EU Falling Behind on Growth; Urgent Reforms Needed

The European Union is falling behind on growth, and Mario Draghi is sounding the alarm. The former European Central Bank president criticized the bloc’s sluggish reform progress, revealing that only 11.2% of the 383 competitiveness recommendations made earlier this year have been fully implemented.

This comes as the EU struggles to match the economic momentum of the United States and China. In the second quarter of 2025, the EU’s economic growth was one-eighth the pace of the U.S. economy. Draghi highlighted that the EU’s global competitiveness is eroding due to excessive regulation, high energy prices, and an inability to scale in emerging sectors such as artificial intelligence and green technology.

Energy costs remain a pressing issue. European industrial gas prices are nearly four times higher than in the U.S., deterring manufacturing and investment. Meanwhile, the bloc’s fragmented regulatory frameworks are delaying digital adoption and innovation. In AI, for example, Europe has launched just three foundation models in the past year, compared to 40 in the U.S. and 15 in China.

Draghi emphasized that temporary subsidies and national programs cannot replace the need for deep structural reforms. He called for a pan-European strategy that simplifies business regulations, improves infrastructure, and unlocks private capital on a large scale.

He warned that without urgent action, EU countries risk losing economic sovereignty, technological edge, and public trust. The risk is not just falling further behind—it’s becoming irrelevant on the world stage.

Policymakers now face a decisive moment. Unless they accelerate reforms, streamline regulations, and foster true single-market competitiveness, the EU may struggle to lead—or even keep pace—in a fast-evolving global economy.