Former ECB President Mario Draghi calls for massive investment to revitalize EU

Mario Draghi, the former president of the European Central Bank and ex-prime minister of Italy, has painted a grim picture of the European Union’s future, warning that the bloc is “falling behind the U.S. and China.” Draghi stated that the E.U. faces “existential challenges” and must emerge from the “depths of low productivity and weak growth.” He emphasized that Brussels would need “an additional €750-800 billion annually” to meet its key objectives. The report, requested by Brussels, was released on Monday, outlines an action plan to halt the continent’s economic decline.

Draghi noted that Europe needs more than twice the investment provided by the Marshall Plan, which was implemented to rebuild the continent after World War II.

“To digitalize the economy, decarbonize, and enhance our defense capabilities, the share of investment in Europe must increase by about 5% of GDP,” he wrote.

Drawing a parallel with the post-World War II era, Draghi remarked, “This is an unprecedented situation,” adding that “the additional investments provided by the Marshall Plan between 1948 and 1951 amounted to approximately 1-2% of annual GDP.”

Draghi also highlighted that Europe’s population growth has ended, entering a phase of decline, with two million people leaving the labor market each year until 2040.

“Productivity is very weak. Now, more than ever, we need increased productivity,” he said, noting that Europe’s needs are rising despite low growth and productivity.

The former ECB president stressed that Europe requires a plan to strengthen defense investments to achieve strategic independence and enhance its global geopolitical influence. He suggested that Brussels may need to resort to new borrowing to meet these needs.

Draghi proposed several priorities for the E.U., including lowering energy prices, increasing competitiveness, coordinating industrial policy, and boosting defense investments.

He observed, “The E.U. must also adapt to a world where dependencies have turned into vulnerabilities, and it can no longer rely on others for its security.”