LONDON, November 9. /TASS/. The European economy may plunge into the recession by the end of the year, said Mario Draghi, who chaired the European Central Bank in 2011-2019.
""It is almost sure we are going to have a recession by the year-end," he said at a conference, organized by the Financial Times. "It is quite clear the first two quarters of next year will show that."
"The starting point of this recession is pretty high — we never had such low unemployment," the expert continued. "So we may have a recession, but maybe it is not going to be destabilizing."
His assessments run counter to the European Central Bank’s latest forecast, which projects the growth 0.1% in October-December to continue in the first half of 2024, gaining momentum to 0.3-0.4%.
Draghi went on to say that the latest round of escalation in the Middle East raises extreme concern in European countries, who fear a new migration crisis. In his opinion, the EU should act together, evolve into a deeper union and cut its dependence on the United States in order to deal with this and other challenges.
"Either Europe acts together and becomes a deeper union, a union capable of expressing a foreign policy and a defence policy, aside from all the economic policies… or I am afraid the European Union will not survive other than being a single market," he said.
In his opinion, the European economy has been losing competitiveness in the last 20-plus years, with respect not just to the United States but Japan, South Korea and, of course, China." He named Europe’s low productivity, high energy costs and lack of skilled labor as weaknesses.
"The geopolitical, economic model upon which Europe rested since the end of the Second World War, is gone," he said. "To have an economy capable of supporting an ageing society at the rhythm we have in Europe, we have to have much higher productivity. Where we need to get our act together is energy. We are going nowhere paying energy twice or three times what it costs in other parts of the world.".