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Article published in Le Temps on 4 September 2026.
Europe is often described as a continent in need of investment. Yet capital in Europe is abundant. The challenge is channelling domestic savings into the innovative, high-risk industries and technologies that will determine its future prosperity and security.
Periodic Middle East escalations, the US’s aggressive posture on tariffs and uncertainty over its security commitments, along with China’s export surge in fast-growing sectors such as electric vehicles, underscore the urgency of Europe’s strategic challenges. Growth and investment gaps with the US and Asian economies have widened in recent decades, and the continent needs to support its infrastructure, industry, and carve out an AI space.
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It’s not too late to change tack. In an influential 2024 report, Former European Central Bank President Mario Draghi estimated that the European Union must spend EUR 750-800 billion in additional investment annually before 2030, equivalent to 4.5% of GDP, in order to close the competitiveness gap with the US and China.
Mario Draghi estimated that the European Union must spend EUR 750-800 billion in additional investment annually before 2030, in order to close the competitiveness gap with the US and China
Unaddressed, this shortfall can only compound. Worse, the US and China are using tariffs, subsidies, and other policies to tilt the playing field in their favour. The Middle East conflict has exposed strengths and weaknesses worldwide with the geopolitical tectonic plates on the move.
Europe is slowly reconciling itself to this new world order with plans to protect its own industries. But its limitation isn’t a lack of capital but capital transmission. The irony is that for all the discussion about financing its challenges, Europe has abundant savings. European households collectively hold savings worth an estimated EUR 33 trillion. One third of that sits in current accounts, and much of the rest is invested abroad, mostly the US. Essentially Europe is exporting its savings while its innovative companies struggle to access enough capital.
European households collectively hold savings worth an estimated EUR 33 trillion. One third of that sits in current accounts, and much of the rest is invested abroad
The policy imperative therefore is not to find more capital but to mobilise this domestic potential. That’s possible through stronger incentives for households, pension funds and insurers to invest in high-growth companies, and through deepening capital markets, while coordinating tax frameworks and investment treatments.
Governments have a role to play. They could be de-risking rather than replacing private investment, providing guarantees, first-loss structures, and better procurement processes. Germany’s EUR 500 billion infrastructure and climate fund is a meaningful step in this direction, but the test will be whether it attracts private capital. Its implementation has been slower than expected, but the pace is improving, with transport, particularly rail infrastructure, digitalisation and healthcare benefitting.
EU defence spending is also accelerating, with a joint procurement programme including non-member states like Switzerland. But in every area, Europe’s single market is still a work in progress. Company law, clearing and settlement, securitisation and supervisory rules are all fragmented, preventing finance, energy and telecoms firms from scaling up across the continent. For now, an initiative to lift cross-border frictions with a single set of corporate regulations remains just a proposal.
For now, an initiative to lift cross-border frictions with a single set of corporate regulations remains just a proposal
These problems are not new, but they are pressing, not least as political risks mount; Germany’s coalition government remains fragile, and France elects a new president next year. Ultimately, Europe’s attractiveness as an investment destination depends on its ability to invest long term, mobilise its massive private savings and align public and private capital effectively.
Europe can remain a continent rich in capital but poor at deploying it, or it can complete the institutional reforms already started and that it recognises are necessary to turn savings into innovation, productivity and strategic power. The region’s slow start doesn’t prevent it from staying in the global investment race.
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