The global landscape is increasingly defined by the transformative power of emerging technologies. Artificial intelligence, in particular, has emerged as a cornerstone of competition among nations. As countries invest heavily in innovation, production, and adoption of advanced technologies, new arenas of strategic rivalry are forming. Europe, however, faces significant challenges in this arena. Between 2015 and 2022, European companies lagged behind their American counterparts by investing €700 billion less annually, with an average investment shortfall of €3,000 per person. This disparity has led to lower returns on invested capital for European firms, widening the gap between Europe and the United States.

Despite these challenges, Europe remains competitive in only four out of 14 critical technologies essential for the future global economy. The consequences of this technological lag could be profound, potentially leaving €2 trillion to €4 trillion in GDP contributions unclaimed by 2040. This amount surpasses the continent’s current annual funding requirements for achieving net zero emissions, defense, and healthcare combined. To address these issues, Europe must focus on strategic initiatives that enhance its economic and technological competitiveness. A consensus is emerging on the broad categories of actions needed to drive change, including proposals from prominent figures like Mario Draghi and Enrico Letta, as well as institutions like the McKinsey Global Institute. Completing the single market and streamlining regulations could unlock substantial investment opportunities.

To turn ideas into action, Europe needs a focused strategy that emphasizes both speed and scale. The proposed framework outlines where Europe should concentrate its efforts and how it can achieve success. For each of the 14 critical technologies, tailored strategies are identified based on their strategic importance, maturity, and Europe’s starting position. In areas where Europe leads, such as private wireless rollout, it should defend and expand its global leadership while carefully balancing the benefits of scale against potential risks. In nascent technology sectors where Europe holds strengths, rapid scaling and commercialization are crucial. For technologies where Europe lags, leapfrogging to the next generation or focusing on specific niches may be the best approach. In areas where Europe is far behind, reallocating resources toward leveraging global front-runners’ investments and capabilities is advisable.

Mobilizing private sector-led initiatives can create momentum for much-needed changes in the investment environment. High-impact projects, such as developing advanced AI applications in finance or healthcare, or launching a semiconductor skills exchange program, can serve as catalysts for broader progress. Public sector initiatives also play a vital role in fostering a more investment-friendly environment. Ten key “grands projets” have been identified, including establishing uniform investment-friendly rules across Europe and creating a streamlined digital permitting system. These initiatives aim to rapidly transform the investment landscape, enabling Europe to seize opportunities in critical sectors like healthcare, defense, and energy.

All stakeholders—public and private—must collaborate closely to translate these ideas into tangible actions. The private sector can provide valuable insights into where and how Europe can compete most effectively, while the public sector must adopt bold policies to catalyze change. With an ambitious mindset, Europe can overcome its technological and investment challenges, positioning itself as a leader in the global economy. This journey requires vision and determination, much like the introduction of the euro, to achieve a lofty ambition despite complexities and risks.