Europe | Draghi and Letta unveil plans to strengthen European productivity

After a year of work, Mario Draghi has just presented the report commissioned by Ursula von der Leyen to kick-start EU productivity and competitiveness. This joins an earlier, though equally essential, report by Enrico Letta.

Key points

• Key points:
• In the last two decades, despite relatively favorable global conditions due to globalization, among other tailwinds, European countries have generally been outperformed by the United States. Unfortunately, the current international environment is more demanding and less conducive, making it all the more imperative to change Europe’s strategy.
• International trade has become more fragmented, Russia is no longer a cheap energy supplier and its invasion of Ukraine poses a genuine threat to European security, geopolitical risks are increasing, and certain dependencies have now become vulnerabilities.
• With populations expected to decline, productivity will be the only source of growth to finance the investments needed to cope with the dual digital and climate transition and new defense needs, and to sustain a welfare state that we must not only preserve, but also build upon.
• Both Draghi and Letta highlight that the European productive system suffers from a significant deficit in size compared to its global competitors. European companies are smaller on average and tend to be less dynamic than their United States counterparts.
• Both of them have been calling for EU countries to focus on breaking down regulatory and other barriers that undermine the performance of the European Single Market and their national markets, to facilitate further business growth.

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