> Although Europe has long been poorer than America, its citizens used not to mind too much. Americans had too many guns and they had coq au vin. But as Mr Draghi lays out with urgency, the world around Europe has changed, making the continent’s lack of growth and innovation a threat to its way of life. “The EU has reached a point where, without action, it will have to compromise either its welfare, the environment or its freedom,” he writes in a guest article for The Economist.
> Mr Draghi’s case is supported by a number of developments, including that the rest of the world is no longer playing by what the EU considers the rules. Led by America and China, countries are using protectionist policies to give their own firms an edge. Europe fears it will lose out economically if its companies cannot compete. It also risks becoming dependent on foreign supply-chains that China wishes to dominate, such as for rare earths, or to which a future American administration could one day restrict its access, perhaps in a crisis, such as for advanced tech.
> Another is that Europe’s decline is becoming more painful. In 1995 European productivity was 95% of America’s; today it is less than 80%, which is a big enough gap for holidaymakers to notice. In frontier tech, such as artificial intelligence, Europe now looks set to fall further behind. And as this tech spreads to more and more sectors—think of self-driving cars—Europe’s potential for innovation will further decline. Pricey energy will make it still harder to lure cutting-edge firms in the future.
> On top of this, Europe’s failure to exploit its scale is becoming more of a problem, as other countries make the most of their own size. “In the 1980s, when the single market was taking shape, Italy’s economy was about as big as China’s and India’s combined,” notes Mr Letta. It hardly seemed to matter if industries such as defence, energy, finance and telecommunications were national affairs. No longer.
> Many of Mr Draghi’s plans—such as the creation of a single capital-markets supervisor—also require power to be transferred away from national governments. “Such a step would help to remove all the hidden barriers in Europe,” argues Nicolas Véron of Bruegel, a think-tank, “but neither national regulators nor many market participants would want such a strong European supervisor.” Governments like to have sway over their countries’ most important companies. “Each head of government wants the CEOs of the national energy firms, banks or telecom companies on speed dial, in case of crises,” says Mr Letta.
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> Although Europe has long been poorer than America, its citizens used not to mind too much. Americans had too many guns and they had coq au vin. But as Mr Draghi lays out with urgency, the world around Europe has changed, making the continent’s lack of growth and innovation a threat to its way of life. “The EU has reached a point where, without action, it will have to compromise either its welfare, the environment or its freedom,” he writes in a guest article for The Economist.
> Mr Draghi’s case is supported by a number of developments, including that the rest of the world is no longer playing by what the EU considers the rules. Led by America and China, countries are using protectionist policies to give their own firms an edge. Europe fears it will lose out economically if its companies cannot compete. It also risks becoming dependent on foreign supply-chains that China wishes to dominate, such as for rare earths, or to which a future American administration could one day restrict its access, perhaps in a crisis, such as for advanced tech.
> Another is that Europe’s decline is becoming more painful. In 1995 European productivity was 95% of America’s; today it is less than 80%, which is a big enough gap for holidaymakers to notice. In frontier tech, such as artificial intelligence, Europe now looks set to fall further behind. And as this tech spreads to more and more sectors—think of self-driving cars—Europe’s potential for innovation will further decline. Pricey energy will make it still harder to lure cutting-edge firms in the future.
> On top of this, Europe’s failure to exploit its scale is becoming more of a problem, as other countries make the most of their own size. “In the 1980s, when the single market was taking shape, Italy’s economy was about as big as China’s and India’s combined,” notes Mr Letta. It hardly seemed to matter if industries such as defence, energy, finance and telecommunications were national affairs. No longer.
> Many of Mr Draghi’s plans—such as the creation of a single capital-markets supervisor—also require power to be transferred away from national governments. “Such a step would help to remove all the hidden barriers in Europe,” argues Nicolas Véron of Bruegel, a think-tank, “but neither national regulators nor many market participants would want such a strong European supervisor.” Governments like to have sway over their countries’ most important companies. “Each head of government wants the CEOs of the national energy firms, banks or telecom companies on speed dial, in case of crises,” says Mr Letta.
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