Industry on Draghi report: Europe must initiate reforms

Mario Draghi’s report on the future of European competitiveness published today paints a dramatic picture for Europe. The report reinforces the position of industry and business, which have been calling for a comprehensive competition and growth strategy for years. “Today’s publication of the report should form the basis for the work of the coming years. Now it is time to breathe life into the European competition agenda and finally tackle fundamental reforms and end or reverse the bureaucratic tsunami,” said Christoph Neumayer, Secretary General of the Federation of Industrialists (IV).

The detailed analysis of various industrial sectors also shows that the problems are complex. In the automotive sector, for example, in addition to the ambitious EU climate targets for climate-friendly road transport, comprehensive and sometimes incoherent legislation (such as CBAM and CSRD) as well as increasing competition from Chinese electric car producers are causing headaches. OECD data shows that nominal unit labor costs in the EU automotive industry were 30-40% higher than in China over the period 2010-2018. Together with the structurally higher energy costs, this puts the EU at a serious competitive disadvantage.

The comprehensive report outlines a future for Europe in which the European Union’s economic growth continues to lag behind China and the United States. The reason is slowing productivity growth, which in turn is slowing the overall economic expansion in the region. This also endangers current EU goals for implementing European climate ambitions and strengthening social justice. The report rightly recognizes the need for a new industrial strategy that addresses the challenges of reducing energy prices and increasing competitiveness. “European decision-makers should use the momentum created by the Draghi report to revitalize the location and increase productivity,” said Christoph Neumayer.