Europe’s share of the global economy is increasingAtrophythere are growing concerns that the European continent can no longer keep up with the United States and China.
“We are too small,” said Enri Coletta, a former Italian prime minister who recently presented a report to the European Union on the future of the single market.Report.
“We don’t have any ambitions,” Nicolai Tangen, head of the world’s largest sovereign wealth fund, told the British Journal.Financial Times” said. “Americans are morediligent.”
“European companies need to regain their confidence,” said the European Chambers of Commerceclaim.
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Caused the so-called “Competitiveness crisisThere are many reasons: EU regulationToo many regulationsand the organization’s leadership in Brussels has too little power.Financial marketToo fragmented; too little public and private investment; and too small to compete globally.
Former President of the European Central BankMario Draghi“Our organisation, our decisions and our financing were designed for ‘yesterday’s world’ – before the coronavirus pandemic, before the crisis in Ukraine, before the conflict in the Middle East, before the return of great power rivalry,” said Draghi, who is currently leading a study on Europe’s competitiveness.
Cheap energy from Russia, cheap exports from China, and the United StatesMilitary protectionOur fundamental dependencies can no longer be taken for granted.
Meanwhile, Beijing and Washington are investing hundreds of billions of dollars to expand their own semiconductor, alternative energy and electric vehicle industries and to upend the world’s free trade system.
Private investment is also lagging. For example,McKinsey Global InstituteAccording to a report by the European Economic Association, large European companies will invest 60% less than large American companies in 2022, while growing at only two-thirds the rate of large American companies. Per capita income is 27% lower than that of the United States on average. Productivity growth is lower than in other major economies, while energy prices are much higher.
Draghi’s report will have to wait until voters in the 27 EU member states go to the polls this week to elect their ownParliamentary representativeIt will be announced later.
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But he has declared that “radical change” is necessary. In his view, that means a big increase in joint spending, an overhaul of Europe’s cumbersome financing and regulations, and the consolidation of smaller companies.
The inherent challenges of more than two dozen countries acting as one are compounded by rapid technological advances, growing international conflict, and the increasing use of national policy to direct commerce. Imagine if each state in the United States had state sovereignty, with only limited federal power to raise money to fund, say, the military.
Europe has taken some steps to catch up. Last year, the European Union passed aGreen Deal Industrial Planto accelerate the energy transition. This spring, the EU first proposed aIndustrial Defense PolicyBut compared with the resources mobilized by the United States and China,These efforts seem insignificant.
The EU “will be far from meeting its ambitious energy transition targets in terms of renewable energy, clean technology capacity and domestic supply chain investments,” research firm Rystad Energy said in an analysis this week.
In Draghi’s view, the EU’s public and private investment in digitalization and green transformation alone needs to increase by another 500 billion euros (542 billion U.S. dollars) each year to keep pace.
Both his and Letta’s reports were commissioned by the European Commission, the EU’s executive arm, to meet this fall to set the bloc’s next policy.Five-Year Strategic Planhour,For reference by policy makers.
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In Europe and other regions, a significant number of people still preferOpen Marketare skeptical of government intervention. But many senior European officials, politicians andBusiness leadersMore and moreexpressmore proactive collective action is needed.
They believe that if public funds are not pooled and aSingle capital marketEurope will not be able tonational defenseenergy, supercomputing and other areas to compete effectively.
And without consolidating smaller companies, Europe will be unable to compete with giant foreign companies that are more capable of gobbling up market share and profits.
Draghi gave the example that Europe has at least 34 major mobile networks, while China has four and the United States has three.
Letta said he spent six months researching his report, visiting 65 European cities and experiencing first-hand Europe’s unique competitiveness flaws. He said it was impossible to “travel between European capitals by high-speed train.” “This is a profound contradiction that embodies the problems of this single market.”
Yet the solutions proposed could run counter to political ideals. Many leaders and voters across the continent are deeply concerned about jobs, living standards and purchasing power.
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But they are reluctant to give Brussels more control and financial power. They often don’t want to see local brands merge with competitors, or familiar business practices and administrative rules disappear. Another concern is the new chaos caused by red tape.
This year, angry France and BelgiumFarmersThey have blocked roads and dumped huge amounts of manure in protest against a massive increase in EU environmental regulations that govern their use of pesticides and fertilizers, planting schedules, zoning,etc.
Blaming Brussels is also a convenient tactic for far-right parties looking to exploit economic anxieties. France’s anti-immigration National Rally party has called the European Union “the enemy of the people.”
at present,PollsThe move comes as right-wing parties are expected to win more seats in the European Parliament, making the legislative body more divided.
At the national level, government leaders are keen to protect their own prerogatives. Over the past decade, the European Union has been trying to create a single capital market to make cross-border investment easier.
But many smaller countries, including Ireland, Romania and Sweden, oppose handing over power to Brussels or changing their laws, fearing it would disadvantage their financial sectors.
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Civil society organizations are also concerned about the concentration of power. Last month, 13 groups across Europe wrote a letteropen letterwarned that greater market integration would hurt consumers, workers and small businesses and give corporate giants too much influence, leading to higher prices. They also worried that other economic, social and environmental priorities would be put on the back burner.
For more than a decade, Europe has been lagging behind in several competitiveness indicators, including capital investment, R&D, and productivity growth.behindBut according toMcKinseyEurope is a world leader in reducing emissions, limiting income inequality and expanding social mobility, according to a report from the European Commission.
Some of the economic gap with the United States is voluntary. Half of the difference in GDP per capita between Europe and the United States is due to Europeans choosing to work fewer hours on average over their lifetimes.
Some warn that such an option may be a luxury if Europeans want to maintain their living standards.Senior ResearcherSimone TagliapietraPolicies governing energy, markets and banking are too fragmented, he said.
“If we continue to have 27 markets that are not well integrated,” he said, “we cannot compete with the Chinese or the Americans.”