2024-11-08 11:35:00
08 November 2024
12:35
Mario Draghi urges the Twenty-Seven, meeting in Budapest, to reform the European economy to reduce the gap with the United States and China. But they are even more divided on the line to follow since the election of Donald Trump.
How to revive the European economy, losing momentum in the face of the American and Chinese giants? The question is at the heart of an informal summit of European Union (EU) leaders, meeting this Friday in Budapest.
The Twenty-Seven should adopt the Budapest Declarationbased on former European Central Bank President Mario Draghi’s report on EU competitiveness. This 400-page document, published in September, draws up an alarming report on the economy of the Old Continent and provides recommendations to boost innovation and growth.
“The sense of urgency is greater today than it was a week ago.”
Return of Donald Trump to the White House
Since the publication of the Draghi report, things have changed somewhat. THE return of Donald Trump to the White Houseand the prospect of a trade war between the United States and Europe, imposes on European leaders a sense of urgency to initiate economic reforms.
Mario Draghi was the first to recognize this during the Budapest summit. “The recommendations in this report were already urgent, given the economic situation we find ourselves in. They became even more urgent after the US elections,” he said.
“We are allies, and it would be stupid for allies to impose tariffs on each other.”
“There is no doubt that Trump’s presidency will mark a big difference in relations between the United States and Europe. Not necessarily in an entirely negative way, but of course we have to take it into account,” he added, inviting “combating the fragmentation of the internal market and the fragmentation of the capital market“The sense of urgency is greater today than a week ago,” he insisted.
The Belgian Prime Minister, Alexander De Croo (Open Vld), called for “dialogue” with Donald Trump, and for “him explain what the impact of a tariff war between the United States and Europe would be“. “We are allies, and it would be stupid for allies to impose tariffs on each other. Our common competitor is China. We are not competitors.”
Reviving EU growth
In his report, Mario Draghi urges Europe to revive its growth through massive investments in digital innovation, the green transition and the defense industry. Otherwise, the European economy will enter into “slow agony”.
Mario Draghi calculates the investments needed to revive the European economy between 750 and 800 billion euros per yearmore than the American Marshall Plan which supported the reconstruction of Europe after the Second World War.
The President of the European Council, Charles Michel (MR), welcomed the Draghi report. It is “an excellent document, with clear and operational recommendations”, he said, inviting the EU to finalize the Capital Markets Union and recapitalize the European Investment Bank (EIB). “The EIB and the capital market can be powerful instruments to inject more money into the European economy,” he explained.
“The discussion on Mr Draghi’s report will take a lot of time and that’s fine.”
Ideological differences
European leaders broadly share this analysis. But they are divided on the recipes to apply. Some of them, like the Italian Giorgia Meloni and the Hungarian Viktor Orban, close to the elected American president, are inclined to less firmness, while others advocate a harder line against Donald Trump. This division has weakened the Budapest declaration, the original version having been watered down in recent days.
The Twenty-Seven will have to return to the Draghi report, and determine in the coming months concrete actions to take. “The discussion on Mr. Draghi’s report will take a lot of time and that’s good,” said German Chancellor Olaf Scholz, who therefore does not share the sense of urgency expressed by the Italian.
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“This report is a wake-up call for Europe to take bold action now.”
Delegates at the summit expressed the urgent need to promote economic reforms, particularly in light of the recommendations put forth by Draghi. The call for substantial investment in vital sectors is vital to strengthen Europe’s economic backbone amidst growing international competition.
As the EU navigates these challenges, leaders will need to maintain a unified stance, ensuring that Europe can effectively respond to external pressures while fostering internal growth and stability.
“Europe must invest in itself to ensure its place on the global stage.”
The determination to act, as expressed by leaders in Budapest, signals a potential shift in the EU’s collective approach to economic strategy. This meeting may mark a turning point for intra-European cooperation aimed at enhancing growth and competitiveness in an increasingly dynamic global economy.
