European business leaders warned on Tuesday that the region risks falling behind its US and Asian counterparts if it fails to innovate and adapt to a rapidly changing world that is expected to accelerate global policy changes during President Donald Trump’s second term.
Europe has “always lagged behind” its counterparts in Asia and the US when it comes to innovation, Mario Greco, CEO Zurich insurancehe told CNBC from the World Economic Forum in Davos, Switzerland.
“In a world that is moving forward very quickly, with a lot of innovation, it is again a wake-up call for Europe. And I hope that Europe will take it seriously,” said Greco.
“Take all the AI development [artificial intelligence] and digital. Europe did not invest in it, as America and China did. It is also the integration of financial markets in Europe. It still is [an issue of] how complicated it is to do business in Europe… And that’s why I say it again, Europe must wake up,” added Greco.
Greco added that Europe has become too caught up in regulation and is stifling progress, especially in the new technologies needed to spur growth — and as we enter the Trump 2.0 era of “America First” policies, that means the region will have to further defend its economic interests. .
President Donald Trump signed a lots of executive orders on his first day in office on Monday, including pulling out of the Paris climate accord and revoking the 50% electric vehicle target, as well as moves to crack down on immigration.
On a global level, with reference that 25% tariffs could be imposed against Mexico and Canada as early as FebruaryTrump also sent a warning signal that the European Union must buy more American goods, as well as oil and gas, or face tariffs.
Novartis CEO Vas Narasimhan told CNBC that the Trump era 2.0 was “a big moment for Europe,” during which the region needs to deregulate and boost competitiveness.
“Europe must now decide, in a world where the US is deregulating so strongly and trying to increase competitiveness, whether Europe will continue to sit idly by, continue to increase regulation in [European] Commission, increase regulation in various individual countries or will we finally get a more pro-competitive, pro-innovative environment in Europe?” he asked.
“We’ll have to see. History suggests that while there’s a lot of talk, little action comes from it [European] Commission. And right now, this is the moment. Because, if not, I think Europe will fall even further behind the US,” he said.
Increase competitiveness
European policy makers seem to be aware of the urgent need for innovation and deregulation in light of growing economic competition and rivalry from the US and China.
“The new Trump administration should be a wake-up call for Europe,” Belgian Finance Minister Vincent Van Peteghem said, Reuters reported on Monday. “Instead of focusing on revenge [against U.S. tariffs]we should focus on Europe’s challenges — the diminishing competitiveness and widening productivity gap we face,” he said.
ING chief executive Steven van Rijswijk said Europe needs more simplified and harmonized regulation across the bloc to boost competitiveness and labor productivity, a growing problem for the continent. He noted that larger investments are needed.
“There’s a lot of investment in infrastructure, a lot of investment in Europe’s strategic autonomy when it comes to technology infrastructure, those are things that need to be stimulated,” he told CNBC. on the margins of the WEF.
Speaking during a panel discussion on the future of growth, Banco Santander CEO Ana Botín said governments need to develop frameworks to drive growth “in the right way, with redistribution [and] thinking about what AI means.”
“We are not a museum,” she said of Europe. “We are in danger of becoming a museum. But who develops the latest vaccines? A lot of innovation actually happens in Europe. We have a huge amount of startups, the problem is that they start here and then go to the United States.”
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— CNBC’s Karen Gilchrist and Chloe Taylor contributed reporting to this story
