EU Set to Back Draghi Warnings on Lagging Behind US and China
(Bloomberg) -- The European Union is set to warn that the integration of the bloc’s single market is slowing down at the same time it’s facing stiffening pressure from major global economies including the US and China, according to a draft report seen by Bloomberg.
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In a report outlining the EU’s future challenges to its competitiveness, the EU’s executive arm cited “significant risks arising from increased geopolitical tensions, unfair trade practices and strategic dependencies, to which an open economy like the EU’s is exposed.”
The findings, which are largely a re-articulation of a broader report completed last year by former European Central Bank President Mario Draghi, are at risk of being overshadowed by an ongoing trade spat between the EU and China, and Donald Trump’s Jan. 20 inauguration. The document doesn’t contain any new policy plans or concrete actions.
Specifically, the EU says “increased Chinese exports at very competitive prices, in many cases facilitated by state subsidies, might cause serious damage to segments of EU manufacturing.” On Thursday, Beijing hit out at EU restrictions on third-country state subsidies, which it said the bloc was unfairly wielding against Chinese investment.
The document adds that the bloc “suffers from structurally high energy and electricity prices,” which can be as much as two to three times higher than costs in the US.
Ursula von der Leyen made affordable energy one of her political priorities for her second term as European Commission president. While electricity and gas prices have eased from records seen during an energy crisis in 2022, the region is still feeling the aftershocks.
The EU’s higher energy costs risk hampering the transition to climate neutrality, which Europe aims to reach in 2050. To further slash greenhouse gas emissions, the region wants to rely on electrification — and it hasn’t taken off yet at a large scale.
More broadly, the EU report acknowledges the bloc is significantly behind the US and China in the digital sector, noting that it’s home to only 263 unicorn companies, compared to 1,539 in the US and 387 in China. It warns that the two nations are “already way ahead” on the deployment of artificial intelligence technologies.
It also says that e-commerce giants are disrupting competition in the parcel delivery space, posing a challenge to the bloc’s postal sector at large.
--With assistance from Ewa Krukowska.
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