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Leaders of the European Union look for alternatives to overcome the economic lag in the face of the advance of the US and China

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Leaders of the European Union look for alternatives to overcome the economic lag in the face of the advance of the US and China

Leaders of the European Union are gathering this Thursday in Brussels to seek new alternatives to overcome the economic lag that the bloc is facing compared to the United States and China. With the aim of enhancing the capabilities of the European common market, leaders are focusing on key sectors such as batteries for electric vehicles and artificial intelligence, where Europe appears to be losing ground.

The European Union has been affected by the increase in energy costs following the Russian invasion of Ukraine, leading to market declines and economic stagnation. In 2023, the bloc’s growth stabilized at a modest 0.4%, while the US and China saw growth rates of 2.5% and 5.2% respectively.

The transition towards digitalization and renewable energies is seen as the main challenge, requiring an additional investment estimated at 700 billion euros. Mario Draghi, former president of the European Central Bank, has emphasized the need for a “radical change” to overcome market fragmentation that hinders the bloc’s competitiveness.

A report drafted by former Italian Prime Minister Enrico Letta will be discussed during the meeting in Brussels. The report highlights the absence of a fully integrated financial market at the EU level, leading to European companies struggling to compete with their American counterparts.

One proposal on the table is the construction of a Savings and Investment Union to mobilize private savings into the economy. However, differences among EU countries, particularly the more frugal nations in northern Europe, pose a challenge to implementing such measures.

In addition to financial markets, Letta also suggests deepening the single market in sectors like telecommunications, energy, and defense, where European fragmentation due to national regulations hinders progress.

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The outcome of the summit in Brussels will set the strategic orientations for the EU in the next five years, as the bloc seeks to address the economic challenges and enhance its global competitiveness in the face of growing competition from the US and China.

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