Europe in the Intelligent Age 2025

Foreword Strategic focus and private sector-led lighthouse initiatives can change the Old Continent’s trajectory – if the public sector radically changes the investment environment with a handful of priority initiatives. The rising economic stakes of the Intelligent Age have made competitiveness, especially in technology, a top priority across Europe. At its core, competitiveness is driven by investment – specifically in productive infrastructure and innovation. Competitive economies become magnets for further investment because of their skilled workforce, advanced infrastructure and culture of innovation. This reinforces growth, securing and improving living standards, and decreasing an economy’s strategic dependencies on others.1 Europe’s strengths in areas such as the industrial sector, sustainability and education provide a necessary but insufficient competitive foundation to offset the growing challenges posed by deficits in innovation, production and adoption of technology, as well as geopolitical shifts. Recent reports by Mario Draghi and Enrico Letta detail important policy proposals to help address this fundamental issue. An increasing urgency exists among European leaders to figure out what tangible actions Europe can take to turn ideas into impact – at speed and at scale. Our research sought to advance this debate by examining two overarching questions: Where could Europe focus to best compete, and in which technologies? How could the private and public sectors mobilize for action and unlock investment and innovation at scale? This paper adds to the work of the World Economic Forum and McKinsey & Company over the past seven years to provide insights for increasing European competitiveness, including the joint 2018 “Renew Europe” and 2019 “Innovate Europe” reports. It also builds on discussions at a high- level dialogue on “Europe in the Age of Intelligent Economies” hosted by the World Economic Forum in October 2024, and nearly a decade of research by the McKinsey Global Institute on the subject, including our recent report, “Accelerating Europe: Competitiveness for a New Era”. Our thanks go to the more than 100 public and private sector leaders across Europe for providing feedback and ideas to help shape these insights. The level of engagement by these leaders from European institutions and corporations has been inspiring. This paper aims to serve as a starting point for a joint multistakeholder, multi-year acceleration of Europe’s trajectory. We are inviting leaders from across sectors and institutions across the continent to collaborate with us on the journey ahead.Europe in the Intelligent Age: From Ideas to Action January 2025 Massimo Giordano Managing Partner Europe McKinsey & CompanyMirek Dušek Managing Director World Economic Forum Europe in the Intelligent Age: From Ideas to Action 3