Europe between demolishing the old order and building the future
Trump has earned a reputation as a 'global pickaxe', disrupting alliances, rules, value chains, energy, technology. But the real issue is not Trump's pickaxe. The question is "who is already building?" Because while demolishing the old order, someone is already laying the foundations of the new. China is doing it. The US is doing it. is Europe building, or is it still watching the demolition?
Europe has already taken huge steps: the Schengen area, the euro, and the NextGenEU. But it still has an unfinished single market, insufficiently connected energy systems, whole parts of the economy burdened by regulation. According to the ECB, bringing everyone up to the level of integration of the best would bring welfare growth of 3%, equivalent to 2-2.5% of GDP, some 10 times greater than the effects of the international agreements we are negotiating.
Moreover, about half of the productivity growth in the next decade will come from AI. There is one characteristic of AI that makes it different from electricity or the internet: AI is enriched by the data it accesses. Each cycle of implementation generates the capabilities that make the next cycle more powerful. Whoever has this advantage first advances permanently. The good news is that this productivity has not yet manifested itself significantly. The US is today benefiting from the effects of huge capitalisation and investment in data centre construction, which generates positive employment impacts. Productivity will come later, when AI is applied directly in physical products, in the core processes of enterprises. There is still time.
In the factory, the performance leap will not come from generalist models under development, but with the massive use of industry-specific data: line data, machine parameters, quality protocols, engineers' know-how, translated into proprietary AI systems.
The products of European manufacturing, Germany and Italia in primis, are today threatened by oriental products that are very good value for money, not least because they are made in brand new factories. But the future of European products will depend on how quickly they become more and more intelligent and thus autonomous. This applies to the packaging machines of Emilia, the air-conditioners of Veneto and the cars of Piedmont.
