Brussels, Belgium, 5 October, (Brussels Morning Newspaper) – Europe risks suffering long-term economic decline unless governments accelerate reforms intended to strengthen EU competitiveness, as pressure mounts on the bloc to close its productivity gap with the United States and withstand intensifying competition from China.
A Reuters commentary published on 5 October warned that the European Union could become the “sick man of the world” if it fails to deliver key economic reforms proposed by former European Central Bank president Mario Draghi. The assessment reflects concerns over the pace of reform rather than an official description of the EU.
EU reform drive faces a critical deadline
Draghi’s 2024 competitiveness blueprint identified structural weaknesses holding back the European economy and called for substantial changes, including deeper capital and energy integration, a stronger Single Market and greater investment.
The EU has set the end of 2027 as an important deadline for delivering key elements of that agenda.
Progress, however, remains limited. According to figures from the European Policy Innovation Council cited by Reuters, just 15.7% of Draghi’s recommendations had been fully implemented by July 2026, although additional proposals had been partially addressed.
The challenge becomes even clearer when the most ambitious reforms are considered. Reuters reported that French think tank Institut Montaigne found only 3% of the major measures, including initiatives involving integrated capital and energy markets, had been successfully legislated.
Von der Leyen calls for faster European action
European Commission President Ursula von der Leyen has acknowledged the urgency surrounding the reform programme.
“Where projects are in Europe’s strategic interests, we need to massively accelerate,” von der Leyen said in her State of the Union address last month, according to Reuters.
A major obstacle is that some of the most consequential changes require agreement among EU member states. Governments must balance European integration against domestic political considerations, making reforms involving sovereignty, common borrowing and cross-border markets particularly difficult.
Upcoming national elections could add further complications as governments become more cautious about politically sensitive reforms.
Productivity gap intensifies pressure on Europe
The debate extends beyond Brussels institutions. Improving EU competitiveness is increasingly linked to Europe’s ability to finance investment, develop artificial intelligence and maintain a strong industrial base.
International Monetary Fund analysis cited by Reuters estimates that a broad reform programme could raise European productivity by about 20% over a decade, although the projection depends on several assumptions.
Capital-market integration is one potential source of investment. EU households hold approximately €35 trillion in savings, according to the Reuters analysis, but those funds remain dispersed across national markets and are frequently invested outside Europe. A more integrated market could potentially direct more European savings towards European companies and infrastructure.
Energy is another major concern. Competitive and interconnected electricity markets will be increasingly important as artificial intelligence and data centres drive greater demand for power.
The European Central Bank estimates rapid AI adoption could increase EU productivity by as much as 4% over a decade. ECB President Christine Lagarde has also warned of the danger that Europe could either miss significant benefits from the AI expansion or become excessively dependent on foreign suppliers for critical technologies.
Why Europe’s economic warning matters
The issue has implications far beyond economic statistics. Europe must finance defence, infrastructure and technological development while confronting demographic pressures and stronger competition from American and Chinese companies.
Failure to increase productivity could make those commitments progressively harder to sustain.
The “sick man” warning therefore highlights a wider question facing European leaders: whether the bloc can convert years of reports, strategies and political commitments into reforms capable of producing measurable economic gains.
What happens next?
Attention will increasingly focus on whether member states can reach agreements on capital-market and energy integration before the end-2027 reform deadline.
For Brussels, the next phase will require more than announcing initiatives. Governments will have to decide whether they are prepared to accept deeper integration in areas where national interests have historically slowed progress.
The relatively low implementation rate means EU competitiveness is likely to remain near the centre of the bloc’s economic agenda. With the United States and China competing aggressively in technology, energy and advanced industry, the time available for Europe to close its structural gaps is becoming increasingly important.
