Europe misses out on €120 billion in investment a year, report finds

A recent study finds that Europe is missing out on an estimated €120 billion in annual investment due to its struggle to build on successful national models across borders. The research, conducted by Italian think tank The European House–Ambrosetti (TEHA) in collaboration with Amazon, highlights the need for better integration of leading examples within the EU rather than imitating foreign models.

The report emphasizes that Europe does not require foreign models; instead, it should connect and scale existing successful investment examples already operating within the EU. According to TEHA senior consultant and study author Diego Begnozzi, "Europe does not need to look elsewhere for answers. Some of the most compelling investment models are already operating within the EU. They simply have not been connected or scaled."

However, the €120 billion estimate may be an underestimate, as it only accounts for additional direct investment, not the broader economic benefits, the report states. In 2024, a report on competitiveness led by former European Central Bank President Mario Draghi suggested Europe would require between €750 and €800 billion in additional annual investment to maintain its competitive edge in the global economy.

The European Commission is currently working on recommendations based on Draghi's report and another study by former Italian Prime Minister Enrico Letta, which aims to complete the EU's single market. Both studies advocate for changes to facilitate easier cross-border business operations.

Key cost factors identified in the study include excessively high energy costs, with European businesses paying around 2.8 times more for electricity than US businesses in Q1 2025. Integrating national energy systems could potentially generate up to €43 billion annually by 2030. Cross-border train services also lag behind domestic routes by 23.4%, despite nearly four decades of railway liberalization, which diminishes the value of the Single Market's physical infrastructure.

Similar barriers exist in AI, digital infrastructure, tax rules, education, the labor market, and the justice system. These challenges arise because national governments have little incentive to fund projects that benefit other countries, given the smaller EU budget compared to their combined budgets. The EU budget currently represents only around 1% of the EU's gross national income, a figure the study's authors deem insufficient for substantial cross-border investments.

The study contrasts the EU's spending of €170.5 billion with the €8,856.8 billion spent by member states in 2024, asserting that the EU's limited scope leaves little room to compensate for insufficient national investment in projects beneficial to multiple countries.