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The report presented in Brussels on September 10 by former ECB Governor Mario Draghi put on the table some interesting insights for both the future of the European Union and the approach of Member States in terms of economic policies. It seems clear that the future of Europe can only pass through new investments, but it is even more obvious that these must be carried out intelligently and in the fields that can best shelter the Union from attacks and interference from the international market.
THE LIMITS OF THE DRAGHI REPORT
In the 327 pages of his Report on the Future of European Competitiveness, Mario Draghi wanted above all to outline a new industrial strategy – as well as political and organisational reforms – for the European Union. The former governor’s aim is to find a way to reverse the European Union’s decline in relation to the growth of other international superpowers such as the United States and China. As many as 170 proposals have been included in the Report, about policies ranging from economy to defence and to common debt, and the reform of the Union’s internal decision-making mechanisms. The problem with this document, however, is that it’s mainly bound to the will and aspirations of at least a few Member States that might not match Draghi’s enthusiasm for investment and expansion of the common debt. In fact, the real sore point is that, according to the analysis, from 750 to 800 billion euros per year would be needed to be competitive with the US and China. The reference put forward by the international press is of the magnitude of about two Marshall plans: an investment manoeuvre that would be worth roughly 4.7% of the European GDP. Draghi’s statement on these investments is clear and strong at the same time. According to the Governor, only in this way could the independence, welfare and freedom of European society be secured. Naturally, sensitivities – especially in economic matters – differ from one chancellery to another. Not all Member State governments would be willing to follow Draghi’s guidelines by accepting, for example, the issuing of new Eurobonds: an opposing front that could put the European institutions that emerged from the last elections in quite some difficulties.
THE ANTI-INVESTMENT FRONT
The opposition to the expansion of the common debt is certainly represented by the governments of frugal countries that embody different economic visions. The first stumbling block is certainly the German government, according to which the raising of a common European debt would not solve any structural problem of the Union’s economy. Austria, the Netherlands, Denmark, Sweden, Finland and the Baltic republics are also likely to oppose it. These are all governments that adopt economic policies of debt and European budget containment. There is also no shortage of eastern Member States not interested in reviewing the investments of the status quo. A very difficult position for the new European institutions to overcome, especially if we also look at the other measures envisaged by Draghi in his report. Specifically, when it comes to revisioning the treaties, facilitating voting by increasing the topics on which the House can vote by qualified majority and no longer by absolute majority. There are several leaders who might not look favourably on this prospect, above all because of the risk that it would undermine the decision-making autonomy of member countries on particularly sensitive issues. The solution, therefore, seems to be still far away, although perhaps a course of action towards Draghi’s outlook could meet the expectations of many Member States. At the moment, the issue to put on the table should be that of overcoming the austerity that has gripped the European institutions for too long and thus, by extension, the governments of the Union’s members. The resistance of the chancelleries most used to (and supporters of) these policies should also be overcome to ensure economic growth for Europe.
HOW TO OVERCOME AUSTERITY
Overcoming austerity is a complex and delicate path suitable for European institutions that are able to take up major challenges. In particular, the conservative forces have included several initiatives, measures and economic policies in their programmes that could give a considerable boost to the EU’s economic growth. These initiatives are represented by clear targets and increased investments that could drive economic growth, especially with a view to closing the gaps within the global market. In short, the austerity policy that the European Union has experienced in recent years cannot be preserved. The idea behind the reasoning is that debt sustainability can only be achieved and guaranteed through growth, with structural investments and not with arbitrary cuts in public spending that would depress the economy further. The resources put on the table by Europe, especially the NRRP and Cohesion Policy funds, can be used more quickly and efficiently. The aim, however, must be to support families and businesses through a general modernisation of the production system, the welfare and the world of work overall. In this sense, states should necessarily pay more attention to the most disadvantaged areas of the territories, which are more peripheral and perhaps far from economic flows. Investment in these areas would also hold the key to growth, to be articulated in various interventions and policies.
INTERVENTIONS THAT CREATE GROWTH AND STABILITY
The watchword here is ‘courage’, which the European institutions have so far shown to have not mastered. At the same time, what is needed is great capacity for analysis and understanding of the economic dynamics and mechanisms underlying European and Member State policies. These, specifically, need flexibility in their finances, and it is in this sense that we must aim at a substantial improvement of the Stability and Growth Pact. There is in Europe, therefore, a need for an investment strategy that aims to achieve the often discussed and often extolled goals of industrial and energy independence, in the double sense of economic security and defence from the increasingly tense and conflict-prone international dynamics. Of course, industrial growth cannot be mothballed by green ideology or blind obedience to the more fundamentalist dynamics of the green deal. Expenditure on investment in the green transition, on the transition to an increasingly digital Europe, and on defence – so important in this international context – should, therefore, not be counted in the deficit, so as not to further burden the national budget. Still on the front of the national economy to support businesses and households, governments should take on a tug-of-war with the ECB on interest rates, so as to reopen the possibility of loans and financing to revive the national economy. Attention should also be paid to the European Union’s upcoming policies. One of these includes the possibility that from 2028 the digital euro will be introduced as an exchange currency. An option – and this is the watchdog challenge that the conservative forces must set themselves – that must in no way burden the pockets of citizens and businesses. It is unthinkable that the introduction of this measure, intended to facilitate digital payments with a view to simplification and tracking, could burden citizens and indirectly the European economy.
THE NRRP AND THE COHESION POLICY AFTER 2026
Another challenge will be to carry the logic of the NRRP to its agreed deadline of 2026, respecting the timetable and completing the planned interventions. At the same time, however, one must also look ahead to the coming years, aiming at a reform of Cohesion Policy beyond 2027 with a view to a more coherent use of funds. On the topic, the Italian government was already clear during the campaign for the European elections: the goal must be to spend more and, above all, to do it better than in the past.