The former president of the European Central Bank (ECB) has predicted the European Union (EU) will be in recession by the end of the year.
Mario Draghi, the former Italian prime minister, issued the warning as the EU economy struggles to recover from the coronavirus pandemic and Russia’s ongoing war against Ukraine.
He also said there needed to be urgent political integration for the European project’s long-term survival.
Mr Draghi told the FT’s Global Boardroom conference: “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.”
Mr Draghi said he expected a contraction in output in the EU over the upcoming quarters
PA
He added: “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.”
Mr Draghi said he expected a contraction in output in the EU over the upcoming quarters.
He said: “It is almost sure we are going to have a recession by the year-end.
“It is quite clear the first two quarters of next year will show that.”
The former ECB president, who left the ECB four years ago, said he thought the recession was not likely to be “deep” or “destabilising”.
However, his prediction is more downbeat than the recent forecasts by the ECB or IMF.
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Both expect a rebound of European growth from the final months of 2023.
The eurozone economy shrank by 0.1 per cent in the three months to September compared with the previous quarter, data showed last week.
While many economists have predicted further contraction in the fourth quarter, the ECB’s latest eurozone forecast predicts a rebound in quarter-on-quarter growth to 0.1 per cent.
It also expects 0.3 per cent growth in the first quarter of 2024, followed by a period of 0.4 per cent growth.