One year after the Draghi report: Draghi speaks at conference, Orbán criticizes Brussels

One year after the release of the Draghi report, former ECB president Mario Draghi warned at a high-level conference that Europe’s economic and strategic vulnerabilities are deepening, while Hungarian Prime Minister Viktor Orbán used the occasion to once again criticize Brussels for slow and ineffective responses.

Draghi report: Summary of Professor Draghi’s Keynote Speech on the conference

Professor Mario Draghi, presenting a keynote address one year after the release of his influential report, warned that Europe’s economic and strategic challenges have deepened rather than eased. He recalled that the report identified three core risks: a fragile growth model reliant on world trade and high-value exports, dependencies on other powers that undermine resilience, and the absence of sustainable financing to meet Europe’s climate, digital, and security ambitions. In his view, each of these issues has become more acute over the past year, with mounting consequences for competitiveness and sovereignty.

Draghi pointed to a shifting global landscape: U.S. tariffs have reached their highest levels since the 1930s, China’s trade surplus with the EU has risen by nearly 20% since December, and the Union’s reliance on the United States for defense and on China for critical raw materials has constrained its policy responses. Europe, he argued, is not moving fast enough to reduce these vulnerabilities, leaving it exposed to both economic and geopolitical pressures.

Although the EU has taken some steps—including advancing the Mercosur trade deal, launching strategic projects for critical raw materials, and sharply increasing defense spending—the financial burden of Europe’s multiple transitions is rising dramatically. According to Draghi, the European Central Bank now estimates that annual investment requirements for 2025–2031 will reach nearly €1.2 trillion, up from €800 billion a year earlier. Public financing needs have nearly doubled, as defense spending, in particular, is largely state-funded. At the same time, EU debt is projected to climb to 93% of GDP within the next decade, even under optimistic growth assumptions.

Draghi underlined that Europe cannot afford complacency. Citizens and businesses, he said, support the Commission’s agenda of boosting competitiveness, but they are frustrated by the EU’s slow pace of action. While the U.S. and China move swiftly to deploy industrial policy, Europe remains constrained by institutional inertia, fragmented national efforts, and an overly complex decision-making process. “To carry on as usual,” he warned, “is to resign ourselves to falling behind.”

He set out three areas where urgent progress is required:

• Technology and AI: Europe lags badly behind the U.S. and China in the development of foundation AI models and the scaling of new technologies. While plans are underway for AI gigafactories and data centre expansion, only three large-scale European foundation models were developed last year, compared to 40 in the U.S. and 15 in China. Draghi called for removing barriers to scale, channeling resources into large centres of excellence, simplifying GDPR rules that slow innovation, and accelerating the integration of AI into industry—particularly manufacturing, where Europe still holds a global advantage in automation solutions.
• Energy and decarbonisation: High energy costs, with European gas and electricity prices far exceeding U.S. levels, threaten to derail the continent’s transition to a high-tech economy. Draghi stressed the need to align energy strategy with digital policy, accelerate investment in grids, interconnectors, renewables, and nuclear, and reform electricity pricing so it is not disproportionately tied to gas. He welcomed the Commission’s Clean Industrial Deal and Grid Package but warned that delays in permitting and fragmented national planning are slowing progress.
• Industrial policy and financing: Draghi argued that Europe must coordinate state aid more effectively, avoiding the current patchwork of national subsidies that fragment the single market. Instead, resources should be concentrated on large-scale, strategic projects—similar to Japan’s focused investment in semiconductors. He urged greater use of EU-level public procurement to create demand for European technologies and called for reforms in competition policy to allow consolidation in strategic industries like defense and space. Finally, he argued that financing the transition will require new instruments, including the joint issuance of common European debt to fund transformative projects.