Key Takeaways
- Despite global geopolitical uncertainty in 2025, European firms’ investment has remained resilient, stabilizing rather than collapsing, though growth is easing.
- US firms are more focused on expanding capacity and domestic sourcing due to tariffs, while EU firms prioritize replacing capacity and balancing supply chain efficiency with resilience.
- EU firms are more proactive in the green transition, with a higher percentage taking action to reduce emissions compared to US firms.
- Digitalization and AI adoption rates are similar between the EU and US, but US firms tend to apply these technologies across more business areas.
- Simplifying regulations and deepening the EU Single Market are crucial for competitiveness, with uncertainty and skills availability being key barriers for EU firms.
Navigating Global Uncertainty and Economic Shifts
Global geopolitical developments in 2025 brought significant uncertainty, raising questions about their short-term and long-term effects on the real economy, particularly trade and private sector investment. Forecasters have been revising their projections as the impact of US tariffs becomes clearer. While initial EU growth forecasts for 2025 were revised downwards, a shift in consensus is emerging, recognizing better-than-expected short-term economic performance.
Several factors contribute to this revised outlook in the EU: a lack of strong EU retaliation against US tariffs, reduced uncertainty due to trade agreements, potential opportunities from a multipolar global system, and an increase in public investment, notably in defense. These elements are prompting institutions to slightly upwardly revise growth expectations.
However, the critical question remains: how are European firms responding to this altered trading environment and other political shifts, such as the US administration’s stance on climate change? And how do their reactions differ from those of US firms?
EIB Investment Survey Reveals Firm Behavior
The 2025 edition of the European Investment Bank Investment Survey (EIBIS) provides valuable insights into these dynamics. Conducted annually since 2016, the EIBIS surveys approximately 13,000 firms across all 27 EU member states, with an additional sample from the United States. The survey gathers data on firm characteristics, performance, past and planned investment activities, financing sources, financial challenges, and other critical issues like climate change and digital transformation. The interviews for the 2025 survey were conducted over the summer.
Investment Activity Shows Resilience Amidst Shifting Appetites
After years of acceleration, the investment appetite among both European and American firms is showing signs of weakening. However, rather than the feared collapse, investment activity appears to be stabilizing, with firms continuing to allocate resources. The proportion of EU firms investing remained stable at 86%, a slight decrease from 87% in the previous year’s survey. A marginally higher percentage of EU firms anticipate increasing their investment in 2025 compared to decreasing it, although this indicator also suggests a moderation in investment growth.
The pattern observed in the US is broadly similar, but US firms’ investment expectations have been revised downwards from a previously more optimistic standpoint.
Divergent Investment Strategies Across the Atlantic
Investment activities exhibit distinct patterns on both sides of the Atlantic. EU firms are more inclined to invest in replacing existing capacity, whereas US firms are primarily focused on expansion.
In the EU, a significant portion of investment (35%) is directed towards intangible assets, such as research and development, training, and software. EU firms invest less in land, buildings, and infrastructure compared to their US counterparts (17% vs. 22%). Over the next three years, EU firms are expected to continue prioritizing investments that replace capacity rather than expand it. The percentage of EU firms investing to expand operations stands 11 percentage points below that of US firms (26% of EU firms versus 37% of US firms).
While EU firms maintain their investment activities, their outlook on the political and regulatory environment, as well as the overall economic climate, is largely negative. More firms anticipate a deterioration rather than an improvement in the situation over the next 12 months. Their view on business prospects within their respective sectors is more balanced.
Conversely, US firms hold a neutral stance on the political climate and express a somewhat positive outlook on business prospects and the general economic climate.
Supply Chain Adjustments: US Focuses Domestically, EU Balances Efficiency and Resilience
Trade perspectives diverge significantly between EU and US firms, leading to varied economic impacts across different countries. Among firms involved in international trade, US firms express considerably greater concern about changes in customs and tariffs than EU firms (77% versus 48%). The proportion of concerned firms in the US has doubled, while the increase in the EU has been marginal.
While tariffs have dominated headlines, compliance with new regulations, standards, or certifications remains a concern for many businesses. Concerns regarding other types of supply chain disruptions have continued to ease in both the EU and the US.
The impact of tariffs has directly affected US supply chains, prompting firms to seek domestic suppliers and reduce their reliance on international trade. Supported by government policies encouraging domestic production and the expectation that tariffs will increase import costs, a significant share of US firms are increasing inventories, substituting imported goods with domestic alternatives, and diversifying their import sources.
In contrast, EU firms are adopting a more balanced strategy, prioritizing both efficiency and resilience in their supply chains. Only 7% of European firms are implementing import substitution strategies, reducing their reliance on imported goods and services. Simultaneously, 19% are diversifying the countries from which they source imports.
The Green Transition: EU Firms Remain Committed
EU firms appear more attuned to the consequences of the net-zero transition than their American counterparts. They demonstrate greater awareness of the risks associated with this transition, particularly in Eastern and some Central European countries, and show slightly higher recognition of the opportunities it presents, especially in Northern Europe.
Consequently, 92% of EU firms have implemented measures to reduce greenhouse gas emissions, a significantly higher proportion than in the US, across various investment categories. A larger share of EU firms is investing in waste minimization, energy efficiency, sustainable transportation, renewable energy sources, and green innovation.
EU firms, especially larger ones, are also more likely to have conducted energy audits or established their own greenhouse gas emission targets. Notably, the percentage of US firms viewing the transition to a net-zero emission economy as a risk has notably declined since 2024.
Firms are increasingly aware of the physical risks associated with climate change and are beginning to take action on climate adaptation. On both sides of the Atlantic, a substantial percentage of firms report incurring costs due to extreme climate-related events: 68% in Europe and 64% in the US. The proportion of firms actively addressing physical risks has steadily increased and is relatively similar (55% in the US, 53% in the EU). However, US firms are more likely to have implemented adaptation strategies or investments.
Digitalization and AI Adoption: EU Firms Accelerate, Seek Broader Application
EU firms have accelerated their adoption of advanced digital technologies, now matching the adoption rates of US firms. This trend is particularly pronounced among large corporations and within the manufacturing sector.
A new finding from the EIBIS 2025 survey indicates that the adoption rate of generative AI technology is nearly identical on both sides of the Atlantic, with 37% in the EU and 36% in the US reporting adoption. However, US firms utilizing big data or AI technologies tend to apply them across a wider range of business areas compared to their European counterparts, highlighting a persistent challenge for broader adoption in Europe.
Opportunities from EU Single Market Simplification and Integration
The 2025 survey underscores the significant importance of simplifying regulations, procedures, and market access within the EU. EU firms dedicate substantial time to meeting regulatory requirements, with an estimated cost equivalent to approximately 1.1% of their turnover, rising to as high as 1.8% for small and medium-sized enterprises.
Deepening the Single Market remains equally vital for enhancing the EU’s competitiveness. A significant 62% of EU firms perceive the EU market as fragmented for their primary product, a figure that has remained unchanged since 2024. Numerous barriers continue to impede firm investment. Uncertainty remains the most frequently cited barrier, impacting EU firms more heavily than US firms (83% of EU firms express concern, compared to 68% of US firms).
The availability of skilled labor ranks second for EU firms (79%), followed by energy costs (75%) and business regulation (69%). Energy costs continue to pose a greater impediment for firms in the EU than in the US.
Alongside simplification and market integration, policy incentives play a crucial role, particularly during a period where policy support must balance strategic priorities with debt sustainability considerations. Overall, 16% of investing EU firms received support from EU policies, compared to 13% among US firms. EU firms generally benefit from better access to finance at favorable rates than US firms, and have comparable access to grants and subsidies.
Targeted policy support has been found to be more effective. In the EU, policy support tends to be more specifically directed and ‘greener’. Policy support is more likely to be linked to a defined objective (61% in Europe, compared to 43% in the United States), with the green economy and innovation being the primary policy priorities.
Expert Summary
The 2025 EIB Investment Survey highlights how European and US firms are navigating a complex global landscape. While investment remains resilient, strategic priorities diverge, particularly concerning supply chains and expansion versus replacement of capacity.
The survey also indicates differing approaches to the green transition and the application of digital technologies, alongside persistent challenges related to market fragmentation and regulatory burdens within the EU Single Market.