Europe is one of the world’s leading regions in terms of sustainability and inclusion. But its per capita income remains 27 percent lower than in the United States. Closing that prosperity gap is one of Europes challenges and the success depends on accelerating growth by becoming more globally competitive. The report focuses on the 27 member states of the European Union (EU) plus Norway, Switzerland, and the United Kingdom.
We have entered a new geo-economic era that makes competitiveness more urgent and more challenging for Europe in seven arenas that matter for the future, from energy to technology and supply chains.
Shoring up competitiveness in these areas is critical. In the McKinsey report it is estimated that about €500 billion to €1 trillion of value added could be at stake annually by 2030. For perspective, this is three to six times the incremental annual investment needed to achieve net zero. Addressing these issues will determine the region’s ability to unlock future growth while preserving its unrivalled sustainability and inclusion model.
To thrive in this new era, Europe needs an integrated agenda for competitiveness, with business leaders and policy makers working hand in hand toward ambitious new goals. Critical choices and potentially uneasy trade-offs lie ahead.
Europes challenges and solutions
Sharply higher goals according to the report could include: doubling innovation-related private and public spending in areas such as artificial intelligence, with a differentiated approach for adoption vs. development; doubling the average scale of Europe’s leading firms, perhaps by introducing a “28th regime” of common business rules; cutting power and gas prices in half by developing and accessing new sources of energy; accelerating reskilling and lifelong learning-strategy, labour redeployment, and talent attraction to enable technology adoption; adding $400 billion of annual corporate investment and doubling the inflow of greenfield FDI; securing access to critical materials; and rethinking regulation and industrial policy.
The report focuses on Europe’s geo-economic challenges as a consequence the authors deliberately have not examined the governance structures of the EU, but instead focus on the economic dynamics.
Learn more about the report here:
Accelerating Europe: Competitiveness for a new era
