The European Union is failing to keep pace with the United States and China in terms of investment and technology. Following the diagnosis presented in Mario Draghi’s 2024 report, EU institutions have launched a number of initiatives, including measures to protect the single market, stimulate investment and simplify regulations. However, Members of the European Parliament have reservations about the pace of the changes being introduced and their real impact.
“Draghi’s report was meant to be a wake-up call for Europe when it comes to strengthening competitiveness. Unfortunately, I have the impression that most of its recommendations still have not been implemented. The report mentioned, among other things, deregulation, pointing out that there are too many regulations in the EU and that businesses are being stifled by them. It also highlighted high energy prices resulting from climate policy and the lack of a proper energy transition in Europe. Unfortunately, these two main challenges have still not been addressed, and in some areas the EU is even accelerating in the opposite direction,” Piotr Müller, Member of the European Parliament from Law and Justice, told Newseria.
Deregulation and reducing administrative burdens for companies are among the key elements identified in Draghi’s report. Since its publication, the European Commission has prepared a series of so-called omnibus packages aimed at simplifying rules in areas including sustainability reporting obligations, administrative requirements for farmers under the Common Agricultural Policy, procurement in the defence sector, chemicals, the automotive sector and personal data protection. According to the Commission’s assumptions, regulatory simplification is intended to reduce administrative costs for businesses by 25 percent, and by 35 percent for SMEs, by 2030.
“Wherever possible, we should reduce the costs resulting from bureaucracy, for example by introducing artificial intelligence into some administrative processes, but also through the automation of processes in factories and companies,” says Müller. “The changes proposed, for example in the area of deregulation, are very shallow. However, the most important element of the report that is not being implemented concerns energy. Compared with electricity prices in the United States or China, the European Union performs very poorly, which is extremely important in the context of investment in artificial intelligence or robotisation.”
High energy costs remain one of the most frequently cited challenges to competitiveness. Analyses prepared for Draghi’s 2024 report show that industrial energy prices in the EU are as much as two to three times higher than in the United States, while gas prices are four to five times higher. In addition, since 2000, real industrial energy prices in Europe have doubled, placing a particularly heavy burden on energy-intensive sectors.
“The European Parliament has adopted another binding climate target, and it does not mean a reduction but, on the contrary, a tightening of climate policy by 2040. If there is no change, the European Union will remain a drifting structure,” says Anna Bryłka, Member of the European Parliament from Confederation.
“The European Union could abolish the ETS system and the ETS2 system, which is due to come into force within two years. These are the things it should do today, otherwise we will be highly uncompetitive in terms of energy,” Müller says. “We need to consider how to redirect some budget funds towards areas such as digitalisation or building capacity in artificial intelligence. The European Union mentions this in the new budget perspective, but there are still no major specifics.”
Analyses prepared for Mario Draghi’s report show that the European economy faces a clear investment and technology gap compared with the United States and China. EU companies spend around EUR 270 billion less annually on research and development than American firms, while catching up would require additional investment of around EUR 750–800 billion per year. In September 2025, in a summary of the first year after the report’s publication, Draghi cited European Central Bank data indicating that the investment gap may be as high as EUR 1.2 trillion annually.
“While the diagnosis of the EU economy’s problems presented in Draghi’s report is correct, the solutions he proposed are not. The proposal to inject EUR 800 billion a year into the EU economy is unfeasible. Besides, the question is whether this would help the European economy in any way. What is needed here is a change in mindset, a change in structural problems and finally an end to naïve thinking. This reflection is missing at EU level,” Bryłka emphasises.
In the new financial perspective, the European Union is announcing both investment support instruments and trade protection measures, such as the CBAM mechanism, industrial subsidies and EU investment programmes, which are intended to reduce pressure from cheap imports and strengthen the position of European industry.
“In the new financing programme, we have almost EUR 230 billion for the Competitiveness Fund, which is nearly one trillion zlotys to make the European economy more competitive. This means investment, protection against the inflow of products that could actually weaken some of our sectors, and, on the other hand, strengthening the economy and simplifying regulations,” adds Dariusz Joński.
The European Competitiveness Fund is intended to support investment in industry, the energy transition and the development of new technologies, including artificial intelligence. According to the European Commission’s assumptions, these funds are meant to increase the ability of European companies to compete globally and reduce dependence on imports in strategic sectors. Investment in digital technologies and artificial intelligence is of particular importance.
“Europe must catch up technologically with the leaders, because we are somewhat digitally excluded when we look at China and the United States, among others. But it can be done — we just have to want it,” Joński adds.
As he emphasises, due to differences between individual Member States, the negotiation process is lengthy and requires compromises, but it does produce results.
“If we were one country, we could do it within three months, but we must remember that the EU consists of 27 countries, and the Parliament itself includes many political groups with which agreements have to be reached,” says the Civic Coalition MEP. “We are making the case for our arguments, whether it concerns military Schengen, where everyone has already become convinced that we must do it, the Competitiveness Fund to support the entire European economy, or products made in Europe so that we limit imports from China and other countries.”
