Today, European Union citizens are 30% worse off in economic wealth per capita compared to those in the United States. Today, the US has seven mega companies with trillions of dollars in valuations while the EU has none. Productivity gaps between the two sides of the Atlantic have been diverging at an increasing rate, especially since 2015. Did this happen by coincidence? The simple answer is no.
Today, the EU finds itself in a unique moment. The discussions at the World Economic Forum in Davos underscored the strengths and weaknesses of our continent. We have an abundance of talent, savings and a well-educated workforce but these advantages are often overshadowed by systemic inefficiencies, most notably in banking and capital markets.
Too often, I have heard from business owners who feel stifled by bureaucracy, fragmented regulations and a lack of access to capital. It’s a story I know well and one that needs to change if we are to compete with the US and China.
The United States thrives on its culture of confidence, where entrepreneurs are encouraged to take risks and pursue bold ideas. Meanwhile, China’s rapid rise has been fuelled by strategic investment and a focus on innovation. The EU, by contrast, has been too cautious. We have the tools to succeed but we lack the collective will to unlock our full potential. This isn’t just about economics; it’s about defending our way of life and ensuring that future generations inherit a continent that is prosperous, innovative and dynamic.
At Davos, leaders like Christine Lagarde, the president of the European Central Bank, and Kristalina Georgieva, the head of the International Monetary Fund, spoke about the EU’s need for reform. They highlighted the inefficiencies of our single market and the urgent need to open up capital markets. These are issues that I have encountered repeatedly in my work. Entrepreneurs need seamless access to funding and a regulatory environment that supports rather than hinders their efforts. Without these changes, we risk falling further behind.
But it’s not just about systems and policies; it’s about culture. The EU needs to rekindle its entrepreneurial spirit. Too often, I have seen promising ideas abandoned because the risks seemed too great or the support too limited. We need to celebrate our entrepreneurs, encourage them to take chances and provide the safety nets that allow them to recover and try again if things don’t go as planned. Confidence is contagious and we need to instil it in every corner of our continent.
We know how collaboration between the public and private sectors can drive growth. Governments must create an environment where entrepreneurs can thrive. This means reducing bureaucratic barriers, simplifying tax systems and providing incentives for innovation. It also means ensuring that financing flows where it’s needed most. Venture capital, private equity and public funding must be accessible to those with ideas that can create value.
Europe’s fragmented market also needs urgent attention. The promise of a single market remains incomplete, hindering the free flow of goods, services and capital. Entrepreneurs often face unnecessary challenges when expanding their businesses across borders, from differing tax regulations to incompatible legal frameworks.
Addressing these issues is not only essential for fostering entrepreneurship but also critical for Europe’s competitiveness on the global stage.
The EU needs to rekindle its entrepreneurial spirit- Stefan Gauci Scicluna
Another vital component is education and skills development. Europe’s talented workforce is one of its greatest strengths but we must ensure it remains competitive in a rapidly changing world. This means investing in reskilling and upskilling programmes, particularly in areas like digital technologies, green energy and artificial intelligence.
Entrepreneurship is also about mindset. As Georgieva observed, Europe’s culture of modesty often holds us back. In contrast, the US thrives on confidence and optimism, which fuel risk-taking and innovation. We need to cultivate that same spirit here in Europe.
Entrepreneurs should be celebrated, not politicised and penalised for failure. Taking risks should be seen as a pathway to progress and those who dare to innovate should be supported, even when they stumble. The problem in an ambitious society is not entrepreneurship but the lack of it.
Supporting entrepreneurship is not just an economic necessity; it is a moral imperative. By fostering innovation and empowering businesses, we can create jobs, build stronger communities and ensure that the EU remains a global leader. This is about defending the values that make Europe unique – collaboration, creativity, the rule of law and resilience – while adapting to the challenges of a competitive world.
Having spent years working in business and alongside businesses of different sizes, I have seen firsthand the struggles and triumphs of entrepreneurs who take risks to create value for their customers. From startups with big dreams to established businesses looking to scale, the key ingredients for success are always the same: access to resources, confidence to take risks and the freedom to innovate.
Unfortunately, many European businesses face unnecessary hurdles that make these goals harder to achieve. Whether it’s securing financing, navigating red tape or dealing with a fragmented market, the barriers are real and often discouraging. Many business owners believe that the EU and its member states must do more to foster entrepreneurship.
Optimism is a choice. Most of us know that European nations have everything they need to succeed but it requires EU and national leaders who believe more in entrepreneurship right from the very start. Remember, the mega companies of today were the ambitious startups of yesterday.
Stefan Gauci Scicluna is a finance and management lecturer.