- Europe’s economy has a competitiveness and innovation problem.
- The new Trump administration and Chinese pressure will only squeeze the economic bloc harder.
- These five things can help Europe drive innovation, according to EY’s head of Europe, Julie Teigland.
Most EY employees spend their days analyzing individual businesses or conducting audits for clients. But at the top end of the EY machine, its executives are part of the global conversation – consultants to governments and industry groups.
Julie Teigland, the firm’s managing partner for Europe, the Middle East, India and Africa, told Business Insider that in Europe, the biggest business challenge is a lack of competition and innovation.
This picture looks set to become more complex as Europe is caught between the new Trump administration’s expected tariff policy and Chinese retaliation.
In 2025, US GDP growth is expected to be significantly higher than that of Europe. The IMF predicts growth of 1% in the eurozone in 2025, compared to 2.7% in the US.
“You don’t want the US going twice as fast as Europe. That creates a downward spiral,” Teigland told BI.
Teigland said she is trying to lead the conversation about what Europe can do to change that.
“We have a million examples of winners, but if we don’t give them the ecosystem they need, they won’t be successful,” Teigland told Business Insider.
She believes there are five things Europe can do in the short term to boost innovation and be more competitive.
1. Clearer implementation of the regulation
“Over the last few years the number of regulations and the length of regulations has doubled,” Teigland said.
Each member state’s market is different, but whenever new legislation comes in, it can be implemented in 27 different ways, she said. To stop duplication and inefficiency, the EU should create more alignment in implementation before signing laws, she said.
2. Creation of a capital markets union
A capital markets union (CMU) would create a single market for capital in the European Union, breaking down barriers blocking cross-border investment and allowing nations to share risk.
“We need Europeans to invest in European companies,” Teigland told BI. Creating a CMU would “unlock billions” to create more of an innovation ecosystem. It wants to see EU tariffs split and allow pension funds to invest in stocks with its biggest markets, such as Germany.
“Why don’t you make it transparent and lower the cost? Why should European mutual funds be significantly more expensive than American ones.”
Julie Teigland is EY’s managing partner for Europe, the Middle East, India and Africa (EMEIA) EY
3. Support the champions of Europe by changing anti-competition laws
“We haven’t been able to create any European champions in any industry, especially not in technology. Why? Because we don’t allow them to combine across borders,” Teigland said.
Teigland said the way to foster “champions” – companies that help Europe compete with other economic powers – is to find more balance between regulations that drive protectionism and those that encourage innovation.
Laws on anti-competition should be changed, especially for larger companies in late-stage funding, she said.
“Think about all the things that have fallen through, all the deals that have been brought to the table that Europe has said no way, we’re protecting individual consumers in individual countries.”
4. Stand together against Trump and China
“The strategy of China and America has been to pick off the Europeans one by one,” Teigland said. But they must work together to prevent this, she added.
“I think they should just say, Donald, you’re dealing with all of us. We’re not going to make a deal for Germany and a deal for Spain.”
The EU could use the Big Tech litigation as a negotiating tool and offer to reduce scrutiny of companies like Meta, Apple and Google. They can also use the promise of more defense spending and energy purchases from the US.
5. Create a clear investment strategy — especially for defense and industrial spending
Finally, Teigland thinks Europe needs a clearer investment strategy – “aligning with what we want first, rather than last”.
She highlighted plans for defense and industrial spending, noting that although Trump is expected to increase pressure on the defense industry, there has been no blueprint for industrial policy.
Citing a recent conversation with a NATO general, Teigland highlighted issues with communication technology in tanks. The person firing the mortars has to “open the hatch, use their Apple phone to call, call the guy to give him the coordinates because nothing connects to each other across Europe,” she said.
Teigland told BI that the EU needs a map of who is producing what and how they combine it, so it can determine where to invest.
Europe’s perspective
It will take money to create the ecosystem for success, and combining forces is no small feat for the bureaucracy-heavy EU bloc. But Teigland said she is positive about the direction of change.
Industry groups are aligned on the need to increase competition and reduce regulatory burdens, and senior EU politicians Teigland speaks to are “really listening”, she said.
Ursula von der Leyen began her second term as President of the EU Commission in December 2024. Thierry Monasse/Getty Images
Recent moves by Ursula Von der Leyen, the president of the European Commission, are one of the biggest signs that Europe is getting serious about boosting economic growth.
After winning a new term in 2024 to lead the European Commission for another five years, Von der Leyen has said she wants to launch a “simplification revolution” and cut regulatory “red tape” by 25% in the first half of 2025.
Teigland said the aligned structure of Von der Leyen’s team also signals a changing wind. “In a way, it has concentrated its power, but it’s also great that each minister has an overlapping area.”
It’s a microcosm of how Teigland thinks the entire bloc should operate: “She recognizes the interconnectedness of the issues and the need to consolidate and do some things well together. That gives me hope.”
