Europe’s Competitiveness Crossroads: Why Draghi’s Vision Still Matters for Fund Managers

As global markets evolve, Europe faces a familiar dilemma: how to stay competitive without deeper integration.

Mario Draghi’s call for “pragmatic federalism” and structural reform is not just political theory; it is a signal to every participant in Europe’s capital ecosystem, especially fund managers, that fragmentation still limits growth, scale, and investor confidence.

The European Union remains a mosaic of regulations, approvals, and national regimes. For fund managers, this creates both opportunity and friction. Understanding how competitiveness and governance intersect is now a strategic advantage, not an academic concern.

1. Europe’s Structural Challenge

Europe’s economy is weighed down by slow decision-making, overlapping regulation, and uneven implementation across member states.
In his 2024 address to the European Parliament, Mario Draghi warned that Europe’s lack of a Single Market for innovation and capital is stifling growth, forcing start-ups and investors to look abroad for scale. As he noted, innovation “is hindered at every stage by the lack of an integrated capital market,” preventing Europe from turning ideas into investment.

For the fund industry, this translates into complexity. Each jurisdiction brings its own interpretation of AIFMD, marketing permissions, and substance rules. These inconsistencies slow fund launches and investor onboarding, creating the very friction that pragmatic federalism aims to solve.

Example:
A manager structuring a pan-European debt vehicle still faces divergent depositary standards and disclosure rules between Luxembourg and France. The regulatory distance between member states has become a competitiveness gap.

2. Capital Markets as the Missing Engine

Europe’s capital markets remain fragmented, limiting the flow of private capital into innovation, energy transition, and SMEs.
A genuine Capital Markets Union (CMU), long discussed but rarely delivered, would allow funds to raise and deploy capital seamlessly across borders.

Without it, smaller and mid-sized GPs remain trapped in national silos while U.S. and Asian peers scale globally.
For investors, that means fewer accessible, scalable European alternatives.

Integration is not an abstract EU policy goal. It is the difference between local reach and global relevance.

3. Pragmatic Federalism: What It Means for Funds

Draghi’s “pragmatic federalism” is less about politics and more about operational efficiency.
For fund managers, it suggests a future where regulatory alignment, data standards, and supervisory cooperation make cross-border fund structuring simpler and faster.

That vision aligns directly with what modern GPs need:

• Consistent investor protection standards

• Harmonised ESG reporting

• Unified substance and delegation criteria

• Predictable approval timelines

In practice, that is what Dorhyan.eu calls cross`-border regulatory alignment: a system where structure supports competitiveness rather than constraining it.

4. What Fund Managers Should Do Now

While Europe debates its next integration step, fund managers can prepare strategically:

• Design scalable structures by selecting jurisdictions, entities, and service providers that can expand into multiple EU markets without redesign.

• Embed compliance intelligence to anticipate national divergences rather than react to them.

• Leverage partnerships with ManCos, AIFMs, and advisors that operate across borders to gain instant scale.

• Prioritise investor experience because transparency and onboarding efficiency are now key competitiveness metrics.

Example:
A non-EU GP structuring through Luxembourg can already pre-map marketing permissions in France, Germany, and the Nordics to avoid reverse-solicitation risks later.

5. The Dorhyan.eu View: Competitiveness Is Structural

At Dorhyan.eu, we see Europe’s competitiveness challenge as inseparable from fund design.
Every delay, every fragmented approval process, and every misaligned regulatory interpretation reduces capital efficiency.

By helping managers build compliant, investor-ready, cross-border structures, Dorhyan.eu turns regulatory complexity into strategic capability.
Competitiveness does not just come from growth. It comes from structure.

Sources

• Financial Times — “Why has the EU only implemented a fraction of Draghi’s economic plan?” (Alice Hancock, November 2025)

• Politico Europe — “Draghi pushes ‘pragmatic federalism’ to get Europe out of its predicament” (October 2025)

• European Commission / European Parliament — “Presentation of the Report on the Future of European Competitiveness” — Address by Mario Draghi, Strasbourg, 17 September 2024