The people of Europe have voted, a new parliament has been elected, candidates for the European Commission President and new Commissioners are vying for their positions, but this is not business as usual for Brussels.
Whoever takes their seat when the music stops, the challenges they will inherit are existential. Thirty years ago, Europe accounted for roughly a quarter of global GDP. Now Europe is lagging behind. The EU’s GDP per capita is half that of the US, and Europeans earn about $40,000 (€37,400) compared with $80,000 for Americans. There are no European companies among the world’s top 10 companies. There are no European companies among the 12 most valuable unicorns (startups valued at more than $1 billion). None of Europe’s top 50 companies were founded in the last 30 years.
European companies are experiencing slowing growth and declining profits, and are lagging behind in research and development in traditional European industries like autos and manufacturing. Last year, only one electric-car brand in the top 10 in the United States was European. China is planning four times as many semiconductor factories as Europe.
Sadly, the EU is no longer a fertile ground for innovation and world-class companies. Emmanuel Macron and Olaf Scholz have stated it clearly: “Our Europe is doomed.” In their words, Europe is experiencing a “Zeitenwende”, or a historic turning point.
The age of generative AI offers an opportunity to change the game. These powerful technologies could provide a major boost when we need them most. Goldman Sachs estimates that generative AI could add 7% to global GDP over the next decade.
Europe is a pioneer in regulating technology, as the GDPR, DMA, DSA, and AI law show, but it has yet to pioneer and deploy the technology at scale. The complexity of European regulations and the patchwork of laws across member states often discourage companies from rolling out new products in Europe. Companies like Meta, Google, and others have delayed the European rollout of their AI assistants, and even successful European companies like Volkswagen are increasingly shifting the development and launch of AI products to the US. As AI is rapidly adopted in the US and China, the gap between these superpowers and the EU is widening.
How can Europe change course?
The underlying infrastructure for basic AI models is very expensive and energy intensive, but adopting and customizing AI models, especially open-source models, gives European companies, startups and researchers access to tools they could not develop on their own.
Europe’s high-quality university sector producing the best talent, together with our deep research and development capabilities, will enable us to become a global leader at the application layer of AI, creating apps and services that allow people to experience this powerful new technology.
Europe is not leveraging its greatest strength: a single market with 450 million consumers. European leaders have repeatedly stated that one of their main goals is for Europe to compete with the US and China in technology. They are eager to see the next Silicon Valley emerge on European soil. As a proud European, I would love to see the next Meta, Alibaba or Google emerge on the European continent. And we have all the ingredients we need: a vast consumer market, great universities, top talent and a history of experimentation and innovation.
But despite aggressive regulatory efforts, with 77 new EU digital laws adopted since 2019, the failure to properly complete the Digital Single Market has held us back. It’s staggering, for example, that a digital start-up in Amsterdam still has to navigate 27 different intellectual property laws, various rules on content licensing, data protection authorities and other hurdles before it can operate across the continent.
When I was in Brussels in the 1990s, the single market was a source of great optimism. I studied at the European University, where I met my wife Miriam, and joined the European Commission at the height of globalization and European integration. The Berlin Wall was falling, the Single European Act was taking hold, the Maastricht Treaty had just been printed and the World Trade Organization was up and running.
I served as a Member of the European Parliament in the late 1990s and early 2000s, a time when the world felt like it was coming closer together and the EU – an incredible experiment in cooperation, openness and strength in numbers – was the symbol of that optimism.
The 2008 financial crisis snapped the backbone of globalisation and sent clouds of introspection over Europe as governments, burdened with huge budget deficits and seduced by anti-establishment populists on both the left and right, prioritised issues of national sovereignty over the common endeavour.
No country has turned its back on the European project more decisively than our own Britain.
With the EU becoming increasingly contentious and divided, with regulators and policymakers pulling in different directions, it is no wonder that many voters, especially young people, are backing insurrectionist populists who promise to challenge the status quo.
The new MEPs and Commissioners face a huge challenge: to reverse Europe’s economic decline. It won’t be easy, but it’s possible. We need to play to our strengths. The single market is Europe’s greatest asset, but it’s not yet perfect. Get the job done. Avoid fragmented regulation. Embrace an open approach to AI development. And let European creativity, ingenuity and entrepreneurial spirit bring back the optimism we all crave.
Nick Clegg is Global President of Meta.
