Philippe Aghion has a critical piece of advice for Europe. In a recent interview, the 2025 Nobel laureate said Europe needs to reduce its reliance on external powers such as the US and invest more in its own technological capabilities. This comes after warnings from experts and industry leaders who claimed that decades of underinvestment in innovation have weakened the region’s competitiveness.In an interview with Bloomberg, the economist said Europe “has been the kind of ‘Sleeping Beauty’ over the past 30, 40 years,” adding that policymakers assumed they could depend on the US and others instead of prioritising breakthrough technologies and defence.Urging a shift in approach, Aghion said, “They thought they could rely on the US, on others, and not invest heavily in breakthrough high-tech innovation and defence. Now the Europeans realise, I hope, that they need to rely on themselves more than in the past. And they need to reverse this technological decline they’ve been experiencing.”His remarks come as European Union leaders prepare to discuss innovation and competitiveness in Brussels, amid concerns flagged in recent policy discussions, including by former ECB President Mario Draghi, though geopolitical tensions risk shifting focus.
Philippe Aghion on shortcomings of EU’s economy
Aghion pointed towards structural gaps in the EU that have limited its ability to generate more “breakthrough, high-tech innovation,” including the absence of a fully unified market for goods and services and less-developed capital market integration.“We need more venture capital to have startups take risks, and we need more institutional investors. We don’t have enough of those. That’s the ecosystem that we need to put in place,” he explained.Meanwhile, European companies have reportedly cautioned the European Union against moving too quickly to reduce reliance on American technology providers. A recent report cited European companies as saying that achieving “tech sovereignty” in the region may be difficult in the near term without affecting business operations. According to a Financial Times report, companies across sectors, including banking and manufacturing, said their dependence on US technology platforms cannot be easily replaced.The report follows a similar warning issued by the US earlier this year. Sean Cairncross pushed back on concerns about Washington interfering with Europe’s internet infrastructure during his speech at the Munich Security Conference in February. The idea that the US government could shut down internet access in Europe is not “a credible argument,” he said. At the time, he also noted that, “It’s China you should worry about, not us.”The concerns come as the EU continues to push for greater “tech sovereignty” and explores ways to reduce reliance on US companies. Business leaders said shifting away from widely used tools such as cloud infrastructure, office software, and emerging artificial intelligence (AI) services could lead to disruption if changes are made too quickly.The warnings also come as Europe’s efforts to strengthen digital sovereignty have drawn attention in recent months, partly driven by concerns that US President Donald Trump‘s foreign policy could lead to a “tech decoupling” between the US and Europe. The European Commission is expected to present a “tech sovereignty package” soon, aimed at expanding sovereign cloud services and strengthening Europe’s independence in software technologies.
