Carl-Vincent Reimers // 30 September 2025

Europe is at a crossroads. With rising geopolitical tensions, soaring energy costs, and an accelerating global technology race, the EU’s competitiveness is under unprecedented pressure.

Draghi’s Dilemma: Competitiveness, Great Power Competition and Europe’s Next Move, warns that unless decisive reforms are implemented, Europe risks becoming a bystander in the global economy rather than a leader.

Key findings of the report include:

• Europe is caught in an innovation trap, with a lack of large-scale innovation clusters leaving it dependent on outdated technologies, particularly in IT and AI.

• National fragmentation within the single market functions as a massive hidden tariff, crippling SMEs and discouraging investment.

• High energy prices and inconsistent climate policies are steadily eroding Europe’s industrial base.

• Europe’s heavy dependence on rival powers for critical imports exposes it to economic coercion and geopolitical blackmail.

• A fragmented financial system is preventing trillions of euros in potential investment from flowing into productive uses.

• Bold reforms are needed, including the creation of a European DARPA-style innovation agency, a harmonised company law framework, and a fully integrated capital market to boost growth and resilience.

Reimers concludes that Europe’s strong foundations, world-class universities, high living standards, and cultural appeal, provide a platform for renewal. But time is running out: only by prioritising EU-wide competitiveness over narrow national interests can Europe remain a global economic force.