EU countries acting alone are ‘too small to cope’, says Draghi

BRUSSELS (Reuters) – European Union countries cannot compete alone with the likes of China and the United States and need a far more integrated single market to create pan-European businesses of the required global scale, Mario Draghi said on Monday

The former European Central Bank chief, whom the European Commission asked to rewrite a report on EU competitiveness, told a seminar at think tank Bruegel that the most important step the European Union had to take was integration.

“If productivity is the objective, scale in many of the sectors that we have analysed has become, in a sense, its essential ingredient and scale you only get it with integrated single markets,” Draghi said.

Scale was hampered by cross-border national barriers and multiple national regulations, he said, while EU businesses faced competition from China and the U.S. driven by innovation and massive subsidies.

“In this new geopolitical context, individual countries are just too small to cope,” he said.

An EU-wide strategy was required to avoid a patchwork of many national strategies that are “tiny” and “uncoordinated”, with EU members separately determining which technologies are strategic and defending national champions rather than developing European strengths.

In telecoms for example, the EU should not have 35 mobile network operators, along with 351 non-investment based virtual operators, but rather a limited number of pan-European competitors vying fiercely in national markets.

The multiplicity of operators had led to lower investment in Europe than in the U.S. in a sector likely to become even more important with the development of artificial intelligence.

“What we need to do in the future is we want to preserve competition, but we should not hamper scale. We should harmonise spectrum allocations, we should harmonise national regulation. We should really create a European market for telecoms,” Draghi said.