Europe must continue to innovate. This is essentially one of the main messages of the report by Mario Draghi on the competitiveness of the Union, which places significant emphasis on new technologies.
The report prepared by the former president of the European Central Bank (ECB) is expected to significantly influence the Commission’s work plan for the 2024-2029 legislature, and its conclusions are already reflected in the political guidelines adopted by the President of the executive, Ursula von der Leyen.
“Europe must become a place where innovation thrives, particularly in the area of digital technologies,” Mario Draghi explained at a press conference on Monday. To achieve this, the Italian suggests a massive investment effort and numerous targeted reforms to support the strengthening of the Union’s competitiveness.
Increasing Investments
For Mario Draghi, the European Union (EU) should significantly increase its spending to compete with rising American investments since the Inflation Reduction Act (IRA), as well as heavily subsidized Chinese industries.
He proposes to more than double the Horizon Europe budget, the EU’s main funding program for research and innovation, increasing it from €93.5 billion to €200 billion. He also wants to redirect it towards financing more innovative research.
Semiconductors, computing, and artificial intelligence (AI) are among the technologies that receive special attention in the report.
Mario Draghi also aims to reduce the costs of deploying AI in the EU by significantly increasing computing resources for training models, relying on the AI factories initiative.
Strengthening the semiconductor supply chain will require “hundreds of billions,” but with the securing of essential raw materials, it represents a “insurance policy” for the future of the EU, he writes.
A Deeper Integration
“It is estimated that the General Data Protection Regulation (GDPR) has reduced profits for small tech companies by over 15%,” Mario Draghi further explains.
He thus calls for a simplification of European legislation, including harmonization of AI regulatory sandboxes, better implementation of the GDPR, and the adoption of a “European regulation on the development of cloud and AI,” aiming to harmonize requirements regarding dematerialized storage architecture (cloud).
Mario Draghi aligns himself with the larger telecommunications companies by advocating for the deregulation of their sector, as Enrico Letta had done in his report on the state of the EU single market last April, in order to improve their returns on investment in this capital-intensive industry.
The former ECB director also supports the goals of the polluter-pays principle, to the detriment of large American tech companies.
Targeted Reforms
Although the Italian economist acknowledges that the EU is lagging behind in certain sectors, such as cloud computing, he believes the Union should develop projects on its territory to remain independent in times of crisis.
Considering that the European Space Agency (ESA) is responsible for the fragmentation of the European space industry, Mario Draghi suggests ending the “geographical return” rule, which allocates contracts to national companies.
Talent is underutilized in the EU, he writes, creating economic issues in the spread of digital technologies, as shown by the reports on the EU’s digital decade.
Mario Draghi thus suggests revising member states’ training systems, introducing a common European certification system, and redirecting EU support for education towards more targeted sectors and skills, such as strategic value chains and management capabilities.
[Edited by Anne-Sophie Gayet and Laurent Geslin]