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Europe’s struggle to build on successful national models across borders could be costing it at least €120 billion a year in missed investment.
That is the estimate of Italian think tank The European House–Ambrosetti (TEHA), in a study produced with Amazon.
The study, published on Thursday, analyses successful national examples across a wide range of sectors—from railway networks to AI, from energy to smart regulation—and argues that Europe does not need to imitate foreign models, but rather integrate leading examples at the European level.
“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,” TEHA senior consultant and the study’s author Diego Begnozzi said in a press statement.
The €120 billion estimate, however, could be even higher as it refers only to additional direct investment. It does not count any wider economic benefits, the report says.
According to a 2024 report on competitiveness led by former European Central Bank President Mario Draghi, Europe needs between €750 and €800 billion in additional annual investment to remain competitive in the global economy.
The European Commission is working on recommendations from Draghi’s report and a separate report by former Italian Prime Minister Enrico Letta on how to complete the EU’s single market. Both call for changes to make it easier for businesses to operate across national borders.
Where the costs lie
The study estimates how much more investment Europe could attract with better-connected national markets.
As high energy costs are increasingly threatening the output of the European industry, the report says, “European businesses paid around 2.8 times more for electricity than US businesses in Q1 2025, while greater Single Market integration of national energy systems could generate up to €43 billion annually by 2030.”
On transport, it says that “cross-border train services are 23.4% slower than comparable domestic routes, despite nearly 40 years since the start of railway liberalisation, limiting the value of the Single Market’s physical infrastructure.”
It identifies similar barriers in AI, digital infrastructure, tax rules, education, the labour market and the justice system.
One reason, the report argues, is that national governments have little incentive to pay for projects that benefit other countries too. The EU budget is much smaller than their combined budgets, limiting what it can fund across borders.
The EU budget currently represents around 1% of the EU’s gross national income, a figure the study’s authors consider too low to fund major cross-border investments.
The study compares €170.5 billion in EU spending with €8,856.8 billion spent by member states in 2024. It argues that this leaves the EU with limited scope to make up for a lack of national investment in projects that would benefit several countries.
What Brussels is doing
The EU is working on changes to capital markets rules and measures to support industry. It has also proposed EU Inc., a set of common rules intended to make it easier to start and grow a business across the bloc. The Commission has called for agreement on EU Inc. by the end of 2026.
Two years after the publication of the Draghi report, the Joint European Disruptive Initiative (JEDI Draghi Tracker) said that Europe was falling short in implementing his agenda, as policymakers were moving too slowly to approve and implement legislation.