1. Read Text 1 and say what problem Europe is facing and what suggestion to solve it is made.

Text 1.
THE GUARDIAN VIEW ON EUROPE’S FUTURE: SPEND BIG OR RISK THE
CONSEQUENCES
Former European Central Bank chief Mario Draghi is right to call for Marshall plan-type
investment in the continent’s future
Tue 17 Sep 2024 19.56 CEST
In a landmark 400-page report on Europe’s competitiveness and future published last week, Mario
Draghi, the former president of the European Central Bank, did not mince words. In the absence of
annual investment three times greater than that delivered by the postwar Marshall plan, Mr Draghi
predicted, Europe would face a “slow agony” as its economies failed to keep pace with China and
the United States.
As the re-elected European Commission president Ursula von der Leyen begins her second term of
office, she and other leaders should take heed of that stark warning. On Tuesday, Ms von der
Leyen unveiled her new team of commissioners for the next five years. As they prepare to take up
their posts, subject to MEPs’ approval, the clouds overhead are dark and threatening.
Politically and economically, Europe is at a crossroads. As witnessed in the recent
European elections, the nationalist far right is making significant gains in the context of moribund
growth, the cost of living crisis and an ongoing sense of malaise (недомогание )in post-industrial
and rural areas. The ongoing impact of Russia’s war in Ukraine – and associated calls for increased
defence spending in EU member states – is pressurising already stretched budgets.
Globally, China and the US are massively investing in – and subsidising – the green economy of the
future, leaving European industrial giants struggling to keep up. The dramatic news that
Volkswagen, once the biggest carmaker in the world, plans to close some of its German plants
should be viewed as a wake-up call.
Mr Draghi’s plan for an overhaul (капитальный ремонт) includes greater economic integration
and more emphasis on tech innovation and skills, after decades of relative neglect. He stresses the
potential benefits of a capital markets union to match the EU’s single market for goods. But the
most important takeaway is the call for common EU borrowing, on a grand scale, to finance
investment in a transformative industrial strategy.
Taking Mr Draghi’s advice would mean belatedly calling time on the shortsighted, self-defeating
economics of austerity that has hobbled European ambition, particularly following the 2008 crash.
Balancing the books at the expense of beleaguered regions (регіони в облозі) and the less well-
off has helped fuel the rise of anti-immigrant nationalism across the continent. The precedent of the
€750bn (£634bn) Covid recovery fund offered a contrasting glimpse of the fiscal power
(контрастний погляд на фіскальну владу) and solidarity the EU can mobilise – given the
political will. As the global economy moves into a new, challenging era, Europe cannot afford to
ignore the lessons of that success.
Sadly, the signs are that it may do just that. In Germany, notwithstanding the alarming rise of
Alternative für Deutschland (AfD) and the red lights flashing in parts of the economy, Mr Draghi’s
expansive strategy was rejected out of hand by the fiscally hawkish finance minister, Christian
Lindner. In Brussels, Ms von der Leyen’s commission is committed to enforcing a return to stricter
rules on deficit and debt levels, following their relaxation during and after the pandemic.
At a time of deep social insecurity, and acute economic and environmental challenges, this familiar
direction of travel will lead to further stagnation and low growth. That, in turn, will give the far
right more scope to target green measures as unaffordable and to fuel anti-immigrant sentiment. A
paradigm shift is urgently required. Having commissioned Mr Draghi’s report, Ms von der
Leyen should take its message on board.
(From https://www.theguardian.com/commentisfree/2024/sep/17/the-guardian-view-on-europes-
future-spend-big-or-risk-the-consequences)
2. Read Text 1 again, make a list of useful phrases, and explain their meaning in English.
3. Read Text 2 and compare its information with that of Text 1. Which text is more
personalized and contains the author’s opinion?

Mario Draghi outlines his plan to make Europe

more competitive
The continent needs investment on a par with the Marshall Plan and a lot more innovation, says
the former central banker
Sep 9th 2024
GROWTH IN EUROPE has been slowing for decades. Across different measures, a wide gap
in GDP has opened up between the European Union and America. Europe’s households have paid
the price in forgone living standards. On a per-person basis, real disposable income has grown
almost twice as much in America as in the EU since 2000.
For most of this period, slowing growth could be seen as an inconvenience but not a calamity. No
more. Europe’s population is set to decline and it will have to lean more on productivity to grow. If
the EU were to maintain its average productivity-growth rate since 2015, it would only be enough
to keep GDP constant until around 2050.
Yet Europe’s need for growth is rising. The EU is aiming to decarbonise and digitalise its economy
and increase its defence capability. It must preserve its social model as its societies age. The
investment needs are massive. According to the latest estimates, the investment share will have to
rise by around five percentage points of GDP to levels last seen in the 1960s and 1970s. For
comparison, the additional investments provided by the Marshall Plan between 1948 and 1951
amounted to around 1-2% of GDP annually.
To reignite growth, the European Commission has today released a report
on EU competitiveness under my leadership. This report identifies the root causes of the EU’s
weakening position in key sectors and lays out a series of proposals to restore the EU’s competitive
strength. It identifies three main areas for action.
The first is closing the innovation gap with America. Europe largely missed out on the digital
revolution led by the internet and the productivity gains it brought: in fact, the productivity gap
between the EU and America since 2000 is largely explained by the tech sector. The EU remains
weak in the emerging technologies that will drive future growth. European companies specialise in
mature technologies where the potential for breakthroughs is limited.

The problem is not that Europe lacks ideas or ambition. But innovation is blocked at the next stage:
it is not translated into commercialisation, and innovative firms that want to scale up are hindered
by inconsistent and restrictive regulations. Many European entrepreneurs prefer to seek financing
from American venture capitalists and scale up in the American market.

The EU must change course. A weak tech sector will not only rob it of the growth opportunities of
the coming AI revolution. It will also hinder innovation in a wide range of adjacent sectors—such
as pharmaceuticals, cars and defence—where integrating AI into operations will be critical for
the EU to remain competitive.
The report proposes a fundamental reform of the innovation lifecycle in Europe: from making it
easier for researchers to commercialise ideas, to joint public investment in breakthrough
technologies, to removing barriers to scaling up for innovative companies, to investing in
computing and connectivity infrastructure to lower the cost of developing AI.
It puts improving skills at the centre of this agenda, so that European companies can find the talent
they need to innovate and adopt technology, and so that people in Europe are able to benefit fully
from technological change. While the EU should aim to match America in innovation, it should
exceed it in training and adult learning.

The second area for action is combining decarbonisation with competitiveness. If Europe’s
ambitious climate targets are matched by a coherent plan to achieve them, decarbonisation will be
an opportunity. But if it fails to co-ordinate its policies, there is a risk that decarbonisation could run
contrary to competitiveness and growth.

EU companies face electricity prices that are two to three times those in America. Natural-gas
prices are four to five times higher. Over time, decarbonisation will help shift power generation
towards secure, low-cost clean-energy sources. But fossil fuels will still set the energy price for
most of the time for at least the remainder of this decade. Unless Europe better transfers the benefits
of clean energy to end-users, energy prices will continue to dampen growth.
Decarbonisation is also an opportunity for EU industry. Europe is a world leader in clean-tech
innovation and parts of manufacturing, like wind and low-carbon fuels. Yet Chinese competition is
becoming acute, driven by a powerful combination of subsidies, innovation and scale. Europe faces
a possible trade-off. Increasing reliance on China may offer the cheapest route to meeting the EU’s
climate targets. But China’s state-sponsored competition represents a threat to otherwise productive
industries.

The report proposes a plan to marry decarbonisation with competitiveness. It starts with reforming
Europe’s energy market so that end-users can see the benefits of clean energy in their bills.
Industries that enable decarbonisation, such as clean tech and electric vehicles, will need more
support to promote innovation and level the playing field against competitors using large-scale
industrial policies. Europe will need to act together to green industries that use energy intensively
and are disadvantaged by asymmetric regulations.

The third area is increasing security and reducing dependencies. As the era of geopolitical stability
fades, the risk of rising insecurity becoming a threat to growth and freedom is increasing. Europe is
particularly exposed. The EU relies on a handful of suppliers for critical raw materials and is
heavily dependent on imports of digital technology.
In this setting, the report calls on the EU to act like other major economies and build a
genuine EU “foreign economic policy”: co-ordinating preferential trade agreements and direct
investment with resource-rich countries; building up stockpiles in selected critical areas; and
creating industrial partnerships to secure the supply chain for key technologies.
The report also calls for Europe to build up its defence-industrial capacity. The EU’s defence
industry is too fragmented and suffers from a lack of standardisation and interoperability of
equipment. For its companies to integrate and reach scale, Europe needs to aggregate and focus its
spending. European collaborative procurement accounted for less than a fifth of spending on
defence-equipment procurement in 2022.
Important decisions lie ahead about how to finance Europe’s investment needs. Integrating its
capital markets will be crucial. Europe has high household savings but they are not channelled into
productive investments in the EU. However, the private sector will not be able to bear the lion’s
share of investment financing without public-sector support.
The more willing the EU is to reform itself to generate higher productivity, the more fiscal space
will increase, and the easier it will be for the public sector to provide this support. Some joint
funding of key projects, such as investing in breakthrough innovation, will help in this productivity
drive. Other key “public goods”—such as defence procurement or cross-border grids—will also be
undersupplied without common action and funding.
The report is coming out at a difficult time for the continent. But Europe can no longer afford to
procrastinate to preserve consensus. The EU has reached a point where, without action, it will have
to compromise either its welfare, the environment or its freedom.

To succeed, it will have to take a new stance towards co-operation: in removing obstacles,
harmonising rules and laws, and co-ordinating policies. There are different constellations in which
it can move forward. But what it cannot do is fail to move forward at all.

Europe should be confident, even as the size of the challenge reaches unprecedented levels relative
to the size of its economies. It has been a long time since self-preservation was such a common
concern. The reasons for a unified response have never been so compelling—and in unity Europe
can find the strength to reform.
Mario Draghi was prime minister of Italy from February 2021 to October 2022 and president of the
European Central Bank from 2011 to 2019.
(From https://www.economist.com/by-invitation/2024/09/09/mario-draghi-outlines-his-plan-to-
make-europe-more-competitive)
4. Make a list of useful phrases, and explain their meaning in English.
5. What does the Marshall Plan mean and why is it mentioned in the text?
6. What do you think of the efficiency of the plan offered by Mario Draghi?