Mario Draghi calls for ‘new industrial strategy for Europe’ and €800bn investment boost – business live

Key events

Show key events only

Please turn on JavaScript to use this feature

Draghi adds that he is confident that “in our unity we will find the strength to reform”.

Ad then he hands his weighty report onto the President of the European Commission, Ursula von de Leyen.

Draghi: we must genuinely fear for our self-preservation

Mario Draghi then warns reporters in Brussels that Europe faces very serious challenges.

Explaining the importance of taking the steps outlined in his new report, Draghi says:

We have to understand we are becoming ever smaller relative to the challenges we face.

For the first time since the Cold War we must genuinely fear for our self-preservation.

Draghi touches on the question of how such massive spending is possible.

He says it is unlikely that private investment alone can finance it alone – without destabilising the EU economy.

So, some form of common funding, and joint safe asset, will be needed.

Draghi: Europe must develop a “foreign economic policy”

The third part of Draghi’s report looks at increasing security and reducing dependencies.

That includes economic dependencies – as the raw materials Europe needs are in the hands of a few suppliers….

…and also security dependencies, even though geopolitics have “significantly worsened” in the last 10 years.

Draghi’s solution – Europe must develop a “foreign economic policy”.

That means….

Cordinating preferential trade agreements and direct investments with resource-rich countries, building up stockpiles in selected critical areas, and creating industrial partnerships to secure the supply chain for key technologies.

And, we need to build our defence industrial capacity.

Draghi concedes that these goals are not new – member states are doing this on their own. But they are punching ‘under our power’ – Europe coould be more effective if it combined its resources and coordinated policies, he argues.

Europe must also increase the supply of clean energy, Mario Draghi adds.

He cites Joe Biden’s Inflation Reduction Act (IRA) as an example of how incentives can be used to stimulate development of green technologies.

China’s state sponsored competition is a threat to developing the European clean energy sector, he says.

Draghi’s second recommendation is that Europe must combine “decarbonisation with competitiveness.”

He says decarbonisation is an opportunity for growth, but one that could be missed if European countries fail to coordinate.

Draghi says Europe needs a plan to decouples the price of fossil fuels from clean energy sources, so consumers see benefits from decarbonisation in their bills.

[currently, fossil fuels are still the main power plants “at the margin”, and hence often set the wholesale electricity price in Europe – as this paper explains].

Draghi: One in three EU unicorns has fled

Europe’s problem is not that it lacks smart people, or good ideas, Mario Draghi continues.

The problem, he argues, is that there are too many barriers to commercial innovations, and to scaling them up.

Draghi then points out that since 2008, 30% of unicorns - tech firms that grow to become worth over €1bn – which started in the EU have left.

The majority went to the US, Draghi adds:

30% of our most succesful innovators have moved, and this has to change.

Europe must become a place where innovation flourishes, especially for digital tech.

A weak tech sector will rob Europe of the growth opportunities of the AI revolution, and also hamper companies in the rest of the economy too, he warns.

Draghi: Europe is stuck in a static industrial structure

Mario Draghi then outlines the steps Europe must take – starting with closing the innovation gap with the United States.

Innovation is the first pillar of the report, he explains, citing Europe’s failure to keep up with Big Tech firms.

Giving a gloomy assessment of the situation, Draghi says:

Europe is nowaways stuck in a static industrial structure, populated by mid-technology companies which are already mature.

The leading firms in research and investment spending are the same ones we had 20 year ago – our cars.

Draghi adds that it was the same picture in the US 20 years ago- where their big R&D spenders were "autos and pharma”. Now, though, it’s all digital at the top, Draghi adds.

Draghi calls for €800bn EU investment boost and new industrial strategy

Over in Brussels, Mario Draghi is calling for coordinated industrial policy and a huge increase in investment to improve the economic situation in the European Union and lift competitiveness.

Draghi, the former European Central Bank chief and Italian prime minister, is presenting a new report on the future of EU competitiveness, which he has been working on for the last year.

In it, he calls for a much more coordinated industrial policy, more rapid decisions and massive investment to stop Europe falling further behind the US and China.

Draghi says that Europe needs to boost its investment by up to five percentage points of GDP – or up to €800bn a year - and much closer coordination between European countries to ensure the money is spent effectively.

Draghi says his report proposes a “new industrial strategy for Europe”, and is granular with 170 different topline proposals.

Speaking in Brussels now, Draghi warns that Europe’s productivity is “weak, very weak”, and point out that growth has been slowing down for a long time.

World trade is slowing, and become less open to European countries, Draghi says, adding that Europe has also lost its main supplier of cheap energy, Russia. Also, it needs to invest more in defence, for the first time since second world war.

Another hurdle, Draghi adds, is that this is the first year that Europe cannot count on population growth to lift growth.

Draghi’s report is likely to influence the debate on EU competitiveness, one of the priorities of the next European Commission, which is due to take office later this year.

Introducing Draghi, EC president Ursula von der Leyen said there is a “wide consensus” that the issue of improving Europe’s competitiveness must be “at the top of our agenda and at the heart of our action”.

Eurozone investor morale weakens

Investor morale across the euro area has fallen for the third month in a row.

The Sentix Investor Confidence Index has dropped to -15.4 this month, down from -13.9 in August, and lower than forecast.

Sentix warns that the eurozone economy is “threatening to tip into recession”, and blames the economic problems in Germany.

It says:

The eurozone is struggling with dangerous recessionary tendencies ‘thanks to Germany’. The situation in the rest of the world is also weakening, but investors here are somewhat more optimistic in their expectations.

Germany is on the brink of recession after its GDP shrank in the second quarter of this year. Its economy has been hit by high energy costs since Russia’s invasion of Ukraine, and its car sector has struggled to cope with competition from cheaper Chinese-built electric vehicles.

Barratt and Lloyds Banking Group have launched a £150m joint venture with the government body Homes England, that will lead to the UK’s largest housebuilder and mortgage provider capitalising on Labour’s plans to build 1.5m new homes.

The combined venture, known as the MADE Partnership, will oversee multiple large-scale projects, including town extensions, new garden village-style communities and brownfield developments, each made up of 1,000 to 100,000 homes and community facilities.

The government’s housing and regeneration body, Homes England, said the partnership would “ have the finance, tools, expertise and partners required to ensure a cohesive approach to delivering a fabulous place that people want to live and work”.

The venture will initially be backed by up to £150m in funding, provided by Barratt, Homes England and Lloyds, which will hold equal equity stakes.

But while MADE has described as a “long-term partnership”, the announcement of its launch on Monday did not included any timescale or housebuilding targets.