Before we start speaking about the global economy, we first have to take a good look in the mirror. Because the work starts at home. So what do we see?
First, that Europe has strong economic fundamentals. Inflation is currently returning below the ECB's 2% target, allowing borrowing costs to fall. Public debts and deficits are lower than in other major economies. The EU turns out almost as many STEM graduates per million inhabitants as the United States. Europe's share in global patent grants is close to other global players. And we have the money to finance them, with households saving around €1.3 trillion every year. We have an opportunity to bring down energy prices in a lasting way. The shift to secure, low-cost clean energy sources is on track: by 2030, over 40% of our energy consumption will come from clean sources. We are the top trading partner for over 70 nations and we continue to strike new agreements.
We need profound change on three fronts.
First, we need to make the EU an easier place for innovative companies to grow. Despite our savings, entrepreneurs lack access to risk capital, because capital markets are still too fragmented.
Second, we need to make Europe a better place to invest. Two out of three EU companies say that regulation is a key obstacle to investment. Firms still face long permitting procedures, onerous reporting requirements and diverging enforcement of digital rules.
Third, we need to make doing business in Europe cheaper, especially in terms of energy costs. To achieve this we need massive investment in grids and storage and smarter market design. We need faster permitting and longer-term contracts.
We have developed a new urgency mindset to address the challenges. This is the key priority of my current mandate. Europe has got the message.
Moving to the global economy.
Let's start with the facts. Our relationship with you – our G7 partners. Let me give you just two figures: 54% of foreign investment into the Europe comes from G7 countries and 49% of Europe outward investment goes to you. That's a powerful foundation.
Let me offer three reflections on why we believe it is in our shared interest to keep trade between G7 countries open.
First, tariffs – no matter who sets them – are ultimately a tax paid by consumers and businesses at home. When companies face higher input costs, they pass them on through higher prices.
Second, tariffs create uncertainty that disrupts business planning and investment. When I meet CEOs they often tell me that uncertainty is what they struggle with the most – it makes it harder to innovate and grow.
Third, and perhaps most importantly, when we focus our attention on tariffs between partners, it diverts our energy from the real challenge – one that threatens us all.
Because we agree: the current global trading system is not working as it should. Guardrails are clearly missing. On this point, Donald is right – there is a serious problem. But we strongly feel that the biggest challenges are not the trade between G7 partners.
Rather – the sources of the biggest collective problem we have has its origins in the accession of China to the WTO in 2001. China still defines itself as a developing country. This cannot be. China has largely shown that it unwillingness to live within the constraints of the rules based international system. While other opened their market China focused undercutting intellectual property protections, massive subsidies with the aim to dominate global manufacturing and supply chains. This is not market competition – it is distortion with intent. And it undermines our manufacturing sectors.
This is the problem we must solve – together. The G7 economies account for 45% of global GDP – and over 80% of intellectual property revenues. That is leverage – if we use it together.
Let us channel it to build resilient supply chains. To strengthen our technological and industrial leadership. And to reform the rules of global trade – so they reflect today's economic realities. This is also why I am working closely with Donald toward a mutually beneficial trade agreement – one that reflects the strengths of our economies, supports our firms, workers, and consumers.
In our next session, I will expand on how we can align our strategies in that area: to reduce dependencies, strengthen resilience, and protect our industrial base in a volatile world.
