Despite the European Commission’s optimistic forecasts about overcoming the energy crisis and dependence on Russia, the EU is facing a shortage of natural resources on the market.
The EU is losing its economic advantage amid a shift away from Russian resources, high competition with China, and declining interest from the US, according to an EU competitiveness report prepared by Mario Draghi, former head of the European Central Bank (ECB), for the European Commission.
According to the report, EU gas prices are on average four to five times higher than in the US. The EU’s annual fossil fuel import bill rose from €341bn in 2019 to €416bn in 2023. This is due to a decline in pipeline gas imports from Russia from 40 per cent in 2021 to 8 per cent in 2023 and an increase in liquefied natural gas (LNG) imports.
The situation at the moment is really worrisome. Growth has been slowing down for a long time in Europe, but we’ve ignored (it)… Now we cannot ignore it any longer. Now conditions have changed.
Draghi also stated that the EU’s decarbonisation goal, announced by European Commission President Ursula von der Leyen, could further stall Europe’s economic development. The bloc is also heavily dependent on imports of materials and technology from other countries.
To address the challenges, he suggests increasing investment in key sectors and paying special attention to demography, as a shrinking population will exacerbate the shortage of skilled labour.
The defence industry was also an essential issue for the EU’s well-being, Draghi said, as the US could no longer act as a security guarantor for the EU. However, the EU is not ready to repeatedly increase investments in its own defence industry in the near future.
