Budapest, Sep 14 : The European Union (EU) is leaning towards the formation of blocs in the world economy, instead of facing competition, Hungarian Prime Minister Viktor Orban said here.

"The (European) Union is leaning towards bloc formation. We hear news every day about new protective tariffs, penalties, sanctions," Orban said on Friday in an interview with local public radio Kossuth, referring to the recent Draghi report.

Former Italian Prime Minister and ex-European Central Bank President Mario Draghi's recent report for the European Commission (EC) offers a stark assessment of the challenges facing EU competitiveness, with several key takeaways, Xinhua news agency reported.

One of the main points is that Europe is falling behind the US and China in critical areas such as innovation, decarbonisation, and securing supply chains.

The global power shift and the rise of Asia are undeniable facts, Orban said, adding that there are two possible ways to respond: join the competition, or disqualify the competitor.

"For Hungary, bloc formation would be a tragedy," he said.

"It is in Hungary's best interest for the global economy to be unified, not to reject or exclude the challengers, but to understand them, understand why they are better than us, and start competing with them, improving our performance."

Recalling his recent talks with leaders of major European car manufacturers, he said: "I asked their opinion on the European punitive tariffs imposed on Chinese electric cars, which theoretically are meant to protect domestic manufacturers. And they said they strongly oppose this."

"We must gather allies and cooperate with like-minded countries," Orban concluded, adding that such countries need to help to change policy in Brussels.

The EU is tending towards bloc formation, and there are daily reports of the introduction of protective tariffs, but for Hungary bloc formation would be a tragedy, just as the socialist economic policy was a tragedy when the world economy was split into a Soviet and an American economy. In the event of such a split, we would be "marginalised, we would become insignificant players in the world economy, we would lose opportunities, we would be locked into a dead end," the Prime Minister said.

/IANS