Now, imagine that you are in a race. You go at a very good speed, but no matter how fast you go, the people in front keep getting further away. That is how Europe feels right now in the world economy. The European Union-today a big team of 27 countries-is worried it’s falling behind the United States and China. A new report by Mario Draghi, one of the most influential figures in European finance, says that if Europe doesn’t change its game plan, then it might lose its place in the world.

The Big Problem
The report says Europe needs to spend a lot more money-nearly $900 billion more each year-on things like new technology and better defense. Mario Draghi, a former president of the European Central Bank, which is Europe’s money boss, says the very “reason for being” of Europe is at stake. What he means is that if Europe can’t keep pace with other countries, then it won’t be able to provide a good life for its people or to keep them safe. That is a big deal!

Why Is Europe Falling Behind?
A year to compile: the report of Mario Draghi, at the request of the European Commission, the main decision-making body of the EU. They wanted to know: why is Europe no longer competitive? This report will form the basis for decisions for the next five years.

Several things have recently been making it tough for Europe. First, the COVID-19 pandemic changed many ways that the world works. Second, there was an invasion by Russia of Ukraine, which has caused many issues. For example, a lot of cheap gas used to be available to Europe from Russia; it is no longer available. Energy prices have gone up, though not to the heights they once saw, they are two to three times the price of what U.S. companies are paying for energy.

Other Challenges Facing Europe
The report also calls for an increase in Europe’s military spending manifold. As of now, Europe is growing and investing nowhere as fast as the U.S. and China. Both countries are spending a lot on new technology and green energy, taking big leads in these vital fields.

It also sells less stuff to other countries, in particular to China. When it comes to technology, Europe is also behind: of the top 50 tech companies in the world, only four are from Europe. In fact, most of the successful tech companies that started in Europe have moved their headquarters elsewhere, mostly to the U.S.

Things may get worse if Europe does not act swiftly and invest in new areas such as AI, the report warns.

What Can Europe Do?
A number of European leaders have said that Europe has got to do much more if it is to match up against others. For example, in April, French President Emmanuel Macron addressed Europe’s future: whether it can be a leader in making new ideas and building things. He said, “Our Europe is mortal. It can die, and it all depends on our choices.” Pretty serious!

The Way Forward
What, then, is the way forward for Europe? It needs to ramp up its spending, the report says-especially in key sectors of technology and defense. That would translate to pumping more funds into activities such as: setting up new factories, enhancing digital skills, and developing better technology.

Mario Draghi also suggests that Europe look back to a time after World War II when a plan called the Marshall Plan helped rebuild Europe’s economy. In that case, investment was equal to about 1.5% of Europe’s economic output. Today, Draghi wants investment that would be around 4.5% of the EU’s gross domestic product. That is a lot more money, but he believes that is what Europe needs to keep pace with the rest of the world.

Why Does This Matter?
Why should we care about all that? Well, if Europe lags further and further behind, it means a reduction in jobs, less income, and even less security for the people living there. All that might mean less powerful Europe on the world scene. For now, it may sound like a problem of leaders and politicians; soon, it might affect ordinary people too.

What’s Next for Europe?
In the following days, European heads of state are expected to meet and talk about the next big plans for the future. They will have to decide what to do with these challenges and how to keep Europe strong-by changing maybe some of the rules and increasing their spending by a great deal. It will not be easy, but if Europe wants to stay in the race, it may just have to run a little harder.