Draghi report on the European economy: cooperation, common debt and challenges for competitiveness

In his report, the former Italian prime minister argues for the need to complete the single market (as envisaged by the Letta Report); to make industrial, trade and competition policies more coherent ("the focus of such policies should be on sectors rather than companies"); to finance 'European public goods' in common; and finally to reform EU governance, reducing administrative burdens where possible but also delegating to the centre where necessary.

The topic of state aid is a sensitive one. In recent years, Brussels has been called upon to strike a difficult balance between the preservation of free competition and the promotion of continent-wide companies. Mario Draghi's report argues: 'As innovation in the technology sector is rapid and requires large budgets, merger analyses should assess how the proposed merger will affect the future of innovation in priority sectors.

The issue of financing the economy is crucial. "To maximise productivity, joint financing in investment in key European public goods, such as the most innovative sectors, will be necessary," the report states. "To achieve the targets set out in this report, a minimum additional annual investment of EUR 750-800 billion is needed, according to the Commission's latest estimates, equivalent to 4.4-4.7 per cent of EU GDP in 2023."

"The Union should move towards the regular issuance of common debt instruments to enable joint investment projects between Member States and contribute to the integration of capital markets," the former banker adds, referring to the example of the NextGenerationEU . Among other things, Mario Draghi suggests that 'Member States could consider increasing the resources available to the Commission by postponing the repayment of NGEUs'.

Defence deserves its own chapter. The former Council President notes limited technological investment and a very fragmented industry in Europe. "The report therefore recommends increasing European R&D funding and focusing it on joint initiatives. This approach could be developed through new dual-use programmes and a proposal for European defence projects of common interest to organise the necessary industrial cooperation'.

Finally, the financial node is linked to institutional issues: 'A new industrial strategy at European level,' the author argues, 'will not succeed without parallel changes in the institutional set-up and functioning of the Union'. In this sense, the former banker proposes to incentivise measures in favour of competitiveness using the Community budget, to reduce the number of decisions taken by unanimity of the member states, and to ultimately allow for enhanced cooperation.

The report also contains a reminder of the urgent need to apply the principle of subsidiarity more effectively. Not only is the legislative process taking an average of 19 months, but the Commission's own legislative activity has grown 'excessively long'. Former Prime Minister Draghi comes to a double conclusion: on the one hand, national parliaments should scrutinise EU initiatives in order to ensure more subsidiarity; on the other hand, the EU institutions themselves should have 'more self-control'.

By way of conclusion, the report published today is certainly a comprehensive and detailed outline of a possible roadmap. As is often the case, the author was forced to find a compromise between what would be necessary, even urgent, and what is politically feasible. The report - requested a year ago by the President of the European Commission Ursula von der Leyen - will now be discussed by the member states and, one must assume, put into practice at least in part.