Brussels, Belgium  -  The EU must massively step up spending through joint borrowing to fund investments as it lags dangerously behind the United States, a keenly awaited report said. EU chief Ursula von der Leyen last year asked Draghi, a former head of the European Central Bank, to report back on how the 27-country bloc can increase competitivity amid rising global insecurity and economic challenges.

The report called for additional investment of at least 750-800 billion euros ($829-$885 billion), amounting to almost five percent of the EU’s gross domestic product.

“For the first time since the Cold War, we must genuinely fear for our self-preservation and the reason for a unified response has never been so compelling,” Draghi said during a press conference in Brussels to present his report. Introducing his blueprint for a “new industrial strategy” based around some 170 proposals, Draghi said “the investment needs that all this entails are massive” but that “radical change” was needed. Citing the bloc’s historic Covid recovery fund, former Italian premier Mario Draghi argued it should issue new “common debt instruments... to finance joint investment projects that will increase the EU’s competitiveness and security”.

The EU resorted to joint borrowing for an 800-billion-euro ($890 billion) to support member states’ economies hit hard by the pandemic -- but the concept remains controversial. The idea’s biggest supporter is France, but other countries including Germany and the Netherlands oppose such action, fearing they will be forced to contribute more money to make up for southern European countries.

Aware of the difficulties of his proposal, Draghi said common loans would only be possible if “the political and institutional conditions are met”. Another solution, he said, was to better mobilise private capital in the bloc, advocating for progress on the long-stalled push for an EU “capital markets union”.

Von der Leyen in July won a second five-year at the helm of the bloc’s executive arm and hopes to use the report to shape her next mandate. In his report, Draghi warns Europe was entering a new era, confronted by more competition from abroad but with reduced access to foreign markets as rivals increasingly throw up barriers to free trade.

He pointed to the “wide gap” in economic growth that has “opened up between the EU and the US, driven mainly by a more pronounced slowdown in productivity growth in Europe”. Draghi’s report pointed to the EU’s weakness in the emerging technologies that will drive future growth -- with only four European companies among the world’s top 50 tech firms.

“Europe must become a place where innovation flourishes,” Draghi told reporters, saying the bloc was “punching under our power.” “We could do much more if all these things were done as if we acted as a community.

“But we lack focus on key priorities. We don’t combine our resources to generate scale. And we do not coordinate the policies that matter.”