Mario Draghi, former president of the European Central Bank, outlined in his report on the competitiveness of the European Union a vision in which the EU would become increasingly lagging behind economically in relation to the US and China. However, he also proposed a number of actions to counteract the realization of such a scenario. The key point of his plan was the proposal for the EU to invest an additional 800 billion euros per year to increase the competitiveness of the economy. This investment program would be financed by joint debt issues of the entire EU. For now, it looks like the main part of Draghi’s proposal will have little chance of being implemented. Germany is resisting.
What does the German government think of the Draghi report on EU competitiveness?
“I am very skeptical about Mr. Draghi’s approach to the debt issue. It can be summed up as follows: Germany should pay for others. This cannot be the main plan,” said Christian Lindner, German finance minister from the liberal FDP party.
Robert Habeck, the German vice chancellor and minister of economics and climate protection, agreed with Draghi that the EU needs major investments, but did not address how they would be financed. “The whole of Europe is facing existential challenges that we can only overcome together,” Habeck wrote. However, he is one of the most unpopular ministers in Olaf Scholz’s government, and his Green party is doing badly in polls and local elections. It is hard to expect him to convince the government of Draghi’s ideas. As for the issue of a common EU debt, both the SPD, the main ruling party, and the opposition parties CDU/CSU and AfD are skeptical. German business circles are also skeptical.
– We doubt whether joint debt for public funds is the right solution, says Thilo Brodtman, chairman of the German Machinery and Equipment Manufacturers’ Association (VDMA).
