepare a strategy for the next mandate, indeed, the President of the Commission herself mandated former ECB President to prepare this report.

In the report, Draghi is uncompromising: the EU needs to take action and invest in the future of its industry to improve its competitiveness if it doesn’t want to keep falling behind geopolitical competitors. Indeed, he lists what he sees as the obstacles to EU growth: energy dependencies, over-regulation of the industry and a European Union that is too heterogeneous when it comes to industrial strategies. He also states three major transformations ahead of Europe: the need to accelerate innovation and find new growth engines, to bring down energy prices while continuing to decarbonise and to react to geopolitical instability.

When it comes to aviation, Draghi highlighted the social and economic value of a sector that enables development and social inclusion, and its undeniable growth (79 per cent more passengers and double the freight by 2050). Although the industry is working on decarbonisation, its efforts are hindered by slow infrastructure development, long project timelines and reliance on public funding. He therefore presented some policy recommendations:

• Enhance infrastructure planning by shifting towards fully multimodal transport by integrating different modes.
• Increase public and private investment and introduce schemes to attract private financing by reducing risks.
• Eliminate barriers to EU integration, especially in air transport, by implementing the Single European Sky 2 Plus package.
• Improve efficiency through digital technologies, particularly those in the Single European Sky initiative, focusing on better air traffic management and integrating it with airline and airport operations.
• Prioritise fuel-efficient, zero-emission aircraft and sustainable aviation fuels (SAF).
• De-risk decarbonisation investments by introducing mechanisms like Contracts for Difference and auction schemes to support investment in SAF and low-carbon fuels.
• Use public procurement, foreign direct investment screening and export credit facilities to support EU industries, particularly in SAF production, to ensure EU autonomy in renewable and low-carbon fuels.
• Adapt job profiles to the green and digital transition, promoting flexible employment opportunities and enhancing professional mobility within the sector.

Overall, Draghi confirmed that Member States must work closely together, and that the institutions have a major role to play in political and financial support, and now is the time to react, or it will be too late. Some of the most striking quotes of the report include “We should abandon the illusion that only procrastination can preserve consensus. In fact, procrastination has only produced slower growth, and it has certainly achieved no more consensus.” And “To digitalise and decarbonise the economy and increase the EU’s defence capacity, the total investment-to-GDP rate will have to rise by around 5 percentage points of EU GDP per year to levels last seen in the 1960s and 70s. For comparison, the additional investments provided by the Marshall Plan in 1948-51 amounted annually to around 1-2% of GDP in receiving countries.” Such quotes highlight the urgent need for the European Union to act and invest in its future before it is too late.