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The recent US national security strategy offers a misguided view of the European Union. It claims that open-border policies and what it terms "progressive" agendas represent an grave risk to European civilization. Yet, this argument rests on a serious misinterpretation of the situation. The actual danger facing the EU is not cultural but technological and economic backwardness.

The Stark Economic Gap Separating Europe and the US

The data paint a stark contrast. From 2008 and 2023, US GDP grew by 87%, compared to a mere 13.5% increase for the EU. Over this time, European income per person fell from 76.5% to just 50% of the US level. Remarkably, even the poorest US state now has a higher per capita income than several leading European economies like Italy and France.

Today, about half of the global top fifty technology firms are American, while a mere four are from Europe.

The Technological Deficit: The Core Question

The growing disparity stems from stronger productivity growth in the US, fueled by technological innovation and better use of resources. The scene of world technology dominance is decidedly US-centric. Over the past fifty years, 241 US firms have grown into enterprises valued at more than $10bn, compared with only fourteen in the European continent.

This disparity prompts a vital issue: As the competition for future industries like semiconductors, AI, and fusion energy, what is the EU stand? Most analysts agree it is largely a two-horse race between the United States and China, with Europe starting at a clear disadvantage.

Root Causes of the Continent's Innovation Gap

A number of major reasons explain this technological divide.

• Financing Ecosystem: The United States has a much more robust and agile system for financing new ventures. The EU still lacks a true capital markets union, which caps the growth potential of new firms.
• Bureaucratic Hurdles: Excessive and fragmented regulation hinder Europe. A American entrepreneur can introduce a service under one regulatory framework to access a consumer base of over 330 million. The EU, despite a bigger population, is divided among 27 different national systems, creating significant internal barriers.
• Cultural Attitudes: Attitudes toward entrepreneurial failure vary greatly. In parts of Europe, a startup's collapse was historically viewed with penalties, whereas in the United States, it is often considered a valuable lesson.
• Military Investment: The US benefits from a tightly woven academic-military-industrial complex. The continent's chronic underinvestment in military capabilities has weakened its capacity for breakthrough innovation.

The Road Ahead: Grounds for Hopefulness

In spite of these hurdles, there are reasons for optimism. Policymakers are growing more conscious of the existential challenge and have started to propose substantial change. Notable reports on European competitiveness and the single market highlight the necessity of major changes.

With the right incentives and rule changes, these assets could support much higher levels of commercial innovation.

The continent retains significant strengths: skilled human capital, top-tier schools and universities, and premier research institutions. Alongside a large internal market and high savings rates, these elements could unleash a new wave of investment and entrepreneurship.

Importantly, even if Europe does not become the leader in developing next-generation technologies, it can still significantly increase productivity by adopting and adapting advancements from elsewhere.

A Critical Juncture

The European Union now faces a critical crossroads. To paraphrase a famous line, economic erosion often happens "slowly, then all at once". So far, Europe's technological decline has been gradual. However, without bold steps to address its deep-seated problems, today's slow erosion could give way to a rapid and permanent loss of world influence.