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The Draghi Report is out. As expected, this long-awaited examination of Europe’s competitiveness shortcomings is exhaustive, analytical, nuanced and well-argued. Bruegel has stressed for years that Europe’s big challenges – raising growth, decarbonising and increasing security – have no simple solutions. The EU leadership needs to understand and carefully navigate the trade-offs between these objectives, and must be prepared to challenge political red lines where they stifle good policy. The Draghi report does both, in spades.

That does not mean that all its policy recommendations hit the mark. At Bruegel, debate on the report is lively, leading – so far – to four short publications. Simone Tagliapietra explains and fully endorses Draghi’s approach to reconciling EU decarbonisation targets with its industrial competitiveness. Fiona Scott Morton applauds Draghi on competition policy, while also pointing to some inconsistencies. For Bertin Martens, Draghi’s analysis of EU digital weaknesses point to the right issues, but his recommendations fail to address them. According to Georg Zachmann, Draghi has good ideas on reducing overall energy system costs, but his proposals to reducing costs for energy-intensive industry are questionable from both a fairness and efficiency perspective.

I find the report convincing in its proposals for beefed-up innovation and competition policy, reduced capital market fragmentation, greater delegation to the EU level when this is efficient, focusing the EU budget on EU-level public goods, common debt issuance to fund some of these critical goods and reform of EU governance. But other recommendations raise concerns about unintended consequences. Draghi appears to advocate major increases in subsidies both for clean tech and energy-intensive industry (albeit linked to decarbonisation measures). He wants to recast trade policy as an instrument of EU industrial policy – for example, by imposing local content requirements. He sees EU international partnerships – the Global Gateway – mainly as tools to promote EU clean-tech exports and secure imports of critical raw materials.

These proposals can perhaps be rationalised as part of a “whatever-it-takes” approach to both defending EU industry and its supply chain and promoting EU decarbonisation. But the seeming disregard for either fiscal constraints or WTO rules could easily backfire by making the EU’s ‘frugals’ even less willing to raise EU-level fiscal resources, by further undermining rules-based trade – preservation of which remains vital for the EU – and by undercutting the EU’s efforts to accelerate decarbonisation internationally, rather than just inside the EU.

The Draghi report has provided a powerful jolt to the EU policy debate. We will continue thinking and writing about it in the coming weeks.