The long-awaited report on the future of EU competitiveness by Mario Draghi is finally out. Draghi’s report, which will influence the Commission’s next five-year policy agenda, makes practical recommendations on how to revitalize the European economy.
As a global company with proud European roots, we agree that now is the time to accelerate the continent’s competitiveness efforts. When reading the report, we had to add some of our own ingredients on how to achieve this.
Harmonization is key
Draghi discusses how to “build out the EU’s capital markets union”, and suggests simplifying supervisory oversight. We agree on simplifying things and fixing the fragmented regulatory system.
Capital markets in Europe are underdeveloped compared to the US. To strengthen the level of private investment, Europe must enable companies to grant employees more equity to make it more attractive to individual and angel investors. A single, simple way to tax equity grants with a base rate that still allows individual countries to set their own rate - like the VAT reform many years ago - would give the EU’s start-up ecosystem a massive boost and help Europe further establish a true Capital Markets Union.
Promote European tech champions
We’ve said it before, Europe needs to fight unfair competition.
Digital markets are still controlled by powerful foreign tech companies that levy hefty fees on companies, startups and developers, impacting businesses like a tax. These high fees limit EU companies’ resources for growth and innovation and make it harder for them to compete globally. We therefore agree with the report’s comment on “why Europe should not give up on developing its domestic tech sector.“ To compete globally, governments need to put an end to the unfair taxes and support European-grown champions, to reduce dependency on foreign Big Tech companies.
It’s not only about the money
The report calls for a hundred billion euros investment plan to restore productivity. It’s not only about numbers, but about how the money is being distributed.
European funds and programs are often focused on strategic goals at a national level - like building up certain domestic hard tech industries. However, those funds aren’t necessarily being put towards the best ideas and talent. Instead, Europe must listen more to EU entrepreneurs who are capable of building needs for the future, and must be willing to accept that they may not know yet what the great next thing looks like. This goes for AI, but much more.
AI is here to stay
Mario Draghi sees AI as an opportunity for Europe “to redress its failings in innovation and productivity” and calls for it to be integrated “into our existing industries so that they can stay at the front”. We can’t agree more - but we can go further.
Europe has the potential to lead in the ethical use of trustworthy AI, already setting a global standard thanks to the EU AI Act. It needs a framework that not only regulates but actively encourages the adoption of AI. To do so, it must prioritize AI training - kicking-off a massive training programme to prepare the current generation of workers for tomorrow and encourage innovation for responsible use of AI.
Well-functioning, competitive markets are the strongest force to grow societal value and bolster access to healthier providers. We look forward to the next 5 years and will continue to play our role in boosting Europe’s potential.
Read more about our thoughts for Europe in the EU Pink Deal.