Where are we going, Europe?

Atomico‘s 2024 report charted Europe’s remarkable rise over the past decade to become a maturing ecosystem built on deep foundations. Since 2015, investment levels have grown more than tenfold, our talent base has expanded sevenfold, count of $1B+ has more than tripled and we now boast five $100B+ firms and ambition across the continent has never been higher. 

We are entering the most transformative decades in human history. This next chapter will be written by those who can move fast and think long-term. Europe is perfectly positioned to lead, if we choose to. That choice requires speed, unity, and boldness. 

So the question is: what will define the next decade of European tech, and how do we take control of our future?

Atomico, State of European Tech 2025

Europe’s deep-tech engine could spur $1 trillion in economic growth

For decades, Europe has lagged behind the United States when it comes to creating billion-dollar technology companies—and has also clocked lower GDP growth. But now it stands on the precipice of opportunity. Europe could become a global leader in launching and growing deep-tech companies, paving the way for more prosperity across the region and increased sovereign strength centered on intellectual property (IP).

Mckinsey, always positive, argues that by investing in deep-tech business building, Europe’s start-up ecosystem could create $1 trillion in enterprise value and up to one million jobs by 2030—paving the way for sovereign prosperity.

McKinsey, Europe’s deep-tech engine could spur $1 trillion in economic growth

Industrial Policy Since the Great Financial Crisis

An IMF Working Paper documents widespread industrial policy adoption across advanced and emerging market economies since the Great Financial Crisis, which was implemented primarily through subsidies and trade restrictions. Authors identify a structural break around 2020, characterized by accelerated policy activity and the emergence of “new industrial policies” motivated by supply chain resilience, national security, and geopolitical concerns, in addition to policies focused on competitiveness and climate objectives, which were already prevalent in previous years. Policies have targeted dual-use and various advanced technology sectors, as well as their upstream inputs, such as critical raw materials and minerals. They find that geopolitical risk and tit-for-tat retaliation have played a greater role in driving industrial policy after 2020, and that this support extends beyond existing sectors of comparative advantage.

Evenett, S., Jakubik, A., Kim, J., Martín, F., Pienknagura, S., Ruta, M., Baquie, S., Huang, Y., & Machado Parente, R. (2025). Industrial Policy Since the Great Financial Crisis. IMF Working Papers, 2025(222), 1. https://doi.org/10.5089/9798229027786.001

Can Europe’s deregulation drive actually deregulate anything?

Europe’s regulatory cake is multilayered; one might call it a bureaucratic mille-feuille. Citizens and companies are subject to edicts from every rank of government, at local, regional, national and EU level. They must hope one tier’s rules do not contradict another’s. Businesses spend around €150bn ($173bn) a year in a frenzy of form-filling. A regulation adopted three years ago requires large firms to provide up to 1,155 data points on what is happening in their global supply chains, in effect forcing them to recruit box-tickers dedicated to tracking Indonesian labour conditions and the like. Citizens are no better off. Internet doomscrolling these days requires batting away repeated “cookie” requests from each website, supposedly for the benefit of Europeans’ privacy. In Spain professionals known as gestores have sprung up to help locals wrangle with the bureaucracy: they are part fixer, part therapist for those traumatised by endless paper-shuffling. Across Europe housing projects are delayed as report after report is commissioned to establish the mating habits of some local toad.

Last year a report by Mario Draghi proposed a raft of measures including cutting red tape, deepening the single market and massive investment to boost productivity. The European Commission has begun taking on red tape. The EU’s bid to curb batty regulations is clearly welcome. But the passengers on Mrs von der Leyen’s omnibus are entitled to feel a bit whiplashed. By the EU’s own estimates new laws currently in the pipeline could add around €80bn a year to annual business costs—far more than is being cut.

The Economist, Can Europe’s deregulation drive actually deregulate anything?

Bleeding to death

The UK economy is bleeding out in a national crisis of growth, especially in the science and technology sectors. The risk is that the Government will not carry out the radical reforms needed before it is too late.

The “failure to scale” for UK technology companies is not new. It has been a deep-rooted problem. But we are in a new technological and geopolitical context, with the rise of AI and the fracturing of the old global order. Technological sovereignty—who owns and operates critical technologies—is more important than ever. Domestically, the UK has seen sluggish productivity growth and near-flat real wages since the global financial crisis. The UK economy is simply not working, and the consequences are easy to see.

UK Science and Technology Committee, Bleeding to death: the science and technology growth emergency, 2nd Report of Session 2024-26 – published 5 November 2025 – HL Paper 192

The Constitution of Innovation

As in Friedrich Hayek’s 1960 book, The Constitution of Liberty, Luis Garicano, Bengt Holmström & Nicolas Petit choose the term ‘constitution’ to mean the basic principles and practices needed for innovation and prosperity to return to Europe.

Europe has shifted from postwar dynamism to prolonged economic stagnation because the EU lost its original focus on a deep, genuinely free internal market and instead built an ever-expanding regulatory state that raises costs and stifles innovation.

Europe’s productivity and income convergence with the US stalled around 1980, and the gap in output per head is now back to 1970 levels. They attribute this to “mission creep”: EU institutions moved from removing barriers to trade toward regulating ever more domains (digital, climate, social policy) in ways that fragment the single market and favor incumbents over new, innovative firms.

Authors call for the EU to “do less but better” by narrowing its action to economic prosperity through integration: enforcing the four freedoms (goods, services, capital, people), focusing on existing exclusive competences (customs union, competition, euro, trade policy), and taking risk and creative destruction seriously instead of over‑precaution. Prosperity is presented as a precondition for sustaining welfare states, strategic autonomy, and ambitious climate policy, not a competing goal.

The text proposes six main reforms:

• Replace directives with directly applicable regulations;
• Create fast, English-language Specialized Commercial Courts for internal-market disputes;
• Introduce strong “field preemption” so EU rules in core areas automatically displace overlapping national rules;
• Design a truly attractive optional “28th regime” for companies;
• Rely more on existing European institutions (like the Strasbourg Court or Unified Patent Court) instead of duplicating them; and
• Embed strict sunset clauses and impact assessments to limit excessive, low-quality lawmaking.

If these changes are made, Europe can again become a global innovation leader, with a genuinely unified market where entrepreneurs can scale, capital can flow, and experimentation across countries is encouraged via “variable geometry” rather than forced uniformity. Without such a shift, they warn, Europe risks an Argentinian path of relative decline, fiscal strain, and political polarization as its aging societies struggle to finance existing promises..

Luis Garicano, Bengt Holmström & Nicolas Petit, The Constitution of Innovation. A New European Renaissance, Nov 10, 2025