Make the EU competitive again

Although incoming US President Trump has promised to ‘Make America Great Again,’ the country already leads the world on most business and economic scorecards. With that in mind, a report last year from the McKinsey Global Institute outlined initiatives to accelerate the competitiveness of European companies. Looking at the largest companies in both US and the EU plus the UK, Norway, and Switzerland, McKinsey found that while US companies boasted market values 2.5 times greater than those in Europe, they generated only 1.6 times greater revenue. A key driver of that valuation discrepancy can be attributed to growth, with US large capitalization companies reporting on average 4% annual growth between 2015 and 2022 compared to 2.7% in Europe. McKinsey attributes the slower growth to underinvestment as European companies spent roughly half as much on research and development as a percentage of revenues compared to their US counterparts.

Source: McKinsey, January 2024