Signal Europe's corporate investment gap with the US is $700 billion, about three points of GDP

Summary

MGI estimates that European companies invest about $700 billion less than their US counterparts, a gap equal to roughly three percentage points of GDP. The report treats closing this gap as the eurozone's most critical swing factor for moving toward productivity acceleration. Doing so would require competitiveness reforms that also lift productivity growth, along the lines of the Draghi report's recommendations on innovation, decarbonization, and defense capacity. If investment does not pick up, secular stagnation could continue, with the added risk that energy prices drive overall inflation higher. The gap sits against a backdrop of eurozone productive investment below both prepandemic and global averages and high household saving.