Europe in the Intelligent Age 2025

Executive summary Technology is increasingly shaping the prosperity and sovereignty of nations. The development of disruptive technologies such as artificial intelligence (AI), along with geopolitical events, is creating new arenas of competition, centred on investment into the innovation, production and adoption of advanced technologies.2 However, large European corporations invested €700 billion a year – or €3,000 per capita – less than their United States (US) counterparts between 2015 and 2022, particularly in technology, as returns on invested capital (ROIC) for corporate Europe trailed the US’s by 4 percentage points.3 Europe currently competes effectively with the US and China in only four out of 14 technologies considered critical to the future of the global economy.4 These gaps create strategic dependencies for Europe and threaten to leave €2 to €4 trillion on the table through foregone gross domestic product (GDP) contributions per annum by 2040,5 an amount that exceeds the continent’s current annual funding needed for Net Zero, defence and healthcare combined. As Europe charts its course to increase economic and technological competitiveness, consensus is emerging on the broad categories of levers required to drive change.6 Hundreds of concrete proposals have been laid out in recent reports by Mario Draghi,7 Prime Minister of Italy (2021-2022); Enrico Letta,8 Prime Minister of Italy (2013-2014); the McKinsey Global Institute,9 and others. Completion of the single market could overcome current fragmentation.10 Streamlined regulation could enable a substantial increase in investments.11 Yet, real impact remains unrealized. This paper aims to start the journey of turning ideas into action with a sharp focus on impact, both at speed and at scale. It proposes a strategic framework for where to play and how to win; a list of private-sector lighthouse initiatives to kick-start momentum; and 10 public-sector “grands projets”12 to unleash European competitiveness and entrepreneurship, aligned with six priority areas for spurring innovation and investment:This paper emphasizes strategic focus, private sector-led lighthouse initiatives, and 10 public sector “grands projets” as near-term proposals to accelerate Europe’s competitiveness and investment environment. Europe in the Intelligent Age: From Ideas to Action 4