Mario Draghi: Europe’s ‘immense complacency’ is over
When Mario Draghi, set out not that long ago to diagnose the European Union’s economic malaise and prescribe remedies, the former prime minister of Italy and former president of the European Central Bank didn’t encounter much self-awareness across the 27-member bloc.
“There was immense complacency,” recalled Draghi during a fireside chat at the 2026 SIEPR Economic Summit. But he noticed a shift in attitudes as time went on — as EU’s leaders and CEOs from across industries woke up to the harsh reality that the region lags far behind the U.S. and China with little chance of catching up without change.
His “Draghi report,” as it’s known, landed in September 2024 with more than 380 recommendations for reforms and a clear message: Without more coordination on industrial policy, faster decision-making, and trillions in investment, the EU faces what Draghi called at the time a “slow agony” of decline.
While “not much” has happened since the report’s release, Draghi said at the Summit he is “cautiously optimistic” that the EU will begin this year to take needed steps to shore up its competitiveness.
“The awareness [now of the need to act] is widespread” among EU business and government leaders, he said. “If anything, people may get a little too desperate [to change], but that’s good.” Were it not for Germany’s increased defense spending and the frontloading of exports in response to new tariffs, Draghi said Europe would be in a recession.
Draghi came to Stanford as the 2026 recipient of the SIEPR Prize, awarded to individuals who have made a profound impact on economic policy. The Draghi report is just one reason he was chosen.
During a Q&A at the Summit with Jeanette Garretty, chief economist at Robertson Stephens and a SIEPR Advisory Board member, Draghi also reflected on his track record and the decisions that have deeply influenced economy policy in the EU.
Notably, Draghi is widely credited for his leadership during an EU financial crisis more than a decade ago that threatened the future of the euro. As the EU’s central banker at the time, Draghi vowed to do “whatever it takes to preserve the euro” — a pledge that underpinned the central bank’s readiness to intervene in bond markets and helped stabilize expectations.
In reminiscing on that period at the SIEPR Summit, Draghi emphasized that the policy move wasn’t the “improvisation” that some imagine. The pledge had been carefully considered by ECB staff and leadership after recognizing that earlier, more limited interventions had failed because they were limited in scope. “The markets saw right through them,” Draghi said.
As for Europe today, Draghi said that the narrative of the EU’s turnaround starts with a focus on innovation. A key reason for why EU productivity lags relative to the U.S. is because of the latter’s high-tech sector and its outsized proportion of private-sector research funding. It’s the opposite in the EU, he said, where research is 80 percent funded by government dollars.
“So maybe having a big social welfare system is not the primary reason why Europe is doing so poorly,” Draghi said. It could be underinvestment, including by the private-sector, in high-tech, he said. “The logic of [an EU turnaround] narrative starts there.”
Photos by Ryan Zhang.
