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DELIVERING ACTIONABLE INSIGHTS ON THE DAY’S NEWS

Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms

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Advancing European innovation

In the news

•

Europe’s innovation gap. Decades ago, Europe was a world leader in AI innovation. But today, the region’s complex regulatory frameworks are increasingly contributing to some companies’ decisions to delay or cancel their AI platform launches, Fortune reports. Although Europe’s actions to protect consumers are admirable, an expert shares that policy-related uncertainty can have a chilling effect on new innovation and, as a result, hinder European consumers and businesses. [Fortune]

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A comeback plan. European leaders have outlined a five-year strategy to strengthen the region’s industries against competition from East Asia and regulatory changes in North America, Reuters reports. The proposal aims to streamline business-related legislation and accelerate investments to encourage innovation, as venture capital is less accessible in Europe than in the US. European leaders also plan to invest in companies working in AI, quantum computing, and other cutting-edge fields. [Reuters]

Europe’s corporate and technological underperformance could put €2 trillion to €4 trillion at stake annually by 2040, according to McKinsey Global Institute analysis.

On McKinsey.com

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Lagging investment. The prosperity and sovereignty of nations increasingly depend on technology, McKinsey Senior Partner Solveigh Hieronimus and coauthors note. Yet despite the region’s potential for technological leadership, large European businesses invest less than their US counterparts—particularly in technology. Indeed, between 2015 and 2022, Europe’s corporations underinvested by €700 billion per year when compared with US corporations, while corporate returns on invested capital in Europe also lagged those in the US.

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Fostering entrepreneurship. As European leaders seek to increase the region’s economic and technological competitiveness, consensus is emerging around the elements required to create change. One is simplifying regulations, which could enable investments to rise substantially; another is completing the European single market, which would allow capital to flow more freely within Europe. Explore examples of private sector–led initiatives, including the development of AI-based diagnostic and treatment pathways in healthcare, that may help unleash European entrepreneurship.

Accelerate European competitiveness

—Edited by Belinda Yu, editor, Atlanta

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﻿Advancing European innovation

In the news

﻿Europe’s corporate and technological underperformance could put €2 trillion to €4 trillion at stake annually by 2040, according to McKinsey Global Institute analysis.

On McKinsey.com

Advancing European innovation

Europe’s corporate and technological underperformance could put €2 trillion to €4 trillion at stake annually by 2040, according to McKinsey Global Institute analysis.

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