Key Takeaways:
On Thursday, April 18th, leaders of European Union states will hear about how the bloc could effectively compete with global rivals like the United States, China, and others in the race to develop new green and digital technologies.
Ex-Italian PM Warns EU Leaders of Last Opportunity to Rectify Economic Shortfalls
Former Italian Prime Minister Enrico Letta is due to summarize his 147-page report to EU leaders at a summit where he will present the current shortfalls of the market. Letto warned that the bloc could not simply consign the report to a drawer and hope for the best, stating it is the last window of opportunity for them to do something.
In a news conference with European Council President Charles Michel, the former PM said the economic stalling was taking place at a level relative to the US and the EU could not afford to wait.
According to the report, the rise in geopolitical tensions in Europe and the Middle East, and protectionism are threatening the EU’s economic security and undermining its push into various new forms of technologies, such as artificial intelligence, and green tech.
Barries on Finance, Electronics, and Energy Serve as Major Roadblocks to Growth and Innovation in the EU
The EU market functions relatively well when it comes to the exchange of goods, but underwhelms in the case of intangibles. Letta’s report highlights the need to remove any barriers in the way of services. The document also states that the exclusion of finance, electronic communications, and energy now serves as a major roadblock to growth and innovation in the continent.
As per Letta’s findings, the greatest overall impact could come from steering over 33 trillion euros worth of private savings to the real economy. About a third of that amount is held in current accounts across banks in the bloc.
The main challenges faced by the bloc are massive subsidies in the US that are drawing in European investors and China’s supply chain domination of newer technologies.
Europe is heavily dependent on both states for digital and green tech.
As per Letta’s findings, approximately 300 billion euros worth of family savings are heading outside the bloc, primarily to the United States, further highlighting the region’s fragmented markets.
The report proposes a nine-point plan to deepen the European single market and the formation of capital markets and energy unions. Plans for a capital markets union, which could unleash private money, date back a decade, but the move stalled due to EU members not wanting to relinquish their control of national financial rules.
While giving his thoughts on the report, Belgian Prime Minister Alexander De Croo, said it highlights the right elements and the next step is to “put it into practice”.
Europe will need to Invest an Additional 620 Billion euros for Green and Digital Transitions
The European Commission has said additional investments of up to 620 billion euros per year will be necessary for the planned green and digital transitions. The report recommends applying the EU’s existing rules on goods and services could unlock up to 700 billion euros worth of efficiency gains by the end of the decade.
Mario Draghi, former chief of the European Central Bank (ECB), said in a speech on Tuesday that the bloc needed consolidation and collaboration from all member states to create the scale to complete the process. He has called for increased investments in common goods such as energy networks and proposed the need for a comprehensive strategy to secure Europe’s essential resources.
Non-ferrous metals association Eurometaux said on Thursday that the EU would need to open at least 10 new mines, 15 processing plants, and 15 recycling plants by 2030 to meet its critical mineral goals.
Meanwhile, lobbying group BusinessEurope said it agreed with the report’s key message that the single market needed a reboot and the call for simpler rules across the EU.
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