Will Super-Mario save Europe (again)?

Former ECB chief Mario Draghi has been given a tough task by the European Commission - his team has until the end of June to produce a report on how to make the European economy more competitive, especially against the US and China. Mario Draghi gave a first glimpse of the direction the recommendations will take this week (https://bitly.ws/3ieQX). And by his own admission - Europe needs radical change. According to Draghi, for too long Europe has (naively) believed in playing by the international rules. Our policies, decisions and financing are designed for a world that simply isn't there, whether because of COVID, the war in Ukraine or more volatile geopolitics in general. And Europe lacks a clear strategy for adapting to the new normal. A good example is the European car industry, which is facing unfair competition from Chinese car companies that are heavily subsidised by the domestic government. How to deal with this situation? Draghi identifies three pillars of a new European strategy. First, to promote the scalability of our businesses. In many cases, European companies do not reach the size of American or Chinese companies because they are highly fragmented. This prevents them from taking a bigger bite out of global market share and also hinders investment and innovation. The fragmentation of the European defence industry is a case in point: in America, the top five companies control 80% of the market, while in Europe they control only 45%. The second is greater integration in key sectors. Strengthening the European transmission grid could be the seed of a common energy union. Similarly, Draghi is considering the creation of a common capital market to mobilise domestic capital and boost investment. Thirdly and finally, the former ECB chief believes it is crucial for Europe to ensure a sufficient and stable supply of key minerals. If this does not happen, our climate ambitions will lead to much greater dependence on China. In general, Draghi's remedy for declining competitiveness is "more Europe". But this may not be to the liking of all member states, as the former ECB chief acknowledges. He therefore suggests that some member states could also act independently, as in the case of the euro. As is often the case with such strategies, it will be the implementation that counts. This will certainly not be smooth, but without fundamental changes, Europe is unlikely to budge.