Draghi to the EU: ‘Extraordinary times require extraordinary actions’

Mario Draghi is back with a warning: Europe is running out of time. One year after his competitiveness report, he told Brussels that the Union’s growth model is cracking.Draghi’s address set the stage for a crucial debate on Europe’s economic future. Below, we break down the key statements from today’s conference.

VDL vows delivery on Draghi agenda

Ursula von der Leyen opened the conference with a pledge to see Draghi’s roadmap through: “We will relentlessly stay the course until we get all of it done. I am absolutely convinced that Europe can unite around this program. Every single Member State has approved the Draghi Report. And so has the European Parliament. We all know what needs to be done,” said Ursula von der Leyen, opening the conference marking one year since the presentation of the Draghi Report on EU competitiveness.

EU growth model in decline
Draghi’s assessment of Europe’s economy was blunt: “One year on, Europe is therefore in a harder place. Our growth model is fading. Vulnerabilities are mounting. And there is no clear path to finance the investments we need. We’ve been reminded painfully that inaction threatens not only our competitiveness, but also our sovereignty,” Draghi said at the start of his speech.

US tariffs test EU’s export resilience

On the Trump administration’s 15% tariffs on European goods, Draghi urged patience: “Diversifying away from the [U.S.] market is unrealistic in the short term,” Draghi stated regarding the 15% tariffs imposed by the Trump administration on European goods destined for the United States. 

But he stressed Europe must look beyond Washington, adding “Europe has begun to respond. Since the US absorbs around quarters of the global current account deficit, diversifying away from its market is unrealistic in the short term. But, for example, the Mercosur deal with Latin America can offer relief for exporters.”

EU finances worsening
Draghi painted a stark picture of Europe’s fiscal outlook, citing that “The ECB now puts annual investment requirements for 2531 at nearly 1.2 trillion, up from 800 billion a year ago. The public share has almost doubled from 24% to 43%, an extra half a trillion a year as defence is mainly publicly funded. Fiscal space is scarce, and without this new spending, EU public debt is set to rise 10% points over the next decade, reaching 93% of GDP on growth assumptions that are more optimistic than what it is at the present day.”

Bureaucratic inertia risks leaving Europe behind

Draghi warned against complacency in Brussels decision-making: “[Citizens] are disappointed by how slowly the EU moves. They see us failing to match the speed of change elsewhere. They are ready to act, but feared governments have not grasped the gravity of the moment. Too often, excuses are made for our slowness. Sometimes, inertia is even presented as respect for the rule of law. I think that’s complacency.” 

For Draghi, “Competitors in the U.S. and China are far less constrained, even when acting within the law. To carry on as usual is to resign ourselves to falling behind. A different path demands new speed, scale, and intensity. It means acting together, not fragmenting our efforts. It means focusing resources where impact is greatest, and it means delivering results within months, not years.”

Draghi urges pause on AI Act rollout
On the EU’s flagship digital regulation, Draghi ushered caution: “The AI Act is another source of uncertainty.The first rules, which included the ban on unacceptable risk systems, landed without major complications. Codes of practice signed by most major developers, together with the Commission’s August guidelines, have clarified responsibilities. 

He warned that the regulation’s next phase could risk stifling innovation if applied too rigidly, stating “implementation [should] be paused until we better understand the drawbacks. More broadly, enforcement should rest on ex-post assessment, judging models by their real world capabilities and demonstrated risks.”

Energy prices threaten Europe’s tech transition
Energy, Draghi warned, remains the Achilles’ heel of Europe’s competitiveness: “Natural gas prices in the EU are still four times higher than in the US. Industrial power prices are on average more than double. Unless this gap narrows, the transition to a high-tech economy will stall. Energy is as fundamental as technology in driving AI. Electricity demand by data centres in Europe will rise by 70% in 2030. Power already accounts for up to 40% of their operating costs.” 

He added that the Clean Industrial Deal and the Affordable Energy Action Plan may offer temporary relief, but they don’t address “the structural reasons why energy in Europe is so expensive. This includes gas prices that, following Russia’s invasion of Ukraine, are still about double their pre-COVID levels. A pricing system in which gas still sets the market price for electricity most of the time, even as renewables expand.” 

On decarbonization, he added: “It is the best long-term path for Europe to achieve energy independence, despite its lack of natural resources. But it requires much faster investment to make a renewable-heavy system work: in grids, interconnections, and clean baseload generation, such as nuclear. Today, half of the cross-border capacity needed by 2030 has no investment plan. Even approved projects take more than 10 years, with half-time lost to permitting. The current system — national coordination of permits and financing — is not fit for a European energy market. Cross-border projects need EU-level planning and execution.”

Defense and space need bold consolidation to stay competitive

Europe, Draghi argued, must think differently about defense and space industries. “In defense and space, and the dual-use technologies that underpin them, market dynamics are very different from consumer markets. Here consolidation is not necessarily a threat to consumers. It can be a way to cut duplicated R&D, lower costs, accelerate innovation, and focus procurement budgets.” 

He underscored that “competitors in the U.S. and Asia benefit not only from state support and vast procurement markets, but also from consolidation in these sectors. Yet Europe remains split between multiple national champions and overlapping industrial bases. Europe should be able to protect competition while still promoting consolidation and innovation. Resilience and innovation must be built into competition policy now. At a minimum, a fast track process should be established immediately.”

More unity and urgency

Draghi closed with a call for political courage: “We need concrete dates and deliverables, and to be held accountable for them. Deadlines should be ambitious enough to require real focus and collective effort. This was the formula behind Europe’s most successful projects: the single market and the euro. Both advanced through clear phases, firm milestones, and sustained political commitment.” 

He urged today’s leaders to match that level of ambition, warning that Europe cannot afford to be consumed by short-term politics. “Europe’s citizens are asking that their leaders raise their eyes from daily concerns towards their common European destiny, and grasp the scale of the challenge. Only unity of intent and urgency of response will show that they are ready to meet extraordinary times with extraordinary action,” concluded Draghi.