In the six years since the pandemic ended, U.S. business investment has grown at more than three times the pace of Europe's. Oxford Economics forecasts that from 2021 to the end of 2027, U.S. corporate real spending on new equipment and facilities will rise by 40%, compared with just 12% in the eurozone, while Germany's growth has nearly stalled.

The surge in AI equipment spending is the core driver.


This gap existed before ChatGPT. Europe's information technology investment was already lagging behind the United States well before the rise of large language models in late 2022. AI has only made the gap more visible.

On the U.S. side, Google, Meta, Microsoft, and Amazon plan to spend more than $725 billion on AI infrastructure in 2026 alone. On the European side, former European Central Bank President Mario Draghi issued a landmark competitiveness report in September 2024, warning that Europe needs an "unprecedented" surge in investment, returning to the investment levels of "the 1960s and 1970s," with the required scale even exceeding the Marshall Plan. More than a year later, little substantial progress has been made.

Daniel Harenberg, an economist at Oxford Economics, said: "The U.S. economy is more dynamic, with a stronger entrepreneurial culture, so it is advancing faster in the AI race and reaping greater rewards. Europe has been much slower."

The productivity gap is also widening. Bart van Ark, a professor at the University of Manchester, noted at this year's ECB Forum that between 2018 and 2025, GDP created per hour of labor in the U.S. rose by $14, while Europe rose by only $2. The gap is not limited to the digital sector; it is also evident in wholesale and retail trade, professional services, and other industries.

But van Ark believes that simply increasing investment will not solve Europe's problems. The deeper issue is that innovation has not been effectively connected to the adoption and application of new ideas and tools by businesses.

Europe's predicament is structural. ECB President Christine Lagarde has said that Europe's growth model, which relies on manufacturing, "is adapted to a world that is gradually disappearing." The EU's Artificial Intelligence Act, which took effect in 2024, is the world's first legal framework for AI, but critics argue that strict regulation will stifle innovation. Macron acknowledged two years ago: "We have fallen behind a changing world."

Karsten Junius, chief economist at Bank J. Safra Sarasin, put it more bluntly: "Europe has already missed the current wave of cutting-edge technology."

But the United States is not without concerns either. The Bank for International Settlements warned in June that if returns from AI investment fall short of expectations, there could be a sustained "investment bubble burst." The $725 billion in annual spending is a bet that AI will generate sufficiently large returns in the short term.

Junius believes that at least part of the investment gap between the U.S. and Europe is temporary. "U.S. AI investment will not maintain its current scale indefinitely." The IT and semiconductor industries have had investment cycles in the past, and they will have them in the future.

But Europe's problem lies in insufficient innovation capacity, lack of flexibility, and a rigid labor market. Junius said: "If Europe cannot catch up in cutting-edge technology, our standard of living relative to the United States will continue to decline."