On September 9th, the EU Commission released Mario Draghi’s highly anticipated report on EU competitiveness. Aimed at advising the EU leadership on future public policies, the report by former President of the European Central Bank and former Italian Prime Minister Draghi explores the challenges faced by the industry and organizations in the Single Market. This report also sheds some light on what businesses can expect from the future Clean Industrial Deal, which is expected to be presented in the first 100 days of the new Commission.
One of Draghi’s key recommendations in the report is a huge increase in investment. Specifically, he suggests that the EU commits to an annual investment plan of €750-800 billion ($834-$890 billion) – which accounts for more than 4% of the EU’s GDP – to meet innovation objectives. Aside from the financial resources needed, the report also details the strategies the EU should focus on in the years to come: sustainable competitiveness, economic security, open strategic autonomy and fair competition.
Outlining the potential obstacles to this, Draghi explores how sky-high energy costs have disproportionately hit the EU’s energy intensive industries, and might handicap AI innovation. The report argues that hoping to reduce energy costs by relying on digital technologies, which are famously energy intensive to operate, will not be a viable strategy. Therefore, to train and operate advanced AI capabilities, the EU needs to understand how to fuel a high-tech decarbonization strategy, while lowering its energy costs.
This could prove an opportunity for EU tech firms: data from the Director General of Research and Innovation show that the EU can build a strong comparative advantage in digital technologies, particularly climate tech. Around 60% of the global high-value patents for low-carbon fuels are in Europe. Innovation is already underway; investing in clean tech can offer an excellent opportunity for the EU to capitalize on its first-mover advantage and build a strong comparative advantage. Industrial buyers and tech vendors alike should take note of Mario Draghi’s findings on European competitiveness, and contribute to what this report could be the starting gun for: a thorough and honest conversation about the challenges the sector faces in Europe.
