Originally published here.
I recently had dinner with a few VC investors and asked a simple question: “I have never been this worried about Europe’s future. What do you think?” Blank looks. “Why are you so negative? There is so much to be optimistic about! In fact, as a VC, I now refuse to say anything negative about Europe.” I stared back. “Are we looking at the same data?”
Europeans, before you bring out the pitchfork to come after me, let me explain. After years of negative headlines criticising Europe for its many flaws, we hit a point in 2024 where many Europeans had understandably had enough. So had I. If one more arrogant visitor called Europe “a museum”, I might have made them the stuff of museums myself. Even journalists tell me that European readers finally want some good news. And so, a much-needed counter movement formed: A new wave of Euro-optimism took hold, fuelled by ambitious founders and a set of new globally competitive companies.
We should welcome that energy. We should not let it blind us.
Refusing to acknowledge the scale of the problems Europe has is not leadership. Neither is fatalism or defeatism. Even if the odds of winning in frontier technology are poor, the stakes are so high that Europe must try its best. What is harmful is the performative optimism that says things are “fine” in order to avoid sounding negative. It is a disservice to this continent because it takes away from both the ambition and the urgency we so desperately require.
Too many who cheer the optimism do not act like believers when it is time to do hard things. They avoid truly contrarian bets and stick to safe plays, hoping a rare billion-euro exit fills their account after all, while moving little for the continent.
Others simply rant on social media that Europe sucks and everyone should move to San Francisco. They treat Europe like a convenience store to raid and then complain when the milk is gone. They treat their country like a service.
I think they should treat it like a brotherhood and sisterhood. One that saw your first steps, your first day of school, sat by your hospital bed, cried at your wedding, will welcome your children, and will mourn you one day. You may despise it at times, but the bond runs deeper than any passing emotion. That sibling bond is how we should feel about our country and this continent. Not paternalistic, but a partnership of equals moving through life together. Fighting hardship, as well as screaming our lungs out when our team wins the football world cup.
Yes, our country must have our back. But our first question should be: how can I be there for it?
I don’t think nearly enough people are asking themselves this question. Many now default to either blind Euro-bashing or blind Euro-optimism, both cheap because they require us to change nothing.
What causes the paralysis we are stuck in and how can we overcome it? Let’s examine a few archetypes.
The Oblivious: There are be those that are truly still unaware of the conundrum we are in. If this is you, fear not and read on! Much has been written about Europe’s dire situation and while I do not pretend to compete with such detailed analysis, I can offer a few simple numbers that tell a much bigger story. What can we do to activate this group of people? Share the bad news.
The Non-Player-Characters: Then there are those that understand the consequences of Europe’s decline but do not really believe in it. Or should I say: they are taking the information seriously in one part of the brain - where theory lives, but not taking it seriously in another part of the brain - where reality lives. I think this is the biggest group of people. When asked to drive positive change, they whisper into the void “but I am just a small cog in the machine”, hoping that somebody will somehow fix things in the end. A zeitgeist term for this group of people is Non-Player-Character (NPC): a character in a game who is not controlled by a player, but by the game’s software. They are the people walking empty-eyed on the streets of Grand Theft Auto. How can we get them to be part of the change? Read on to: The Fighters.
And lastly, there is the small group of those who have both understood how deep in dog-shit we are, as well as found the agency to change things. They divide into two subgroups:
The Flight Class: They turn their back on Europe, at least for the time being (until it’s time to retire comfortably in the South of France). They move their assets and their families elsewhere, always driven by the hope of a better future. They are the high-status immigrants of the 21st century.
The Fighters: They start the company against all odds. They become politicians. They write the contrarian check. They find the unlikely but gigantic ambition to truly change things. Our job is to become them; if we cannot, then we should back them with everything we have.
If we want to become fighters, we must start a world-changing company. If we can’t start a world-changing company we must go and work for one.
If we want to become fighters, we must run for office. If we cannot run for office, we must find a politician worth supporting. Print free posters for them if we have to. Distribute their flyers in our street.
If we want to become fighters, we must start a petition. If we cannot start one, we must sign a petition and get 10 friends to do so as well.
If we want to become fighters, we must go where our presence makes a difference. Where the shape of the matter changes because we are in it.
When the German band Alphaville published the song “Forever Young” in 1984 during the final period of the cold war, they captured a spirit I prefer to performative optimism or pessimism: Hope anchored in harsh reality.
Hoping for the best, but expecting the worst
Are you gonna drop the bomb or not?
Mario Draghi’s 2024 report jolted us awake for a moment. Then we rolled over and went right back to sleep. If we fully absorb how bleak the default path we are currently on is, we might finally move at the speed required.
Now, for those I told earlier to read on about Europe’s issues. A small handful of numbers tell a pretty drastic story. To follow this story, you must first believe in a few simple dependencies. To do so, consider the graph below1.
Energy → AI. Cheap, reliable energy is the core input to compute, powering chips, training and inference.
AI → economic growth. AI improves productivity, which raises GDP per head. In plain terms, can you afford more tomorrow than today.
AI → Defence. AI lifts capabilities in sensing, targeting, autonomy, cyber defence and decision support.
Economic growth → society. Rising or falling living standards shape social stability, opportunity, and trust.
Economic growth → Defence. A larger tax base funds defence readiness and modernisation; defence demand sustains advanced manufacturing, semiconductors and R&D that spill over into the civilian economy.
Defence → Society. Defence capabilities protect society.
Birth rates → economic growth and society. Birth rates change the size and age structure of the workforce, which affects economic growth. Birth rates also shape society through the dependency ratio, intergenerational contracts, and the viability of pensions and care systems.
Migration → economic growth and society. Migration expands labour supply and can add skills and entrepreneurship, which affects economic growth. It shapes society through social cohesion and the load on public services.
If we assume the above as the basic relations that shape Europe, then consider the following.
Energy:
AI progress runs on power. A region’s energy capacity will determine how far it can scale AI inference. Today, data centres already use more electricity than all of France, and by 2030 the IMF estimates their consumption will approach 1.5k terawatt-hours, roughly equal to the current electricity use of India, the world’s most populous country. In 2024, the EU generated 2.7k terawatt-hours of electricity, the US 4.4k terawatt-hours, and China a striking 10k terawatt-hours. Crucially, China also produces more renewable energy than Europe and the US combined, while energy is twice as expensive in Germany than it is in the US or China. This gap has widened over the years, as the EU’s electricity output has been flat to down in recent years, with the US and especially China growing significantly.
AI and technology leadership:
According to EY, in H1 2025 the US captured 97% of global GenAI deal value (total $-amount invested) and 62% of deal volume (total number of deals); EMEA captured 23% of volume but only 2% of value. In 2024 the US stood at 85% of value and 70% of volume. We are closing a little on deal volume, but Silicon Valley’s share of value is pulling further ahead.
Global markets echo this. The Magnificent Seven reached about $20 trillion in August 2025. Nvidia alone exceeds the total value of the German DAX 40. The 25 largest companies by market cap no longer include a European firm. A year ago ASML, Novo Nordisk and LVMH were still on that list.
Demography and society
Europe faces severe pressures from declining birth rates and shifting socio-ethnic composition. Germany will lose 12.9 million economically active people to retirement in the next 12 years, just under 30% of its active workforce, straining pensions and care. Migration could help, but faces pushback and tighter rules across Europe. Globally, Nigeria and Pakistan will each reach about 500 million people by 2050, overtaking both the EU and the US. Europe is set to begin shrinking from around 2045, which implies persistent pressure on borders and institutions.
Today, about 30% of people in Germany have a migration background. Even with zero new arrivals, higher birth rates among non-German citizens mean almost half of children under five already have a migration background. Significant cultural change is likely even without further migrant inflows, adding strain to an already toxic political climate. I write this as a German with a migration background to urge clear sight: today’s tensions will likely grow. With demographic change, weak growth and continued migration pressures, the extreme right is likely to gain further ground. As of September 2025, Germany’s right-wing extremist party leads national polls, ahead of either party in the current grand coalition. A right-wing turn across several EU states, with cumulative risk to the European Union, is no longer unimaginable.
Defence
Total EU defence spending is reaching ~2.1% of EU GDP in 2025, up from 1.9% in 2024. Earlier this year, European allies committed to invest 3.5% of GDP annually in defence and 1.5% in defence-adjacent areas. With Russia’s war on Ukraine and uncertainty over the United States’ commitment, Europe is spending at historic highs, yet time and munitions remain the scarcest resources. Scenarios place a Russian threat to the Baltic states as early as 2027. In September 2025, Europe faced disruptions that may foreshadow what is ahead: ransomware hit airport check-in systems, drones entered Polish airspace, Russian jets briefly violated Estonia’s airspace, and large drones repeatedly halted traffic near Danish airports.
The obstacles to rapid capability build-up are substantial. Hardware and software gaps are large and extremely expensive. Defence industries struggle to scale production fast enough, while many European armies miss recruitment and retention targets.
Bottom line
US and Chinese leadership in energy, AI and other frontier technologies is accelerating, not narrowing. This seriously harms our chance of increasing economic growth and defence capabilities, adding to already enormous societal strain caused by demographic change and cultural tensions around migration. Europe has brilliant exceptions that deserve celebration, and there are a few metrics where we are making up ground. But they do not yet change the broader trend.
This is not Euro-bashing. It is an honest reading of the numbers to maintain urgency, rather than toast with champagne we have not earned. With Russia’s war on Ukraine, we have painfully understood the message and are taking action to change Europe’s defence capabilities. Challenges remain and will not disappear overnight. But we have to start somewhere.
The current state of play is not acceptable. It cannot be our ambition. It must not be our future. Rather than performative optimism, Europe needs its brothers and sisters, fighting alongside it.
1 Please note that the world is much more complex than this and great articles explain these effects in much more depth. I recommend starting with the Draghi Report and general reporting on Europe’s economic situation by The Economist. Bear with me for the sake of simplicity.
