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Competitiveness
Europe isn’t falling behind — it just thinks it is. Business leaders can change that
Business leaders have a decisive role to play in shifting the continent from defensive pessimism to strategic ambition, with the quest for digital sovereignty forming a central part of that shift.
Rapid read:
- Europe’s perceived economic decline is more a narrative problem than a reality. The continent has strong innovation, talent, and regulatory foundations.
- The bloc’s Achilles heel is scaling innovations due to limited mobilization of capital. Fragmented capital markets restrict growth funding. By integrating financial systems and unlocking existing wealth, Europe could rapidly scale its companies and strengthen its digital sovereignty.
- Europe’s regulatory model, often criticized as restrictive, enables trust, stability, and global competitiveness across sectors like cybersecurity and pharmaceuticals, where innovation is strong. This could become a strategic advantage, creating markets that other regions seek to replicate.
Business leaders have a decisive role to play in shifting the continent from defensive pessimism to strategic ambition, with the quest for digital sovereignty being a huge part.
Europe’s economic story is often told in the language of decline: sluggish productivity, fragmented markets, and an inability to scale digital champions. But this narrative misses the deeper truth.
Europe is not uncompetitive. The continent has the talent, regulatory foundations, and technological leadership to become the central pillar of the global digital economy.
Estonia, Denmark, and Switzerland are already the three most digitized nations in the world. So what’s the sticking point? Europe lacks both the capital and confidence to turn its innovation into a globally competitive scale. But this is solvable.
If Europe can seize the moment to build digital sovereignty – controlling its digital infrastructure, data, and technological capabilities – it will be better able to compete globally on its own terms. Digital sovereignty is not about isolation, but about reclaiming control over European innovation. And this turnaround is possible within a 10-year timeframe.
What is Europe?
Europe is not just a geographic space or a political project. It is a social model that combines innovation with protection, competition with fairness, and growth with dignity. Europeans live longer than their American and Chinese counterparts. Income distribution is more equitable, consumer protection is stronger, and none of this is accidental. Europe is the product of a regulatory philosophy that sees innovation and social cohesion as mutually reinforcing.
This same model is often caricatured as bureaucratic or slow, but the data tells a different story. Europe leads in cybersecurity, deep-tech, and pharmaceuticals. It dominates hydrogen-related patents. It has built the world’s most advanced payment systems. And these achievements are not despite regulation; they are enabled by it.
Europe’s challenge is not innovation. It is scale. And scale requires capital.
Europe’s corporate sector faces structural constraints that its global competitors do not.
Global competitiveness: a concern of the corporate sector
In a global economy defined by platform effects, network advantages, and technological acceleration, the corporate sector is the engine that translates innovation into economic power.
But Europe’s corporate sector faces structural constraints that its global competitors do not. The United States benefits from deep, unified capital markets and a culture of risk‑taking. China benefits from state‑directed industrial policy and massive domestic scale. Europe, by contrast, has fragmented capital markets, cautious investment norms, and a persistent gap between invention and commercialization.
This does not mean Europe is doomed to lag behind. It means Europe must mobilize its corporate sector differently: by leveraging its unique strengths rather than imitating foreign models.
Europe is frequently accused of over‑regulating.
What can the corporate sector do?
1 – Sing the praises of European innovation
Europe’s innovation story is stronger than its reputation suggests. Global patent data is often misinterpreted because it includes re‑patents – an area where China inflates its numbers. When looking at frontier technologies, Europe consistently performs at the top. As I detailed in my book SuperEurope: The Unexpected Hero of the 21st Century, the continent’s leadership in hydrogen patents, cybersecurity, and biotech is not anecdotal; it is systemic.
Yet Europeans rarely celebrate these strengths. Business leaders can help shift the narrative by highlighting Europe’s technological leadership and reinforcing the message that innovation is not an imported good – it is a native European capability.
2 – Change the rhetoric on European regulation
Europe is frequently accused of over‑regulating. But the comparison with the United States reveals a more nuanced picture. In the US, regulation oscillates between extremes: too little in some sectors, too much in others. The result is instability. Light‑touch regulation in finance contributed to the 2008 collapse, and in digital markets has produced monopolies with unprecedented power.
Europe’s regulatory approach, by contrast, is grounded in trust, safety, and consumer protection. It ensures that a European cannot be denied a loan because of their ethnicity. It ensures that food labelled “cheese” is actually cheese and not a wedge of plastic. It ensures that digital systems are accountable.
This regulatory foundation is not a burden. It is a moat. It creates trusted markets that global partners increasingly look to emulate. The UAE and Singapore are studying European digital regulation as I write, and that’s not because it is restrictive, but because it is enabling.
3 – Build on R&D leadership, activating growth capital
Mario Draghi has highlighted the gap in R&D investment between Europe and the US. But when military spending is excluded, the gap narrows significantly. Europe is not under‑investing in research; it is under‑converting research into scale.
Europe’s weakness is capital, not creativity. The continent has more investable funds than the US – €85tn to be precise – but much of this is locked in conservative instruments. Unlocking this capital is the single most important lever for European competitiveness.
The EU has a long-term goal of creating a Capital Markets Union (CMU), a single, integrated market for capital, allowing money to flow as easily across EU countries as it does within them.
Europe’s capital markets remain fragmented along national lines. This fragmentation prevents pension funds, insurers, and institutional investors from deploying capital at scale into high‑growth sectors.
The EU has a long-term goal of creating a Capital Markets Union (CMU), a single, integrated market for capital, allowing money to flow as easily across EU countries as it does within them.
If achieved and done so well (complete with Eurobonds, harmonized listing rules, and cross‑border investment vehicles), it would unlock unprecedented growth. Business leaders should advocate for this integration and design financial products that channel long‑term capital into European scale‑ups. In practical terms, a pro-European strategy might include the following:
1 – Advocating for harmonised rules
Example: A European multinational could publicly support the harmonisation of insolvency laws by demonstrating how differing national rules increase the cost and time required to restructure subsidiaries across borders. By quantifying these inefficiencies in a policy paper or EC consultation, the company helps build momentum for EU‑wide insolvency reform.
2 – Increasing cross‑border investment
Example: A German industrial firm could issue a corporate bond on Euronext Paris rather than only on the Frankfurt exchange. This signals confidence in cross‑border financing, deepens liquidity in multiple markets, and normalises pan‑European capital raising.
3 – Supporting integrated financial infrastructure
Example: A large retailer or telecom operator could adopt the EU’s consolidated tape for equities as soon as it becomes available, using it to optimise treasury operations. Early adoption encourages financial intermediaries to build services around the tape, accelerating its uptake across the continent.
4 – Funding innovation and scale‑ups
Example: A major European pharmaceutical firm could launch a corporate venture capital arm that invests in early‑stage biotech firms across the EU, not just in its home country. This helps build a pan‑European deep‑tech ecosystem and channels private capital into frontier innovation.
5 – Promoting investor participation
Example: A large employer could expand its employee share‑ownership plan to include workers in all EU countries where it operates, not just its headquarters. This increases retail participation in capital markets and strengthens the culture of long‑term investment.
6 – Engaging in policymaking
Example: A consortium of European scale‑ups and corporates could jointly submit evidence to the European Commission showing how fragmented listing rules push high‑growth companies to pursue IPOs in the US. This real‑world data helps shape reforms to EU listing requirements.
7 – Anchoring strategic assets in Europe
Example: A leading European AI company could commit to listing on an EU exchange – rather than NASDAQ – if late‑stage capital becomes more accessible. This creates a visible incentive for policymakers to accelerate CMU reforms and keeps strategic technologies owned, taxed, and governed in Europe.
This article draws on themes from a speech Arturo Bris gave at the European Commission event Digital Now 2026: Building a trusted digital future: People-led, AI-powered.
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