Europe must urgently secure its strategic interests

Europe does not lack money. It lacks the ability to put its money to work.

That is the central warning from Michael Strobaek, Global Chief Investment Officer at Banque Lombard Odier. Periodic escalations in the Middle East, aggressive U.S. tariff policies, doubts about Washington’s security commitments and China’s growing exports in high-growth sectors such as electric vehicles all point to the urgency of Europe’s strategic challenges.

The continent has fallen further behind the United States and Asian economies in growth and investment over recent decades. It now needs to reinforce its infrastructure and industrial base while securing a place in artificial intelligence. Strobaek argues that Europe can still change course, pointing to Mario Draghi’s 2024 report, which estimated that the European Union must invest an additional 750 billion to 800 billion euros each year through 2030. That would equal 4.5% of gross domestic product.

If Europe does not act, its investment gap will widen. The United States and China are already using tariffs, subsidies and other policies to tilt competition in their favor, while geopolitical shifts expose different strengths and weaknesses around the world. Europe has begun adapting and taking measures to protect its own industries, but the main obstacle is not a shortage of capital.

European households hold an estimated 33 trillion euros in savings. About one-third sits in current accounts, while much of the rest is invested abroad, mainly in the United States. Europe is therefore exporting its savings as innovative European companies struggle to obtain the capital they need. Strobaek calls for stronger incentives for households, pension funds and insurers to invest in high-growth businesses, deeper capital markets and better coordination of tax and investment rules. Governments, he says, should reduce risks for private investors through guarantees, first-loss mechanisms and more effective public procurement rather than replacing private capital.