EU competitiveness reforms lag as Draghi agenda stalls

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EU competitiveness reform delays

Highlights

Only 15.7 per cent of the 383 Draghi report recommendations were fully implemented by July, with 41.3 per cent partially carried out.
Core reforms such as capital markets integration and removal of internal barriers face national resistance, with progress lagging despite new EU deadlines.
Ireland's upcoming EU presidency aims for a political deal by year-end, but continued implementation delays threaten Europe’s competitiveness in AI and semiconductor sectors versus the U.S. and China.

Implementation gaps widen across core reforms

As reported by Financial Times, citing the European Policy Innovation Council, only 15.7 per cent of the 383 recommendations in Draghi’s report had been fully implemented by July, while 41.3 per cent had been partially carried out. The findings highlight how repeated commitments from EU leaders and European Commission president Ursula von der Leyen have yet to produce broad delivery on the bloc’s competitiveness agenda.

Von der Leyen endorsed Draghi’s plan as a policy blueprint for her second term, but the agenda has been crowded out by the war in Ukraine, migration pressures and negotiations over the EU’s next shared budget. The most consequential changes, including capital markets integration, removing internal single market barriers and reducing strategic dependencies, remain caught in national political resistance.

Other measures, such as integrating fragmented energy markets and harmonising defence procurement and telecoms rules, are also advancing unevenly. A separate study by Institut Montaigne gives a more optimistic estimate, concluding that about 30 per cent of Draghi’s recommendations have now been implemented, but it points to the same obstacle, the hardest politically sensitive reforms are still pending.

National resistance tests Europe’s economic push

Earlier this year, the Commission, the European Parliament and member states agreed on specific deadlines for implementing the competitiveness agenda in an effort to reduce institutional disputes. Enrico Letta, the former Italian prime minister who wrote a separate report on single market integration, says he is more optimistic because there are now clearer plans and timelines.

Progress so far has largely come in areas where the Commission can act on its own, including cutting regulatory burdens, improving access to finance for companies seeking to scale up and accelerating permits for clean technologies. But the broader gap between ambition and delivery remains largely intact, with officials questioning whether some agreed measures will materially improve conditions for businesses.

One example is the EU’s new digital declaration system for posted workers, which was meant to create a single online form across the bloc but was slowed after member states including Germany added national reporting requirements. Martin Lidegaard, Denmark’s minister for business and competitiveness, says there is broad agreement on the destination, but robust disagreements remain over how to get there, especially on plans for a unified EU capital market.

Ireland, which takes over the EU’s rotating presidency in July, has pledged to secure a political deal by year-end. Business groups welcome what they describe as a philosophical shift from von der Leyen’s first term, but investors and lobby groups say that unless implementation speeds up, Europe risks falling further behind as the U.S. and China extend their lead in AI, advanced semiconductors and related investment.

In our earlier article on the UK’s devolution drive under Prime Minister Andy Burnham, we explained why shifting power from central government to local authorities can boost regional growth only if it comes with real control over budgets, regulation and accountability. We also noted that past devolution efforts often fell short in execution, turning politically attractive promises into operational bottlenecks for businesses and investors when local leaders lacked practical powers.

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