€12 trillion in infrastructure investments needed through 2040
Europe stands at a critical turning point. Its global competitiveness is eroding—a strategic decline starkly illustrated by an average GDP per capita that is around 50% lower than in the United States. As global competition intensifies and geopolitical shocks test its resilience, a new, comprehensive report from Dansk Industri and Boston Consulting Group identifies a massive infrastructure gap as a core reason for this decline.
This analysis will break down the report's key findings, exploring the unprecedented scale of the challenge, the profound benefits of decisive action, the deep-seated reasons for past failures, and the proposed new paradigm for success.
The report redefines infrastructure as the fundamental backbone for Europe's future success across three critical dimensions. Investing in modern, integrated networks is not simply about patching up old systems; it is a strategic imperative to unlock long-term growth and security. This section dissects the critical value proposition that closing the infrastructure gap offers for the continent's competitiveness, sustainability, and resilience.
Enhancing Competitiveness
Infrastructure investment is a powerful economic engine, delivering both immediate stimulus and lasting productive capacity. In the short term, every euro invested generates a powerful ripple effect through job creation and demand for goods and services. In the long term, new grids, modernized ports, and high-speed digital networks lower business costs, enable new technologies, and expand access to labor markets, placing Europe on a structurally higher growth path.
The report's economic modeling reveals a powerful dual benefit:
Every euro invested returns €1.2 to €2.1 in short-term economic stimulus.
This stimulus could deliver an incremental €20 trillion in GDP over the next 15–20 years.
Long-term, this investment could lift Europe's GDP by an estimated €900 billion annually, equivalent to €2,000 more output per citizen each year.
Achieving Sustainability Goals
The data makes an undeniable case for infrastructure as the central engine of decarbonization. Without a massive build-out of renewable energy generation, expanded electricity grids and electrified transport systems, the continent's green transition will stall. Modernizing buildings and deploying smart, data-driven energy management systems are equally critical for reducing overall demand.
The report's findings illustrate this pivotal role:
More than 50% of the required emission reductions to meet 2040 targets depend directly on infrastructure.
Targeted infrastructure investments could allow Europe to reach 70% of its 2040 emission reduction target.
Modern, efficient infrastructure can also reduce Europe's total energy demand by 16% through gains in areas like building retrofits and smarter grids.
Strengthening Resilience
A modern, integrated infrastructure network is Europe's best defense against a volatile world. By diversifying energy sources, securing critical supply chains, and hardening assets against climate change, Europe can significantly reduce its vulnerability. This strategic investment enhances security and ensures the reliable flow of goods, energy, and data.
The impact on resilience is substantial:
New energy infrastructure could enable Europe to reduce its natural gas imports by two-thirds by 2040.
Climate-resilient assets would help mitigate the ~€50 billion in annual damages Europe currently suffers from extreme weather events.
Achieving these transformative benefits requires an immense financial commitment, the scale of which is unprecedented in recent history.
An Unprecedented Investment Need
Realizing the vision of a competitive, sustainable, and resilient Europe requires the largest coordinated infrastructure program in generations. The sheer scale of the financial and operational challenge is immense, demanding not only a huge mobilization of capital but also a dramatic acceleration in the pace of deployment.
The total equates to €800 billion annually, or 3.5% of European GDP. This represents more than double the historical average of €300 billion per year over the last decade.
The energy transition (€5.5 trillion) and the modernization of cities and buildings (€3.6 trillion) account for over 75% of the total investment need.
The most significant shortfalls compared to the current pace of investment are in Energy (a gap of €2.8 trillion) and Transport (a gap of €1 trillion).
Why Europe Is Falling Short
This 'weak delivery' is not merely an inconvenience; it is a direct threat to the continent's future. With projects typically running more than 30% over budget, the report warns that continued inefficiency will not just inflate costs but cause the investment gap itself to widen by an additional €3 trillion as delays and failures compound. Furthermore, about half of Europe's 55+ infrastructure segments are not on track to meet their targets.
Escalating Costs: Volatile inflation has strained project budgets, leading to delays and cancellations. This is a top barrier for 40% of developers.
Skills and Workforce Shortages: An aging workforce and lagging training pipelines have created a major talent gap, cited as a significant barrier by 39% of companies.
Constrained Supply Chains: Limited equipment, a lack of critical materials, and dependence on imports create bottlenecks. Around one-third of companies identify this as a top-three barrier.
Insufficient Enabling Conditions
Underpinning these cyclical issues are deeper, structural weaknesses in how Europe plans, permits, and finances its infrastructure. This systemic friction creates a fundamentally challenging environment for large-scale investment.
Inconsistent rules and lengthy approval timelines, which often stretch for 5 to 7 years, create uncertainty and add costs. This is cited as a top barrier by 38% of companies.
Public budgets are already strained, yet private investors face significant hurdles. Over 50% of capital providers see weak public funding models as a top barrier, and at least €1.4 trillion in private capital is needed to fill the gap.
The absence of a dedicated, pan-European infrastructure investment plan leads to slow decision-making, especially for vital cross-border projects. This is a major barrier for nearly one-third of developers.
The Path Forward
To overcome the deep-seated challenges of fragmentation and weak delivery, the report issues an actionable call to action. Europe must move beyond its current fragmented approach and adopt a new, holistic paradigm for planning, financing, and executing infrastructure projects.
This means treating infrastructure not as a collection of siloed national projects but as a strategic, interconnected European backbone essential for future prosperity.At the heart of this new paradigm is a pragmatic focus on maximizing value. This requires a strategic application of the Pareto principle: prioritizing the 20% of cross-border projects—such as energy interconnectors and data networks—that generate the greatest Europe-wide impact.
To fund this vision, leaders must create stable, transnational frameworks to mobilize the €1.4 trillion in private capital required.
"No country in the EU alone can make the necessary investments to prevent Europe’s economic decline... our greatest achievements have always come when we are bold…together we can do it."
– A sentiment reflecting remarks from Mario Draghi (2024) and Ursula von der Leyen (2019).
