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EU Losing Economic Fight With US, China

By Stefan J. Bos, Chief International Correspondent Worthy News

BRUSSELS (Worthy News) – Mario Draghi has warned that the European Union needs a roughly 800 billion euros ($883 billion) annual spending boost combined with rapid decisions and coordinated industrial policies if it wants to keep pace economically with rivals the United States and China.

In a long-awaited report requested by the EU’s executive European Commission, the former European Central Bank chief and Italian prime minister raised doubts about the EU’s current “greening” let’s-save-the-Earth-approache and its more digital economy at a time of increased global tensions.

“We’re going to be a society that basically shrinks,” Draghi said in Brussels as he presented his ideas to relaunch the economy of the 27-nation bloc of 450 millionpeople and hold back the tide of American and Chinese dominance.

It was his 77th birthday last week, and journalists noted that those celebrations played a part in the bleak analogy: “We share this cake which becomes smaller and smaller ― with a smaller number of people.”

The EU should fear for its self-preservation as it faces a “slow and agonizing decline,” according to Draghi’s hard-hitting report.

However, his calls for additional investments of 750-800 billion euros – equivalent to 5 percent of the EU’s annual economic output – were not eagerly awaited by member states such as Germany and the Netherlands, which are among the most significant net contributors to the EU.

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Germany itself is struggling to keep its long-revered automobile industry running, while the Netherlands already faces massive strikes over pension reforms.

Yet Draghi said the money was needed to build a more resilient economy and regain previously high productivity growth rates.

“It’s ‘Do this,’ or it’s a slow agony,'” Draghi warned. Draghi’s report said EU countries had already responded to the new realities, but it added that a lack of coordination limited their effectiveness.

He noticed that differing levels of subsidies between countries disturbed the single market, fragmentation limited the scale required to compete on a global level, and the EU’s decision-making process was complex and sluggish.

Several members of the EU’s European Parliament welcomed the report, saying it was “a wake-up call” to EU member states and Brussels policymakers. “We need to take swift and significant action on EU competitiveness,” said Christian Ehler, a German legislator for the centre-right European People’s Party (EPP).

However, Martin Schirdewan, one of the co-chairs of Parliament’s most far-left bloc (The Left), condemned the report as the work of industry lobbyists setting the political agenda. “I fear that even though it falls short of what is needed now, it’s going to be quite influential.”

He said he fears the European Commission and the Parliament’s liberal and conservative blocs “will always refer to this report as kind of a playbook for a European industry and economic strategy.”