Europe's competitiveness – an assessment of the Draghi report

Mario Draghi’s report on “the future of European competitiveness” is a wake-up call for European economic policymakers. In times of weak growth, high energy prices and intense competition, particularly from the United States and China, it reveals the extent to which the EU has lost out in terms of innovative strength and productivity. Based on a comprehensive analysis, the report contains groundbreaking recommendations for strengthening European competitiveness.

The report provides the new European Commission, which was inaugurated on 1 December 2024, with decisive impetus in the field of competition. This is already reflected in the fact that the new European Commissioner for Competition, Teresa Ribera, was introduced to the public shortly after the report was published. Many of the recommendations can already be found in the “mission letters” of the Members of the College of Commissioners.

Key findings of the Draghi report

The Draghi report shows that Europe's competitiveness is under increasing pressure in global comparison. While the EU lags around 34% behind the US in terms of per capita income in purchasing power parities (PPP), it only invests half as much in research and development. Europe is at risk of being left behind in key technologies such as artificial intelligence and quantum computing. In addition, the EU is heavily dependent on third countries, particularly for critical raw materials and strategic products, which jeopardizes its sovereignty. High energy prices and complex bureaucratic requirements take a toll on Europe as a business location and hamper investment and growth of its industry.

Main recommendations of the Draghi report

The Draghi report recommends that European policy areas such as industrial, trade and competition policy should be more closely interlinked to create a coherent strategy for stronger competitiveness. The full implementation of the single market is highlighted as an essential cornerstone to remove cross-border barriers for companies. In addition, start-ups and high-growth companies should be given easier access to capital so that they can develop and scale successfully within Europe and assert themselves against international competition. The next Multiannual Financial Framework (MFF) needs to be aligned in such a way that it addresses investment needs in key technologies and infrastructure and thus strengthens Europe's competitiveness in the long term. The report also focuses on reducing regulatory barriers in order to ease the burden on companies and boost Europe's innovative power.

Assessment by the Federation of German Industries

The Federation of German Industries has issued a comprehensive assessment of the Draghi report. The recommendations of the report provide an important impulse for a reorientation of European economic policy. The analysis is sound and many of the proposals are critical to make Europe more innovative, resilient and sustainable. Key measures include:

  • Promoting innovation and technological leadership through additional funding for research and venture capital. Overcoming the middle “tech trap” as an important guideline.
  • A clearer focus of the budget on strategic priorities, including a doubling of funding for the research framework program in the Multiannual Financial Framework 2028-2034.
  • Reducing red tape, including a reduction in reporting obligations, as a key step towards decreasing the burden on the European economy.
  • Reducing energy costs and simplifying approval procedures for renewables to ease the burden on companies.
  • Deepening the European single market in all areas.
  • Securing critical raw materials through a European raw materials strategy and the expansion of recycling in order to reduce dependence on third countries.
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