One year after Mario Draghi’s landmark report on Europe’s competitiveness, the continent recognises the scale of its challenge, but continues to drift between ambition and action. The Draghi report confirmed what investors already knew: on innovation, Europe lags dangerously behind. Yet it seems to lack the courage to make the painful leap that reform demands.
The “One Year On” review, published last month, offers a moment to take stock. Draghi’s 2024 report was not ordinary policy, it was a wakeup call. He described Europe as standing at a decisive crossroads, facing its most dangerous period of relative decline since the Union was created.
Growing geopolitical fragmentation and new security threats have reshaped Europe’s economic environment. The competitiveness gap between the U.S. and China continues to widen, whilst the green and digital transitions strain national budgets already limited by demographics and debt. As citizens across the Union feel the weight of these transformations, political legitimacy is also under severe pressure.
In response, the European Commission asked Draghi to deliver an independent blueprint for renewal. His report highlighted Europe’s weaknesses, but at its core was a single imperative: Europe must close its innovation gap.
Blueprint for renewal
Draghi’s report marked the clearest attempt in years to restore Europe’s economic ambition. He called for Europe to raise research and development (R&D) spending to at least 3 per cent of GDP, finally matching the level of its global peers. The report argued that for Europe to achieve its overall economic and strategic goals, it would need additional investments of about €750 to €800 billion every year. This would be enough to lift the EU's total investment rate from roughly 22 to 27 percent of GDP.
The report was not just a question of money; Draghi urged Europe to loosen the regulatory corset that still constrains its innovators and to accelerate the flow of EU funds so that research can reach the market before momentum is lost. He also called for genuine pan-European markets, where firms can scale across borders without the friction of conflicting regulations.
Beyond these key demands, Draghi’s blueprint stressed that investment cannot succeed without resolving deep structural failings. The report identified persistent obstacles holding back competitiveness, including fragmented capital markets, chronic underinvestment in key industries, high energy costs, and widespread skills shortages. Confronting this full spectrum of issues is central to his strategy for unlocking sustainable growth.
Progress on paper
When European Commission President Ursula von Leyen presented the One Year On review, she portrayed it as evidence that Europe had acted with the urgency Draghi demanded. Few were convinced. Europe has definitely made genuine progress over the past year, but it still has fallen short of the ambition Draghi set out.
More than €1 trillion has been mobilised across the Union, including €200 billion specifically earmarked for artificial intelligence (a commitment partially drawn from existing EU frameworks). The Commission has also unveiled a Quantum strategy and a Start-Up and Scale-Up plan, two initiatives meant to accelerate Europe’s technological base. Efforts to streamline bureaucracy have saved an estimated €8.4 billion through simplification measures, a modest but visible attempt to reduce regulatory friction. Most recently, a Roadmap to 2028 has been presented, setting out a timeline to tackle Europe’s main innovation bottlenecks. The progress is measurable but not yet transformative.
Behind the figures, the picture is uneven. Independent assessments suggest caution. For instance, the Draghi Observatory/EPIC analysis notes that after one year, only about 11.2% of the 383 recommendations were fully implemented, and only around one-third show even partial progress. Many of Draghi’s recommendations are still untouched; some targets have been lowered; and several sectors are clearly lagging behind. Energy and digital infrastructure, for instance, continue to move at a pace far below what the transition is demanding.
Europe appears to be falling back into a familiar pattern: announce ambitious goals, attach deadlines, then advance slowly and bureaucratically until expectations fade into under-delivery. Innovation is not a field that waits. It evolves through continuous breakthroughs, requiring agility and freedom more than it needs rigid timetables. Treating it as another five-year plan risks leaving Europe behind globally once again.
Italy between promise and paralysis
The real test of Europe’s ambition lies in whether its Member States can turn Brussels’ declaration into action. Italy reflects both Europe’s potential and its paralysis. Italy continues to suffer from chronic underinvestment in innovation and a restrictive environment for new ventures, constrained by regulation, bureaucracy, and limited access to capital. Funds allocated through the National Recovery and Resilience plan have offered limited support and structural change. Political response remains subdued, reinforcing the sense that what happens at the European level is often perceived as too distant to be taken seriously. This detachment fuels the country’s brain drain and weakens its ability to retain talent. Without a stronger commitment, the innovation Italy so urgently needs may fade before it begins.
Among younger Italians — and Europeans overall — the desire to create something new has become increasingly visible. Participation in programs that foster innovation, from workshops to independent start-up initiatives, has surged. Without meaningful support, many young innovators risk abandoning their projects under the weight of limited opportunities and repeated failure.
A year later, Europe has plans, funding, and even a roadmap. Yet Draghi’s warning still hangs over the continent. Attention is elsewhere. Wars, budgets, and politics take the spotlight, whilst innovation quietly slips down the list. This is a real danger — if Europe continues to drift it risks not only its competitiveness but also the peaceful, comfortable way of life its citizens take for granted. The test will be if complacency proves to be stronger than ambition.
