Europe is forgoing at least €120 billion in investment every year because its member states have failed to connect their most successful national systems, according to a new study by the Italian think tank The European House–Ambrosetti (TEHA), produced in collaboration with Amazon.
The report, released on Thursday, examines standout national practices across sectors ranging from rail networks to artificial intelligence and smart regulation. Its central argument is that Europe does not need to copy models from the United States or Asia; it already has the ingredients for success within its own borders, but they are not being scaled up or linked together.
“Europe does not need to look elsewhere for answers. Some of the most compelling investment models are already operating within the EU. They simply have not been connected or scaled,” said Diego Begnozzi, senior consultant at TEHA and author of the study.
The €120 billion figure is a conservative estimate, the report stresses, because it only counts additional direct investment and excludes the wider economic benefits that would flow from deeper integration.
The cost of fragmentation
The study quantifies the price of fragmented national markets. On energy, it notes that European businesses paid roughly 2.8 times more for electricity than their US counterparts in the first quarter of 2025. Greater integration of national energy systems could unlock up to €43 billion annually by 2030, the report argues.
Transport is another sore point. Cross-border train services are on average 23.4% slower than comparable domestic routes, despite nearly four decades having passed since rail liberalisation began. That slowness undermines the value of the single market's physical infrastructure, the authors say.
Similar barriers exist in AI, digital infrastructure, tax rules, education, labour markets, and the justice system. The report points to a fundamental incentive problem: national governments have little reason to fund projects whose benefits spill across borders. The EU budget, meanwhile, is far too small to compensate.
In 2024, EU spending stood at €170.5 billion, compared with €8,856.8 billion spent by member states. That leaves Brussels with limited firepower to finance cross-border initiatives that individual countries might neglect.
The report arrives as the European Commission works on recommendations from Mario Draghi's 2024 competitiveness report and a separate study by former Italian Prime Minister Enrico Letta on completing the single market. Both called for measures to make it easier for businesses to operate across national borders.
Brussels has already proposed EU Inc., a set of common rules designed to simplify starting and scaling a business across the bloc. The Commission wants agreement on the plan by the end of 2026. The EU is also pushing ahead with changes to capital markets rules and industrial support measures, though progress remains slow.
The findings echo concerns raised in other recent analyses. For instance, a separate report found that the EU's daily diesel bill has surged to €270 million, highlighting the bloc's vulnerability on energy. And as the EU debates its climate and industrial policies, five member states have urged Brussels to soften carbon market rules, a sign of the tensions between competitiveness and green goals.
The TEHA study suggests that the EU's problem is not a lack of good ideas but a failure to scale them. “The solutions are already here,” Begnozzi said. “What is missing is the political will to connect them.”
