One year after Mario Draghi’s landmark report urged the European Union to overhaul its approach to innovation and competitiveness, a new assessment paints a sobering picture of stagnation. According to a recent analysis by Deutsche Bank, Europe’s ambitious plans to rival the technological prowess of the United States and China have yielded only marginal advances, with critical sectors like artificial intelligence showing persistent lags. The report, which evaluates progress since Draghi’s 2024 recommendations, highlights how bureaucratic hurdles and fragmented funding continue to hamper the bloc’s efforts.

Draghi, the former European Central Bank president, had warned of an “existential challenge” facing the EU, calling for massive investments—up to €800 billion annually—to boost research, development, and digital infrastructure. His blueprint, detailed in a comprehensive document published by the European Commission, emphasized the need for unified policies to counter the dominance of American tech giants and China’s state-driven innovation machine. Yet, as Deutsche Bank notes, implementation has been uneven, with member states prioritizing national interests over collective action.

Persistent Gaps in AI and Tech Investment

In the realm of AI, Europe’s shortfall is particularly stark. The Deutsche Bank report points out that while the US pours billions into startups and research via venture capital and government incentives, European funding remains scattered across disparate national programs. This has resulted in a brain drain, with top talent migrating to Silicon Valley or Shenzhen, exacerbating the innovation divide. Sources familiar with EU policy discussions indicate that regulatory frameworks, intended to protect data privacy, have inadvertently slowed adoption of cutting-edge technologies.

Comparisons with global peers underscore the urgency. A 2024 article in Reuters echoed Draghi’s call for coordinated industrial policy, noting that without it, the EU risks a “slow agony” of economic decline. Deutsche Bank’s findings align with this, revealing that Europe’s share of global AI patents has barely budged since last year, hovering at around 10% compared to the US’s 50% dominance.

Challenges in Funding and Policy Coordination

Funding remains a core stumbling block. Draghi’s report advocated for common debt instruments to finance large-scale projects, but political resistance from fiscally conservative nations like Germany has stalled such initiatives. As detailed in a Euronews review published in August 2025, only a fraction of the proposed investments have materialized, with most efforts redirected toward short-term crisis responses rather than long-term innovation.

Industry insiders argue that this piecemeal approach undermines Europe’s potential in emerging fields like quantum computing and biotechnology. Deutsche Bank’s analysis critiques the lack of a centralized innovation fund, contrasting it with China’s Five-Year Plans, which have propelled advancements in electric vehicles and semiconductors. Without bolder steps, experts warn, the EU could see its GDP growth lag further behind the US, where tech-driven productivity gains have accelerated post-pandemic recovery.

Signs of Incremental Progress and Future Paths

There are glimmers of hope amid the critique. Initiatives like the EU’s Digital Europe Programme have begun channeling resources into AI infrastructure, though at a scale Deutsche Bank deems insufficient. A CSIS analysis from late 2024 praised the report as a potential roadmap for the European Commission, urging member states to embrace radical reforms and shared financing.

Looking ahead, the coming year could prove pivotal. With the European Parliament set to debate budget allocations in 2026, pressure is mounting for actionable commitments. As one Brussels-based economist told Business Insider in a related piece, the bloc must move beyond rhetoric to foster a unified ecosystem for startups and R&D. Failure to do so risks not just economic irrelevance but a broader erosion of geopolitical influence in a tech-centric world.

Implications for Global Competitiveness

For industry leaders, the stakes extend to supply chains and market access. Europe’s automotive sector, for instance, faces threats from Chinese electric vehicle exports, a point Draghi highlighted as needing urgent protection through innovation rather than tariffs. Deutsche Bank’s report suggests that targeted investments in green tech could yield dividends, but only if executed with speed and scale.

Ultimately, the path forward demands political will. As the EU grapples with these challenges, the contrast with nimble competitors serves as a stark reminder: innovation waits for no one. With Draghi’s vision still largely unrealized, the bloc’s leaders must decide whether to accelerate or accept a diminished role on the world stage.