BRUSSELS — Two years after Mario Draghi warned that Europe faced an “existential” threat from economic decline, his plan to make the continent competitive again has become the EU’s official agenda — but implementation lags behind rhetoric. The Commission has proposed a series of Draghi-inspired measures, from an industrial policy overhaul to new funding for competitiveness and defense. Yet grand ambition has come up against the realities of the EU legislative machine, and many proposals remain stuck in negotiations as national governments continue to defend their spending priorities and policymaking turf.
A year ago, Draghi didn’t sound too happy with how quickly his plan was being implemented. Since then, his frustration with the lack of progress has become increasingly visible. The former Italian prime minister recently co-founded the Rhine Group with Stripe chief Patrick Collison, bringing together business leaders, economists and former policymakers to push Europe from diagnosis to action.
The group says Europe is “in a harder place” than when Draghi’s report was published in September 2024, and warns that decline is inevitable unless governments act urgently. Its creation is itself a sign that Draghi believes the institutions responsible for delivering his agenda are moving too slowly. Europe’s leaders broadly agree that competitiveness matters.
The harder question is what they are willing to give up to pay for it. Here’s POLITICO’s assessment of progress so far. Draghi’s main recommendation was to steer EU money from agriculture and regional payouts toward competitiveness and innovation.
The Commission delivered on this in its proposal for the 2028-2034 EU budget, when it floated creating a new European Competitiveness Fund worth €410 billion. But during the ensuing budget negotiations, governments have diverged from Draghi’s advice. The draft negotiating position prepared by Cyprus last summer downsized the ECF while increasing funding for agriculture and regional funding.
In a further swipe at the Draghi report, the Commission reduced the budget’s leeway by giving countries the possibility to immediately hand €45 billion from a rainy-day fund to farmers. On a more positive note for the EU executive, member state governments broadly approved a new budget structure that prioritizes flexibility at the expense of pre-defined allocations. Draghi’s hopes of turning the EU into an investment hub to rival Wall Street are still very much a work in progress.
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