EU needs 'true single market' to stay competitive, Nobel prize winner Aghion tells Euronews

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EU needs 'true single market' to stay competitive, Nobel prize winner Aghion tells Euronews

Europe has overregulated and punishes failure too severely, hindering the next wave of innovation, the French economist said, calling for a "true single market" in an exclusive interview on Euronews' flagship morning show Europe Today.

READ MORE : http://www.euronews.com/2025/12/03/eu-needs-true-single-market-to-stay-competitive-nobel-prize-winner-aghion-tells-euronews

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00:00Coming up, we'll be joined by the 2025 Nobel Prize in Economics winner, the French economist

00:05Philippe Agion. Known for spearheading the theory of innovation-driven growth and creative

00:10destruction, he's a professor at the Collège de France and is the chair of innovation and growth

00:15at INSEAD Business School. Good morning, Professor, and congratulations on your prestigious win,

00:20and of course, to your co-winners. Thanks for joining us.

00:24Thank you so much. Thanks for being with you.

00:26Look, you advocate for this idea of creative destruction, a concept that could alarm our viewers this morning.

00:33Just remind us what exactly it is.

00:36Creative destruction is the process whereby new innovations displace old technologies.

00:42So the new replaces the old. And progress has always gone through.

00:47You know, when you invented the computer, the typewriter became obsolete.

00:51And, you know, we keep the new, the new continuously replaces the old.

00:58And you see innovation as a means to sustain long-term economic growth.

01:04How can the EU copy and paste this thinking?

01:07Well, the EU, there is not enough creative destruction in the EU because, you know, for example, in the U.S.,

01:14if you look at the five most innovating firms in the U.S. nowadays, they are not the same as they were 25 years ago.

01:24In the EU, they are essentially the same because we remain stuck in mid-tech incremental innovation,

01:30whereas they do much more breakthrough high-tech innovation in the U.S. and even in China now.

01:37So the EU is lagging behind China and the U.S. when it comes to breakthrough frontier innovation.

01:43And that's what Mario Draghi, of course, warned in his report.

01:46He called it a wake-up call for the EU.

01:48So how can we prevent the slow agony, to quote Mario Draghi?

01:52I think you need first, you know, a true single market for goods and services,

01:58because when you do a big innovation, you want a big market.

02:01And also, with a big market, with a single market, you have more competition.

02:06And competition boosts frontier innovation.

02:08I innovate to escape competition with you.

02:11So you need a single market.

02:12We don't have that.

02:13Each country, each member state has its own regulation to the European regulation.

02:19We call that gold plating.

02:20The second thing is that you need a good financial ecosystem of innovation.

02:25Venture capital, institutional investors like pension funds, mutual funds,

02:30we don't have enough of those.

02:32And those, they induce risk-taking.

02:34Because, you know, in Europe, we don't take enough risk.

02:37We don't, you know, forgive short-term failure.

02:41You know, to innovate breakthrough, you need to tell people,

02:45no problem if you fail.

02:46We encourage you to fail, because if you fail, it's that you tried.

02:50And we don't have financial institutions that encourage risk-taking sufficiently.

02:56And the third thing, we don't have anything like the DARPA, this modern way to do industrial policy.

03:01You see that the pro-competition way.

03:03They did that for defense and space in the U.S., DARPA.

03:06They did that for vaccines.

03:07It was the BARDA.

03:08We don't have anything equivalent in Europe.

03:11In Europe, in the name of competition policy, we precluded industrial policy.

03:16But what about people who fear change?

03:18They fear technology.

03:19They're afraid of the future, especially with AI developments as well.

03:22You see what I mean?

03:26They are, you know, yeah, they, Europe is a regulatory giant and a budgetary dwarf.

03:37We regulate too much and we don't invest enough.

03:40Indeed, and that's why they always say that here we regulate.

03:45In China, they replicate.

03:46And, of course, in the United States, they innovate.

03:48They more than replicate now in China.

03:50They now are a frontier.

03:52They became frontier innovation.

03:53They are ahead of us in several, you know, several technologies.

03:57And the problem is that Europe is declining when it comes to frontier innovation.

04:02China is rising and the U.S. is above.

04:05And that's where we need to wake up.

04:07But there's a drive, of course, in Brussels now to simplify.

04:09That is the word of the day.

04:10Do you welcome this?

04:11And how do you find the balance?

04:13Yeah, we have too many regulations.

04:15I think we need regulations.

04:16For example, on AI, we have too many regulations.

04:19And regulation discourages new firms.

04:22Large incumbent firms can cope with regulation.

04:25New entrants are discouraged by regulation.

04:28So we need to regulate, but we over-regulate in Europe.

04:31That's the problem.

04:32That's a big barrier.

04:34And, yeah, so that's something we need to work on.

04:37Particularly for AI.

04:38If we want to, you know, to harness the AI revolution, that's what we need to do.

04:44Okay, Professor Philippe Agion, thank you so much for speaking to us here this morning on Europe Today from Paris.

04:51Thank you so much.

04:52Have a lovely day.

04:53Bye-bye.

04:54Bye-bye.

04:55Bye-bye.

04:56Bye-bye.

04:57Bye-bye.

04:58Bye-bye.

04:59Bye-bye.

05:00Bye-bye.

05:01Bye-bye.

EU needs 'true single market' to stay competitive, Nobel prize winner Aghion tells Euronews

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