A “competitiveness crisis” is raising alarms for officials and business leaders in the European Union, where investment, income and productivity are lagging.
Europe’s share of the global economy is shrinking, and fears are deepening that the continent can no longer keep up with the United States and China.
“We are too small,” said Enrico Letta, a former Italian prime minister who recently delivered a report on the future of the single market to the European Union.
“We are not very ambitious,” Nicolai Tangen, head of Norway’s sovereign wealth fund, the world’s largest, told The Financial Times. “Americans just work harder.”
“European businesses need to regain self-confidence,” Europe’s association of chambers of commerce declared.
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“Our organization, decision-making and financing are designed for ‘the world of yesterday’ — pre-Covid, pre-Ukraine, pre-conflagration in the Middle East, pre-return of great power rivalry,” said Mario Draghi, a former president of the European Central Bank who is heading a study of Europe’s competitiveness.
At the same time, Beijing and Washington are funneling hundreds of billions of dollars into expanding their own semiconductor, alternative energy and electric car industries, and upending the world’s free trade regime.
The built-in challenges of getting more than two dozen countries to act as a single unit have sharpened in the face of rapid technological advancement, growing international conflicts and the increased use of national policies to steer business.
In Mr. Draghi’s view, public and private investment in the European Union needs to rise by an additional half a trillion euros a year ($542 billion) on the digital and green transitions alone to keep pace.
Without pooling public financing and creating a single capital market, they argue, Europe will not be able to make the kind of investments in defense, energy, supercomputing and more that are required to compete effectively.
Last month, 13 groups in Europe wrote an open letter warning that greater market consolidation would harm consumers, workers and small businesses and give corporate giants too much influence, causing prices to rise.
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