Tech took centre stage in Mario Draghi’s long-awaited report on European competitiveness, released on Monday (9 September).

The report is expected to significantly influence the Commission’s new work plan for the 2024-2029 mandate, and already has influenced European Commission President Ursula von der Leyen’s political priorities, presented in August.

“Europe must become a place where innovation flourishes, especially for digital tech,” stated Draghi at the Commission’s press conference on Monday.

Draghi suggests achieving these goals through a massive investment push, deeper EU integration and numerous targeted reforms, to accompany enhanced competitiveness.

A massive investment push

Draghi thinks the EU should drastically increase its spending to compete with US investment, including through the Inflation Reduction Act, and with China’s subsidised industries.

Draghi suggests more than doubling Horizon Europe, the EU’s key research and innovation funding programme, from €93.5 billion to €200 billion, and refocus it on financing more disruptive innovation.

Semiconductors, computing, and AI are among the technologies that receive significant attention in the report.

The Italian wants to cut artificial intelligence (AI) deployment costs in the EU by significantly increasing computing resources for training models, building on the AI Factories initiative.

Strengthening the supply chain for semiconductors will also require “hundreds of billions” in spending, but along with securing critical raw materials, it is an important “insurance policy” for the EU’s future, he wrote.

Deeper EU integration

“The General Data Protection Regulation (GDPR) is estimated to have reduced the profits for small tech companies by more than 15%,” said Draghi in a Monday press conference.

Draghi therefore called for simplification of EU laws, including an EU harmonisation of AI sandboxes, better implementation of GDPR, and the adoption of an “EU cloud and AI Development Act,” aimed at harmonising cloud architecture requirements.

Draghi sided with the largest telecommunications firms in defending deregulation of their sector, as did Enrico Letta in his report in April, in order to improve their returns on investment in this capital-intensive industry.

The former head of the European Central Bank also supports the objectives of the senders-pay principle, to the detriment of US Big Tech.

Targeted reforms

Although Draghi acknowledges that the EU is lagging behind in some tech industries, like cloud computing, he believes the bloc should still develop a domestic sector so that the EU may remain independent in case of crises.

Taking the view that the European Space Agency is causing fragmentation in the EU’s space industry, Draghi suggests putting an end to the “geographical return” rule, which directs contracts to domestic companies.

Talents are underused in the EU, he writes, creating economic issues in the diffusion of digital technologies and digital take up, which can be seen in EU’s digital decade reports.

Draghi therefore suggests revising member states training systems, introducing a common EU system of certifications, and redirecting EU support in education towards more targeted sectors and skills, such as strategic value chains and managerial capabilities.

[Edited by Owen Morgan]

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