Welcome to the Brussels Edition. I’m Suzanne Lynch, Bloomberg’s Brussels bureau chief, bringing you the latest from the European Union each weekday. Make sure you’re signed up.

One year on from the publication of Mario Draghi’s report on how to fix the EU’s perennial competitiveness problems, the man himself was back in Brussels today to give an update.

Speaking alongside European Commission chief Ursula von der Leyen, Draghi gave a bleak assessment on the outlook for the bloc.

Europe is in “a harder place,” he said. “Our growth model is fading. Vulnerabilities are mounting. And there is no clear path to finance the investments we need.”

Though officials have embraced the spirit of the former European Central Bank president’s report, critics have accused the Commission of failing to take sufficient action to address the EU’s many shortcomings.

A paltry 11% of the Draghi report’s 383 recommendations have been fully delivered, according to a study by think tank EPIC.

Draghi and von der Leyen in Brussels, on Sept. 16. Photographer: Simon Wohlfahrt/Bloomberg

In his speech today, the former Italian prime minister also called for a pause in EU rules governing Artificial Intelligence, saying the next stage covering areas like health and critical infrastructure should be put on hold “until we better understand the drawbacks.”

He also took aim at EU state-aid rules, calling for a “new approach.”

“In practice, state aid often acts as protectionism – locking activity within borders instead of building European industries that are globally competitive,” he said. Unlike the consolidation in evidence in the US and Asia, Europe “remains split between multiple national champions and overlapping industrial bases.”

In her speech, von der Leyen pledged that the Commission would advance the overhaul of merger guidelines that had been initially expected by 2027.

Another key recommendation of the Draghi report was the need to encourage consumers to channel private savings into investments.

Bloomberg’s Saim Saeed and Jorge Valero report that the Commission will propose a series of tax measures to spur investment as part of the forthcoming  savings and investment union package expected at the end of the month.

The Latest

• The EU will delay formally tabling its latest package of sanctions against Russia,  after the US demanded stronger measures as a condition for the US to move forward with its own penalties.
• Poland neutralized a drone flying over government buildings in Warsaw yesterday evening and detained two Belarusian citizens over the incident, Prime Minister Donald Tusk said.
• Financial regulators in France, Austria and Italy urged the EUs top markets watchdog, the European Securities and Markets Authority, to start supervising major crypto companies directly and to tighten the bloc’s rules, after identifying disparities in how crypto regulations are being implemented.
• Prime Minister Giorgia Meloni’s government is working on a preliminary plan to raise an extra €1.5 billion from Italian lenders in 2027 by postponing their tax deductions, sources say.
• Raiffeisen Bank International wants to leave Russia but that decision isn’t necessarily up to the firm, with “too many decision makers involved,’’ CEO Johann Strobl told Bloomberg.
• Kering, whose luxury brands include Gucci, Saint Laurent and Balenciaga, said it was the victim of a data breach discovered in June, the latest in a string of attacks on the consumer goods sector.

Seen and Heard on Bloomberg

WATCH: ECB’s Kocher speaks at a Bloomberg event in Vienna.

ECB Governing Council member Martin Kocher said officials stand ready to react to shifts in economic data even if inflation risks for the region are “quite balanced” at the moment. Officials must remain alert and keep some policy powder dry without over-interpreting particular events, the new Austrian central-bank governor said at a Bloomberg event in Vienna.

Chart of the Day

France’s central bank published gloomier economic forecasts for the next two years, warning of downside risks from budget uncertainty following another government collapse. The Bank of France trimmed forecasts for 2026 and 2027 by a tenth of a percentage point compared with June projections, citing a “more uncertain national context” and unfavorable global factors. The Spanish government and central bank,  meanwhile, raised their growth forecasts for this year, cementing the country’s status as the region’s top major performer after a bumper second quarter.

Coming Up

• EU European affairs ministers are meeting today in Brussels
• European Council President Antonio Costa holds talks with Spanish Prime Minister Pedro Sánchez this evening in Madrid
• Opposition protest takes place in Bratislava this evening against the Slovak government’s proposed budget measures

Final Thought

UBS Group’s senior leadership has been sitting through presentations from investment bankers in recent weeks as they seek a solution to what is perhaps the Swiss lender’s biggest challenge in over a decade: A $26 billion increase in capital requirements leveled by its home government. Options range from the dramatic — a merger or acquisition deal with a non-Swiss bank allowing a change in domicile — to the more mundane, such as a range of technical tweaks that can put just enough capital away over the coming years.

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