Politics, money and energy costs explain the slow take‑up of 383 recommendations as the EU races the U.S. and China

Brussels —Twelve months after Mario Draghi delivered a sweeping blueprint to reboot Europe’s competitiveness, the European Union has implemented just 11.2% of his 383 recommendations. That headline number, tracked by a new civil‑society index and echoed by several independent analyses, crystallises a broader fear in Brussels and across national capitals: while the U.S. and China move at continental speed, the EU’s delivery machine is still stuck in second gear.

The figures come from the Draghi Observatory & Implementation Index, an initiative launched by the European Policy Innovation Council (EPIC) to benchmark progress. Its first reading shows only 43 measures completed, with around a fifth partially implemented, nearly half “in progress” and roughly a quarter untouched. Policymakers contest some of the gradings; few dispute the drift. The gap between announcement and action remains Europe’s defining competitiveness problem.

Draghi’s report, released last September at the request of Commission President Ursula von der Leyen, framed the stakes in existential terms. It called for a step‑change in investment and a hard push on the single market’s unfinished plumbing: a capital markets union to channel Europe’s vast savings into innovation; lower and more predictable energy costs; faster permitting and common standards for critical technologies; and EU‑level funding on a scale that could crowd in private money for clean tech, digital infrastructure and defence‑adjacent capabilities.

So why has take‑up been so slow? Start with politics. Many of the report’s cornerstones—especially a genuine single market for capital—require countries to give up cherished prerogatives over insolvency, taxation and securities supervision. Europe has tried before and fallen short. The Commission now talks up a rebranded “Savings and Investments Union”, a broader push to mobilise household wealth for productive investment. But rebranding is not the same as harmonisation, and negotiations to align insolvency regimes and empower EU‑level market oversight remain delicate.

Money is the second brake. Draghi argued Europe needs a burst of additional public and private investment—hundreds of billions of euros a year—to match the U.S. subsidy surge and China’s state‑directed financing. Yet the EU budget still hovers a little above 1% of GDP, and member states are back under re‑tightened fiscal rules. The Commission’s January “Competitiveness Compass” sketches a work programme to simplify rules and prioritise growth sectors, but it is a low‑cost response compared with Draghi’s call for large, common‑funded programmes. Without new “own resources” or joint borrowing, the centre lacks the firepower to change the pace.

Energy prices are the third constraint. Gas and power markets have calmed since the 2022 shock, but industrial electricity remains structurally costlier in Europe than in the U.S. For energy‑intensive sectors from chemicals to metals, that delta is the difference between reinvesting at home or shifting production abroad. Grid bottlenecks, slow permitting for renewables and a still‑fragmented power market keep bills high and timelines long. Integrating markets and building cross‑border infrastructure would help; both require capital and political stamina.

A fourth complication stems from state‑aid policy. Emergency rule‑loosening during recent crises allowed capitals to subsidise companies more freely. That flexibility helped avert a collapse but also turbocharged an intra‑EU subsidy race, favouring countries with deeper pockets. Draghi warned against this path, arguing for more EU‑level instruments that preserve a level playing field. So far, the centre has preferred coordination over centralisation. The result is uneven—and sometimes duplicative—industrial policies that muddy the single market rather than deepen it.

None of this means nothing has moved. The Commission’s Competitiveness Compass, unveiled on January 29, 2025, pulls together a slate of initiatives around three pillars—innovation, decarbonisation and reducing strategic dependencies—plus a promised “unprecedented simplification” drive. It backs faster permitting, a common approach to strategic projects, and efforts to expand risk capital. Several capitals have also warmed to nuclear power, grid build‑out and cross‑border interconnectors as competitiveness tools, and a handful of sectoral files—from critical raw materials to parts of transport policy—have advanced.

But taken together, the actions to date add up to incrementalism. Business leaders say rules still change too often and approvals take too long. Start‑ups complain that access to growth‑stage equity remains thin outside a few hubs. Pension funds and insurers point to prudential hurdles that make it costlier to back riskier assets at home than to park capital in deeper U.S. markets. And while the EU has accelerated standard‑setting on AI and clean tech, firms warn that compliance costs bite hardest for small suppliers, turning scale‑up years into survival years.

Geopolitics compounds the drag. Europe is simultaneously financing support for Ukraine, de‑risking from China, strengthening defence supply chains and managing a mercurial U.S. trade stance. Each priority competes for money and ministerial attention. Meanwhile, the U.S. and China keep pumping capital into semiconductors, batteries, AI compute and advanced manufacturing—precisely the areas Draghi said would set the global productivity frontier. The risk is not that Europe stops innovating, but that it innovates too slowly, in too small a volume, to anchor its industrial base.

What would change the trajectory? Practitioners point to three near‑term levers. First, land a concrete, time‑bound deal on capital markets: simplify and converge insolvency procedures; give the European Securities and Markets Authority stronger cross‑border supervision; and create tax incentives for long‑term equity. Second, make energy integration a competitiveness project: accelerate grid permits, build more interconnectors and design market rules that reward flexibility and industrial demand response. Third, create a realistic EU‑level financing envelope—whether through reallocated budget lines, new own resources or a limited joint instrument—that can de‑risk private investment at scale without fuelling a subsidy race.

There are flickers of momentum. The Commission’s Savings and Investments Union proposals launched in March opened consultations on barriers to cross‑border finance and sketched options to mobilise household wealth. Several finance ministers are exploring a common label for retail savings products that channel money into European assets. And in industry, more companies are looking to pool projects across borders to qualify as “strategic”, tapping easier permitting and coordinated standards.

Sceptics counter that Europe has seen versions of this movie before. Capital markets reforms bump up against national legal traditions. Energy integration hits local permitting and grid‑planning realities. Joint funding divides frugal and activist camps. And more “simplification” risks becoming a slogan if each new initiative adds fresh reporting layers. The implementation index’s early readings, in other words, may reflect not just lack of urgency but the structural design of a union where delivery lines run through 27 capitals and countless agencies.

Even so, the cost of drift is mounting. The longer the EU relies on temporary rule‑derogations and national balance sheets, the greater the risk that its single market fragments and its investment gap widens. Draghi designed his plan to make Europe faster, bigger and more predictable. The one‑year verdict is that Europe has started to steer—but not to speed. If 2025 is to become the year of delivery, the bloc will need to translate slogans into solvable files: a small‑but‑real capital markets deal; a punchy grid and interconnection package; and a financing instrument big enough to crowd in private money without pitting member states against each other.

Voters will also need a clearer account of the prize. A Europe that mobilises its savings at home, lowers energy costs and cuts time‑to‑build can finance better hospitals and schools, design and manufacture more of the next‑generation technologies, and sustain security without austerity. That is the political case for moving from 11% to something closer to critical mass.