BRUSSELS, 16 September 2025 — Mario Draghi has warned that the European Union is losing ground to competitors and must accelerate long-promised economic reforms.
Speaking in Brussels one year after submitting his competitiveness report to the European Commission, the former European Central Bank president said the bloc’s current growth model is “fading fast” and that governments have yet to grasp the urgency of the task. He urged action at greater “speed, scale and intensity”, coordinated at EU level rather than fragmented nationally.
Draghi set out three areas of concern. First, growth and investment: he said vulnerabilities have mounted over the past year and that Europe still lacks a clear path to finance the scale of investment required. Second, trade pressures: the EU is being squeezed by new rounds of U.S. tariffs while its goods deficit with China has widened since late 2024. Third, technology: Europe is building gigafactories and expanding data-centre capacity but remains far behind in artificial intelligence.
On AI, Draghi cited production of large “foundation models” as a benchmark of capability. In 2024, U.S. companies produced about 40 such models, China 15 and EU-based actors only three. He said Europe must improve conditions for scaling companies, clarify rules on data use and accelerate industrial adoption of AI. Without these steps, the bloc risks trailing competitors that combine risk capital, deep markets and permissive regulatory environments.
Energy costs formed a second theme. Draghi noted that European natural gas prices remain close to four times U.S. levels, constraining energy-intensive industry and the deployment of power-hungry digital technologies. He warned that electricity demand linked to AI could rise by around 70% by 2030, adding pressure to grids and generation capacity unless planning and investment proceed more quickly.
The former ECB chief argued that large public subsidies have provided temporary relief but cannot substitute for structural reform. He said progress on completing the single market, opening capital markets and streamlining permitting remains too slow. “The more we push reforms, the more private capital will step up and the less public money we will need,” he said, adding that Europe may have to break “long-standing taboos” on policy coordination to match rivals.
Tuesday’s conference marked a stock-take of the Commission’s response to Draghi’s 2024 report. Commission President Ursula von der Leyen attended the event, which reviewed progress on recommendations and set out priorities for the next phase of work. The Commission has published an update page and the keynote speeches to mark the one-year review.
Separate assessments this year have pointed to limited follow-through on the report’s proposals. Analysts cite uneven progress on deepening the single market, fragmented approaches to subsidies and state aid, and continuing gaps in scaling technology firms. One analysis suggested that just over a tenth of recommendations had been implemented, with political disputes and bureaucracy slowing delivery.
Draghi linked the competitiveness debate to living standards. European growth has lagged the United States in recent quarters, reflecting weaker productivity and lower private investment. He said the EU’s response must concentrate on removing barriers that deter scale, mobilising private capital through well-functioning markets, and aligning regulation to support innovation while maintaining safeguards. He argued that acting collectively would reduce duplication and deliver projects at continental scale.
He also pointed to external pressures. Trade tensions with major partners have complicated export prospects, while China’s industrial capacity has weighed on prices in sectors such as electric vehicles and clean-tech inputs. At the same time, higher borrowing costs have made large-scale public investment more expensive, intensifying the need to crowd in private finance. Draghi suggested that a clearer investment pipeline and predictable rules would help re-rate European assets and draw long-term capital.
Despite the stark tone, Draghi framed the outlook as contingent on decisions taken now. He said Europe retains strengths in advanced manufacturing, research and skilled labour, but that these advantages need policy support to translate into growth.
“To carry on as usual is to resign ourselves to falling behind,” Draghi said. “A different path demands new speed, scale and intensity.”
The Commission is expected to outline next steps following the conference.
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