How Europe can capitalize on its bright future

I was born in Germany, I studied in Switzerland and the UK, and I served as a reserve officer in the French navy. Today, I am a French citizen leading a French company that operates in more than 50 countries. I am, above all, a European.

My personal history reflects what Europe has achieved: countries that fought one another for centuries forged a union characterized by peace, freedom and prosperity, grounded in democracy and the rule of law and committed to solidarity and social protection. And yet, we have grown so accustomed to these conditions that we often take them for granted. While outsiders still largely view the EU as a model of freedom and opportunity, we Europeans tend to focus on our weaknesses: a cumbersome bureaucracy, aging populations, technological inertia and a dearth of global “champions” in critical sectors.

These weaknesses are real but they are hardly insurmountable if we act now. The longer we wait to tackle the challenges we face, the less confident we will be in our ability to do so. As rapid technological transformation and intensifying strategic rivalries generate profound uncertainty and even existential risk, the last thing Europe needs is to lose sight of its strengths.

Those strengths are considerable. The EU accounts for about 20 percent of global consumption: it is the world’s largest single market, with transparent rules and regulations. Thanks to savings rates some three times higher than in the US, Europeans hold €35 trillion ($39 trillion) in savings. The eurozone has a structurally high average savings rate, historically ranging between 12 percent and 15 percent (and even higher in countries such as France and Germany). European insurers alone manage some €10 trillion in assets.

The longer we wait to tackle the challenges we face, the less confident we will be in our ability to do so
Thomas Buberl

The challenge is to mobilize more of this capital for education and research, innovation, the green and digital transitions, and defense. To this end, the EU must complete its long-discussed savings and investments union, aimed at fostering the development of shared capital and banking markets. But investment alone will not deliver the world-beating technology sector that is widely considered to be essential to Europe’s future competitiveness.

As Mario Draghi noted in his influential 2024 report on European competitiveness, the productivity gap between the EU and the US is largely a result of their diverging technology sectors. The question is what has driven this divergence. Why does Europe specialize in incremental innovation — improving on what we have built for decades, like cars — rather than producing disruptive innovation?

Part of the answer lies in regulation, particularly of labor markets. With a few exceptions — notably Scandinavian economies, with their “flexicurity” model — protecting workers from displacement makes introducing new techniques and developing new activities harder in European countries than in the US or China.

Europe’s social model is one of its greatest strengths and social protection lies at the heart of European identity. But ensuring security must not become a quest to eliminate all risk. Instead of hampering innovation in service of preserving every job exactly as it exists today, Europe must help people navigate the coming transitions.

Through strategic thinking, bold policies and regulatory flexibility, Europe can foster champions in key industries
Thomas Buberl

Too often, Europe’s social model intervenes too late, after workers have lost their jobs and their skills have become obsolete. Instead of playing defense, we should pursue active intervention as innovations arise. Europeans must be protected from the risks of change but also from the risk of stagnation. By trying too hard to prevent disruption, we discourage experimentation, investment and entrepreneurship.

Europe’s welfare model must be preserved, so it must be modernized and financed sustainably. Priorities should include raising retirement ages, increasing employment rates through better access to lifelong learning and support for career transitions, and making affordable long-term savings plans more widely available. Investing in preventive health — crucial to help people stay healthy and independent for longer — and developing long-term care services suited to an aging population are also essential.

Such efforts would reassure all Europeans that they will not be left to fend for themselves, while giving young people more reason to hope for a secure and prosperous future. Addressing all these challenges — from modernizing the economy to reforming the welfare state — must involve dialogue with social partners. Such dialogue can deliver legitimacy for difficult reforms in societies that are often deeply polarized.

All of this hinges on Europe recovering its capacity to act. The EU’s creation began when six countries, determined to offer their young people a peaceful future, pooled the resources required to wage war: coal and steel. We should emulate this model today, identifying the initiatives that would effectively guarantee a future characterized by freedom, sovereignty and solidarity; focusing political will and investment on them; and moving forward with those who are willing to act.

This might not include all 27 EU countries. In fact, on major industrial, technological and defense projects, it often will not. Coalitions of the willing must pave the way, with others joining once initiatives prove successful.

Full European autonomy is not realistic but, through a combination of strategic thinking, bold policies and regulatory flexibility, Europe can foster champions in key industries, as we did with Airbus in 1970. In artificial intelligence, while Europe trails the US and China in frontier model development, it might be able to lead in adoption, thanks to a robust industrial base. Its incentive to do so is certainly strong: as population aging causes the workforce to shrink, AI-driven productivity gains could be a game changer.

To this end — and to enhance young people’s future prospects — worker reskilling and the creation of higher-value jobs must be top priorities. Investment in critical and local infrastructure, as well as practical AI applications, is also needed, not least to strengthen our tech sovereignty.

Believing in Europe does not mean defending the status quo. It means having the ambition to pursue transformation. A clear sense of purpose at the top — captured by a compelling narrative centered on prosperity, security and democracy — would help citizens envision a positive future, rather than retreating into nostalgia. And decisive action would translate that purpose into progress.

Europeans might not like the new, more fragmented and competitive global environment in which we find ourselves, but this is the world the EU must confront. No member country can do it alone and no bloc of countries is better placed to succeed.