IRELAND WILL NEED to share debt with other European member states in order to boost and improve the competitiveness of the EU single market, an expert report has recommended.

The report was written by ex-Italian Prime Minister Mario Draghi, under the direction of European Commission President Ursula von der Leyen, and explores methods the EU can compete with other markets, such as the US and China, in the coming years.

Draghi, who previously served as the President of the European Central Bank, claimed that member states can no longer “ignore” competitiveness and added that, he believes, the EU is in a “weakening position” in the global trade market.

Additionally, the report recommends, member states’ Governments should not be able to use their veto when entering into joint-financing schemes, such as ‘Eurobonds’.

Common borrowing schemes are joint ventures between Governments within the EU that will borrow money together and take on the debt as a Union.

Titled “The future of European competitiveness“, the report outlines how the EU can do better than the current situation to compete in industries such as energy, technology, computing, defence, space, pharma and transport.

The recommendations outline a step-by-step plan on how member states can reduce barriers to growth in these sectors, futureproof the single market, and what steps can be made immediately under existing plans, such as the Green and Digital Transitions.

Draghi takes issue with some regulatory measures in these sectors, namely in tech, and claims that they currently hinder the growth of these industries within the EU. He reasons that more needs to be done to better improve their expansion by member states.

During a press conference today, the former Italian leader said he believes that the EU’s existing view of the future competitiveness of the bloc “lacks focus” and painted a grim image of Europe’s place in the global markets.

The headline recommendation from the report is that, in order to fund improvements, EU member states need to agree to enter common borrowing and joint debt schemes for common infrastructure.

Stopping member states from vetoing these schemes will ensure that the plan is properly financed and that individual countries cannot “delay or dilute” measures to strengthen the EU’s single market so it can keep up with competitors, Draghi reasons.

Common borrowing and joint-public funding for European projects is “instrumental” to the plan, according to Draghi, and has “several positive aspects” including simultaneously strengthening the single market and member states’ economies.

These schemes are, in short, joint-financing projects where individual Governments inject public funds into European projects, borrow funds together and take on the debt as a union rather than a single entity.

Nicknamed ‘Eurobonds’, common borrowing schemes have previously been supported by Ireland but has been met with some push back, from countries such as France and Germany.

Concerns about the plan are mainly to do with the risk that some members states, with strong economies, will end up paying more for common debt schemes when entering joint-financing projects with countries with weaker economies.

Speaking in Brussels today, however, Draghi reasoned that a number of steps and decisions would need to take place before European member states would need to decide whether or not to join a Eurobond scheme.

“It all depends on the plan,” Draghi said. “Whether we need to take the action, if we are going to take the action, and how to finance that. Then it’s [working out] how much of it will be privately financed and how much is publicly financed.”

Draghi agreed that increased private finances used to build essential infrastructure, such as energy grids, would have the same effect on the European single market as joint-borrowing schemes.

He added: “But there are projects, such as [energy] grids, where private money is not enough and the case for public money becomes pretty urgent.”

So far, the Eurobonds idea was used in the aftermath of the Covid-19 pandemic as a measure to strengthen the single market at a time of increased volatility.

Ireland has opted in to similar schemes before, but has been hesitant to join common-defence spending schemes, due to its militarily neutral stance. It is unclear, at this time, what impact the blocking of vetos for such schemes would have on Ireland’s position. 

Today’s report, along with a previous report written by another former Italian Prime Minister Enrico Letta, was commissioned by von der Leyen and likely signals the direction the Commission President wants to take in terms of financial security of the EU during the next term.

Fianna Fáil MEP for Ireland South Billy Kelleher, and member of the European Parliament’s economic affairs committee, said that today’s report should be a “wake up call for the European Commission and all Member States to get their act together”.

Kelleher welcomed plans in the report to support smaller businesses and to jointly procure and finance European resources. “Fundamentally, we must pool our resources, pool our skills, and pool our potential,” he said.

“Our continent is at a crossroads: the choice is between investment and simplification to build a new economy, or stagnation and retrenchment,” Kelleher added.