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EU falling behind on growth, reforms even more urgent, says Draghi
Published by Global Banking and Finance Review
Posted on September 16, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 16, 2025
2 min readLast updated: January 21, 2026
Mario Draghi warns the EU is lagging in growth and competitiveness, urging urgent reforms to address AI, energy, and trade challenges.
BRUSSELS (Reuters) -The European Union is falling further behind global rivals on growth and governments are failing to grasp the urgency to act, former European Central Bank president and Italian prime minister Mario Draghi said on Tuesday.
Draghi, who delivered a far-reaching report on EU competitiveness at the European Commission's request 12 months ago, said the EU's growth model was "fading fast", vulnerabilities were mounting and there was no clear path to financing necessary investments.
Draghi said the bloc had come up with ambitious plans, but it was moving ahead too slowly and governments had "not grasped the gravity of the moment".
"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," he told an audience of EU officials, including European Commission President Ursula von der Leyen, in Brussels.
SQUEEZED BY U.S. TARIFFS
Draghi addressed a number of challenges facing the European Union, now squeezed by U.S. tariffs and a trade deficit with China that has expanded by 20% since December 2024.
In AI, the European Union was building gigafactories and expanding data centre capacity, but gaps were clear. The United States produced 40 large foundation models - learning based on large datasets - last year, China 15 and the EU just three.
Draghi said more action was needed to address barriers to scaling up in Europe, regulation on the use of data and adoption of AI by industry.
Energy prices, such as natural gas nearly four times higher than in the United States, were also a constraint on technology, with AI electricity demand set to rise 70% in Europe by 2030.
Europe had structural problems to fix, but the main step taken by EU countries had been to subsidise prices for temporary relief.
"The more we push reforms, the more private capital will step up and the less public money we will need. Of course, this path will break long-standing taboos, but the rest of the world has already broken theirs," Draghi said.
(Reporting by Philip Blenkinsop and Tierney Kugel)
Draghi stated that the EU's growth model is 'fading fast' and that vulnerabilities are mounting, indicating a need for urgent reforms.
The EU is currently squeezed by U.S. tariffs, which are impacting its competitiveness in global markets.
The EU is building gigafactories and expanding data center capacity, but it faces significant gaps in AI development compared to the U.S.
Draghi highlighted that energy prices, particularly natural gas, are nearly four times higher in Europe than in the U.S., constraining technology growth.
Draghi suggests that more reforms are needed to attract private capital and reduce reliance on public funds, emphasizing the urgency of acting together.
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