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EU Faces up to €4 Trillion GDP Loss by 2040 Without Urgent Tech Investment, WEF Warns

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James Morales
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Key Takeaways

  • European tech investment has fallen significantly behind the U.S.
  • As a result of this investment deficit, the region risks missing out on up to €4 trillion in GDP annually by 2040.
  • The organization called for reforms and initiatives to free up capital and spur investment.

Europe risks losing between €2 trillion and €4 trillion in GDP annually by 2040, without decisive investment in advanced technologies, according to a World Economic Forum (WEF) report published on Friday, Jan. 17.

The report , “Europe in the Intelligent Age,” highlights the region’s widening innovation and production gaps, underscoring the need for immediate, coordinated action to secure the continent’s economic future.

Investment Deficit Is a Pressing Concern

While European and American companies used to invest similar amounts each year, in 2022, American firms outspent their European peers by 76%, the WEF found.

The picture is even more stark when looking at the technology sector alone, where American corporations invested 514%, or €700 billion more, in 2022 than their European counterparts.

The WEF stressed that this underinvestment jeopardizes Europe’s ability to capitalize on a projected $30 trillion global market for “advanced technologies” by 2040.

Pointing to AI as an example, the report found that Europe’s market share in most parts of the value chain is less than 5%.

The largest corporate investors in Europe spent €25 billion on the technology in 2024, it noted. In comparison, the largest U.S. technology firms spent more than €150 billion.

Falling Behind in Key Technologies

Notably, the report found that Europe excels in only four of the 14 critical technologies identified by the think tank: Quantum computing, climate technology, bioengineering and advanced connectivity.

chart showing European competitiveness in advanced technologies.
Source: “Europe in the Intelligent Age”

Meanwhile, the region has fallen behind in cloud computing, immersive reality technology, cybersecurity and AI.

The Economic Stakes

The economic impact of Europe’s technology deficit could be dire.

Beyond the immediate loss in GDP, the WEF found that the continent’s slower pace of tech adoption has already cost 0.4 percentage points in productivity growth annually, compared to the U.S.

Addressing this gap is critical to ensure sovereignty and resilience in a volatile geopolitical landscape. Advanced technologies, such as quantum computing and AI, are integral to innovations in healthcare, defense and energy, areas that are crucial for Europe’s strategic autonomy.

Solutions and Strategic Priorities

To reverse Europe’s trajectory, the WEF proposed a dual approach, involving private sector-led initiatives and bold public sector reforms.

The report identified “10 grands projects” that could spur investment. These include reforming financial regulation so that pension funds can invest more in private equity and venture capital, increasing the pool of readily available capital to fund innovation.

At a time of heightened nationalism, protectionism and simmering Euroscepticism, the report also makes the case for free trade and a stronger, more unified single market.

It calls for more regulatory and tax alignment between countries and a streamlined process for regulatory approvals within the EU.

Other recommendations include ramping up public spending on technologies, for example, by directing a portion of national healthcare budgets toward AI diagnostics.

The report also suggests creating new training programs and pan-European research hubs.

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James Morales

Although his background is in crypto and FinTech news, these days, James likes to roam across CCN’s editorial breadth, focusing mostly on digital technology. Having always been fascinated by the latest innovations, he uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
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