Policy and regulatory considerations for Europe

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McKinsey: To help European firms to compete, which policy and regulatory initiatives could Europe consider?

Solveigh Hieronimus: Look, we finally believe that Europe can do well when challenged in crisis, and we’ve seen it just now in the COVID-19 crisis. We’ve seen how Europe came together with the Next Generation EU Recovery Facility, which was historic in both size and ambition for the continent. And now we see it on the energy crisis side. So when challenged, we can actually rise to the occasion and do really bold things really well, and really fast.

So when it comes to digital, we need some of that same confidence and decisiveness we saw in responding to the previous crisis, and use it to improve and accelerate on some of the dimensions. So we need to think about the muscle we built, and the things we learned from that crisis, and apply it to the things we do now, and how we do them.

It’s also important to consider the European regulatory angle from the perspective of growth, not just from the perspective of protection. And I think when we look at it from a growth angle, there’s probably three things we can do to really accelerate the digital transition and take that confidence and muscle from the last crisis and really apply it to digital.

One is scale, the second one is speed, and the third one is a level playing field for European companies to compete on a global scale. If we drive those three together, based on what we already have, we think we can actually close the digital gap. And that would be worth an extra 2 trillion in European GDP by 2040 alone, which is equal to our current social expenditures.

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