Ursula von der Leyen has adopted the European Union’s time-honoured reform strategy: focus on the art of the possible. That looks like a smart move. But the question remains whether the bloc’s national leaders will come on board.
U.S. President Donald Trump hogged the headlines at last month’s World Economic Forum in Davos, but the prize for clear-eyed economic analysis at the event surely belonged to the European Commission chief.
Whether the newfound zeal for practical reform is a response to the U.S. president’s aggressive trade posture or former European Central Bank head Mario Draghi’s blueprint for EU economic revival, it’s a welcome change for many in the financial community.
The central recommendation in Draghi’s lengthy proposal is that the EU should invest an additional 800 billion euros ($826 billion) each year until 2030 to become a world leader in clean energy and advanced technology. He said this would require common borrowing – something that remains taboo for many EU member states.
So the European Commission president is instead focusing on more realistic plans, including completing a long-planned capital markets union. Von der Leyen noted that EU household savings total nearly 1.4 trillion euros, far more than in the United States, but these funds are fragmented across member states.
“We do not lack capital. We lack an efficient capital market that turns savings into investments,” she told the World Economic Forum.
Reuters
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