Can Europe Still Turn Strength into Action?

In a recent interview with The Economist, Elon Musk suggested that artificial intelligence (AI) could surpass human capabilities within roughly ten years. In the same conversation, he speculated that the United Kingdom could face civil conflict within twenty years. The interviewer pointed out the obvious tension: if AI proves as transformative as Musk predicts, society itself will change fundamentally long before such a political scenario unfolds. Musk openly agreed. What looks like an amusing exchange revealed a serious truth. Even those closest to shaping the future struggle to predict it consistently.

For multinational companies, as for all of us, this may be the crucial lesson. There is no doubt that rapid technological, political, and economic change is coming. The challenge is understanding which countries and institutions will remain capable of adapting when reality inevitably differs from today’s forecasts.

Europe’s future competitiveness may depend less on predicting change than on responding to it.

Three forces are converging simultaneously: First, technological transformation. The question is no longer whether AI will matter but whether governments, businesses, and societies can absorb and govern its consequences. The uncertainty may lie less in the technology itself than in our ability to manage it.

Second, Europe is searching for a sustainable model of competitiveness. Policymakers seek to combine innovation, strategic autonomy, sustainability, security, and public trust. The idea to create a European framework for trustworthy AI reflects this objective. The difficulty lies in translating principles into economic outcomes.

Third, political fragmentation is making decision-making harder across Europe. Governments increasingly struggle to build consensus, sustain reforms, and execute long-term strategies.

Taken together, these forces make adaptability and execution more valuable than prediction.

Germany offers a revealing example. For decades, German industrial success was closely associated with engineering excellence and the internal combustion engine. Germans remain rightly proud of that achievement. Yet technological transitions rarely reward past mastery.

The future of mobility may depend less on engines and more on batteries, software, charging infrastructure, and energy networks. In some respects, Norway’s rapid embrace of electric vehicles (almost every newly admitted car) may tell us more about the future of transportation than countries that perfected the technologies of the twentieth century.

A similar lesson applies to artificial intelligence. Germany is not among the leading developers of frontier AI models. But the future economic winners may not be determined solely by who develops the most advanced AI systems, but also by who succeeds in deploying them most effectively across the wider economy.

Germany also highlights a different challenge: The country continues to benefit from strengths that rarely make headlines: legal certainty, institutional integrity, engineering expertise, industrial discipline, and a reputation for reliability. These are not abstract virtues but economic assets.

The concern is whether Germany can still convert those strengths into action.

The Berlin Brandenburg Airport, originally scheduled to open in 2011 but ultimately opening almost a decade later, became famous precisely because it contradicted the international image of Germany as a country that plans carefully and executes efficiently. What made the project remarkable was not the delay itself but what it seemed to reveal about the state’s ability to deliver. By the time the airport finally welcomed its first passengers, observers joked that China could have built an entirely new airport, a high-speed rail connection to it, and perhaps even the city around it in the meantime.

The rise of the populist, and in parts extremist, AfD matters in this context not primarily as a partisan issue but as a sign of growing political fragmentation. At the same time, European democracies are increasingly confronted with concerns about foreign influence, information operations, and other forms of external political interference — external interference and AfD are not accidently mentioned together in this context. These developments add another layer of complexity to policymaking and may further complicate consensus-building around long-term economic priorities.

Germany’s problem is not that it lacks strengths. It struggles to convert strengths into action. In that sense, Germany may be an early indicator of a broader European challenge.

Technology matters enormously. Yet long-term competitiveness may depend on more than innovation, industrial policy, or access to capital. It may also depend on the quality of the institutions within which innovation occurs.

Europe’s democratic systems are often criticised for being slow, complex, and procedurally demanding. Decision-making can be cumbersome, political compromises difficult, and reforms time-consuming. In comparison, more centralised systems may appear capable of acting faster.

Perhaps it is. But investors do not commit capital for decades on the basis of technological forecasts alone. They also rely on courts, contracts, and confidence that the rules will remain broadly predictable.

Admittedly, this may sound suspiciously like the argument a lawyer would make. But businesses do not invest for the next quarter alone. They commit capital, build facilities, enter contracts, and develop markets over decades. Those decisions ultimately depend not only on growth projections but also on confidence that institutions will remain reliable over time.

China’s economic rise demonstrates the advantages that can result from decisive state action and long-term planning. At the same time, it raises a broader question. Is competitiveness ultimately defined by the speed of decision-making alone, or by the durability and predictability of the institutions within which decisions are made?

For multinational companies, these developments may become increasingly relevant. The geography of business may depend not only on where innovation occurs but also on the reliability of the institutions that support it. Today, some established democracies face mounting institutional pressures, while countries once thought to be moving toward greater openness and integration have chosen different paths.

In a world shaped by uncertainty, institutional trust may — more and more — become an economic asset in its own right. Over the next five to 10 years, Europe’s debate is likely to shift to vision and — hopefully — from vision to execution. The challenge of reconciling democratic governance, legal certainty, and effective action will become increasingly visible. Whether solving that challenge is easier than describing it is another matter. Europe does not lack talent, capital, technological capability, or institutional experience. What remains uncertain is whether these assets can be mobilised with sufficient speed and consistency in a world characterised by accelerating technological and geopolitical change. The decisive test is no longer the quality of the vision but the ability to deliver.

For multinational companies, the key question may not simply where innovation occurs, but where innovation can be deployed, scaled and protected over the long term. Europe’s challenge is to prove that democratic governance, the rule of law and effective execution remain capable of providing that environment.