European Central Bank Governing Council member Fabio Panetta said on Tuesday the European Union needs common debt to remain competitive.
The official admitted that at the root of the European economy’s low productivity lies its insufficient capacity for innovation, which, in turn, is due to the lack of dynamism in the business sector. “In the last decade, investment in research and development by European companies has been about 60% that of US companies, and the gap has been widening over time,” he highlighted.
Panetta noted that common debt does not imply the creation of a fiscal union, and would require neither an EU finance minister nor mechanisms for systematic transfers between countries. "The idea, instead, is to set up a common spending program to finance investments that are indispensable for all European citizens, through a continent-wide productivity compact,” he added.