Europe Has Uphill Battle to Catch Up With U.S. on Growth

• Despite ambitious environmental goals, Europe struggles to match the economic growth of the United States over the past two decades. The EU faces issues like chronic under-investment, an aging population, and obstacles in the free flow of labor, capital, and goods.
• Former ECB chief Mario Draghi proposes solutions involving a low cost of capital, rule adjustments favoring innovation, and necessary state aid to overcome hurdles. The emphasis is on rapid investment to restructure supply chains and decarbonize economies.
• The EU estimates indicate a requirement of 650Bn euros annually until 2030 and 800Bn euros annually thereafter until 2040 for private investments. The goal is to close the technology gap with the U.S., foster green energy sectors, and reduce reliance on imported chips.
• The EU faces challenges in implementing a capital market union due to resistance from member countries protecting their interests. Even if achieved, it won't be a cure-all for the EU's competitiveness issues, as reflected in rankings and concerns about high electricity costs. Policymakers stress the need for private investment, raising questions about the sustainability of businesses dependent on subsidies.

(Source: Reuters)