By Stefano Mallia, President of the EESC Employers' Group

The release of the Mario Draghi report has once more turned the spotlight on to the urgency of addressing Europe's economic challenges. Both the Letta and the Draghi reports have sounded alarm bells - loudly: Europe is facing a decisive moment, and we cannot afford to be complacent.

The stakes are higher than ever: over the past two decades, EU economic growth has been persistently slower than that of the United States, while China has been rapidly closing the gap. From 2002 to 2023, the EU-US gap in GDP levels (at 2015 prices) widened from just over 15% to a worrying 30%. The comparison is even starker when looking at purchasing power parity (PPP): the gap has grown from 12% to a significant 34%.

One of the biggest challenges is Europe’s regulatory environment. The figures are striking: from 2019 to 2024, the EU enacted approximately 13 000 legislative acts, compared to around 3 500 in the US.

This regulatory overload has entailed significant compliance costs for businesses, diverting resources away from innovation and performance improvement. Moreover, it has led to a worrying trend of companies relocating outside the EU, with 30% of European unicorns moving away between 2008 and 2021.

As Draghi emphasises, investment alone will not drive Europe forward. It is about ensuring that reforms lead to meaningful progress. We must focus on completing the Single Market, removing barriers, prioritising a coherent approach to burden reduction and streamlining regulations. These are key steps that can be taken immediately without major political battles and would deliver tangible benefits to businesses, particularly SMEs, which are the backbone of our economies.

Moreover, we cannot ignore the interconnectedness of our sectors and economies. Improvements in one area can lead to positive ripple effects across others. For example, the integration of AI and data-driven technologies can support smarter energy management across industries, significantly cutting costs and emissions, from advanced manufacturing to precision farming. These are the kinds of synergies we must pursue.

The path forward is clear. Europe has the capacity, talent and innovation potential to regain its competitive edge. But it will require strong political will, collaboration and a focus on long-term strategic objectives. Now, the onus is on us — EU institutions and Member States — to transform these opportunities into action that delivers real change.