Europe Must Invest in Young People and Innovation to Recover from the Pandemic

Mario Draghi has emphasized that Europe can only fully recover from the economic impact of the coronavirus pandemic if governments use their increased debt to invest in young people, innovation, and research. Draghi, the former European Central Bank president, stated that high debt levels will be sustainable only if used for productive purposes, such as investing in education and research, rather than for unproductive purposes. He drew parallels between Europe's rebuilding efforts after the pandemic and the aftermath of World War II, highlighting the need to rethink rules and resist challenges to core values of multilateralism, solidarity, and the rule of law.

Key Takeaways:

• Draghi emphasized that Europe's recovery from the pandemic will depend on governments investing in young people, innovation, and research, using increased debt levels for "good debt" purposes.
• The former ECB president stated that low interest rates are not a guarantee of sustainability, but rather the perception of the quality of debt incurred is crucial.
• Draghi pointed out that the perception of debt quality can deteriorate if debt is used for unproductive purposes, jeopardizing employment, investment, and consumption.
• He called for European governments to invest in educating the young, citing the "moral imperative" to equip them with the means to service the unprecedented debt created by the pandemic.
• Draghi highlighted the need for European governments to rethink rules and resist challenges to core values of multilateralism, solidarity, and the rule of law.
• The former ECB president praised the EU's €750 billion recovery fund as enriching the European policy arsenal.
• Draghi suggested that the EU could establish a common Treasury ministry as a result of the precedent set by the recovery fund.

Statistics:

• Debt levels in southern European countries, particularly Italy, are expected to rise above 160% of GDP this year.
• The majority of the debt created by the pandemic will have to be repaid by those who are young today, making it a moral imperative to invest in their education.
• The €750 billion recovery fund agreed upon by EU leaders is a significant step towards stabilizing European economies.

Sources:

• Speech by Mario Draghi at an event in Rimini, Italy (no date provided)
• Mario Draghi's statements as former ECB president and appointed Vatican think-tank advisor