With his three-word promise to do “whatever it takes”, former European Central Bank president Mario Draghi is said to have forestalled the eurozone’s sovereign debt crisis in 2012. At 400 pages, his solution to raising the EU’s flagging economic competitiveness is a great deal more wordy. But the overall principle, of doing whatever it takes, is similar. The bloc, he argues, needs a “new industrial strategy”, and must raise investment by €800bn a year to boost its growth. At 4.7 per cent of GDP, that is over double the scale of the Marshall Plan, relative to the size of the economy.
Draghi is right about the scale of the challenge. The bloc needs an ambitious agenda to jump-start its long subdued productivity growth. The economy has persistently grown more slowly than the US over the past two decades.
It has also become clearer that Europe’s economic model is in urgent need of renewal. The US is spending heavily to attract clean technology industries. Imports of cheap green tech from China have also sparked fears of deindustrialisation, particularly in Germany, the EU’s largest economy. Last week, the finance chief of Volkswagen, Europe’s largest carmaker, warned that the company had “a year, maybe two” to adapt to lower sales. The ongoing trade war with China and the possibility of a second, more protectionist, Donald Trump presidency also threatens its exports.