Draghi: EU Countries Acting Alone Are ‘Too Small to Cope’

BRUSSELS (Reuters) – According to Mario Draghi, European Union countries are unable to independently compete with major powers like China and the United States. He stated that the EU needs to foster a more integrated single market to facilitate the emergence of pan-European businesses capable of achieving the necessary global scale.

Draghi, the former chief of the European Central Bank, was brought on by the European Commission to revise a report on the competitiveness of the EU. He expressed his views during a seminar at the Bruegel think tank, emphasizing that deeper integration is the most crucial step for the European Union.

He remarked, "If productivity is the objective, achieving scale in many of the sectors we have analyzed has become, in a sense, its essential ingredient, and scale can only be achieved through integrated single markets."

Draghi noted that cross-border national barriers and various national regulations hindered scale, especially as EU businesses face stiff competition from China and the U.S., both of which benefit from innovation and substantial subsidies. He pointed out, "In this new geopolitical context, individual countries are just too small to cope."

He stressed the need for a cohesive EU-wide strategy rather than a fragmented array of national strategies that are "tiny" and "uncoordinated." This would enable EU members to collectively determine which technologies are strategic and support the development of European strengths, rather than simply defending national champions.

Using the telecom sector as an example, Draghi suggested that Europe should not have 35 mobile network operators and 351 virtual operators without substantial investment. Instead, he advocated for a smaller number of robust pan-European competitors actively competing in national markets.

The proliferation of operators has resulted in lower investment levels in Europe compared to the U.S., particularly in a sector poised to become increasingly vital with the advent of artificial intelligence.

"We need to preserve competition in the future, but we should not impede scale. We should harmonize spectrum allocations and national regulations to truly create a unified European market for telecommunications," Draghi concluded.