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So far this year, much of the world has been consumed by the second US presidency of Donald Trump. By contrast, the second term of European Commission President Ursula von der Leyen has flown under the global radar, despite its international importance.

Much progress has been made, for instance, on the trade front, with new EU deals struck with powers as diverse as the Mercosur bloc in Latin America and Indonesia, Southeast Asia’s largest economy. There is also the new tariff deal with the US.

However, there has been less attention so far on the domestic components of what is probably the bloc’s No. 1 challenge — enhancing economic competitiveness.

Almost exactly a year ago, former Italian Prime Minister and European Central Bank President Mario Draghi launched his landmark report on this issue to much political acclaim. Yet, 12 months later, only about 10 percent of his recommendations have been fully implemented.

In September 2024, continental leaders pledged to follow Draghi’s famous maxim and do “whatever it takes,” this time to try to restore Europe’s wider economic edge. French President Emmanuel Macron, for example, said that the bloc needed to “rush” to deliver the plan so that it does not fall further behind its major competitors on key economic agendas, especially the US, but also China and India.

Macron said the bloc needed to ‘rush’ to deliver the plan so that it does not fall further behind its major competitors

Andrew Hammond

The report has three macro themes that Draghi argues are not even close to being fully tackled. Firstly, closing the innovation gap, with special emphasis on commercializing and scaling up innovation, including in digital technology and artificial intelligence. Secondly, combining decarbonization with growth to boost competitiveness. This requires a continued shift from fossil fuels to a cleaner, circular economy and ultimately a lowering of energy costs. Thirdly, in the face of a deteriorating geopolitical context, there is a growing need to de-risk supply chains. This includes for raw materials, particularly critical minerals, to build resilience to future shocks after the pandemic and Russia’s invasion of Ukraine.

An evaluation released this month by the European Policy Innovation Council found that only 11 percent of the more than 380 Draghi report recommendations have been fully delivered. Moreover, just 20 percent have been partially implemented, 46 percent are “in progress” and more than 22 percent have not been implemented at all. In the field of energy, pharmaceuticals, automotives, space and defense, which is crucial to the EU’s future economic health and security, no substantive actions have been completed.

Little wonder that Draghi is concerned at this slow pace of implementation. Last November, he flagged that the reelection of Trump made the European competitiveness agenda more important.

In recent months, the EU has endured what some have called a “summer of humiliation.” This includes the Trump-Vladimir Putin meeting in Alaska, when the US president rolled out the diplomatic red carpet for his Russian counterpart, ending his years of Western isolation.

On the anniversary of his 328-page report’s release, Draghi warned that the case for Europe making “the massive investments needed in the future” is only growing. He added that the window of opportunity continues to close and that EU leaders “must do it not when circumstances have become unsustainable but now, when we still have the power to shape our future.”

What Draghi was alluding to here is the fact the competitiveness problem now facing the EU is significantly more complicated than even the 2012 financial crisis. This “existential” moment calls for big, bold thinking and Draghi offers this with his “new industrial strategy for Europe.”

An evaluation found that only 11 percent of the more than 380 recommendations have been fully delivered so far

Andrew Hammond

Yet, while this project has the full endorsement of Von der Leyen and almost all national leaders across the 27-member bloc, the asks made by Draghi are expensive. For instance, he recommends the EU raises investment by €800 billion ($941 billion) a year to fund huge schemes that would be equivalent to about 4.5 percent of EU gross domestic product. This would bring the investment-to-GDP ratio to a level not seen since the 1970s.

To be sure, Von der Leyen has launched key initiatives in 2025 that have the potential to help deliver on this, including the “Competitiveness Compass” and the “Clean Industrial Deal.” It is also the case that other landmark reports in Europe have led to major change in the past. These include the 1970 Davignon report, which helped guide the European Economic Community away from its original steel and coal dependencies, and the Delors report, published in 1989, which catalyzed the European Economic and Monetary Union.

Yet, while all is not lost, macro-scale reform may be more difficult today than it was in yesteryear, given the growing challenges. These include, but are not limited to, the economic and political challenges in key economies such as France and Germany; increased international protectionism, including with Trump’s tariff agenda; and a growing alliance between China and Russia.

At this difficult time, a key question, one year on, is who will pay for the report’s wider recommendations to be delivered faster. Draghi has called for a common safe asset and joint EU funding to back “European public goods,” such as energy infrastructure. He also advocates new EU levies to fund more effective spending via common budgets. But it may not only be the traditionally austere nations in Northern Europe, such as the Netherlands and Germany, that will push back on ambitious plans to raise new joint EU debt or raise taxes for more public funding.

Draghi’s report has not yet generated the political traction needed to ensure it changes the EU economy’s fundamental pathway. However, it still has the potential to become an economic roadmap for Von der Leyen’s second term — and Trump’s disruptive diplomacy is increasing this possibility.

• Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.