Euro area digital investment shows robust growth, lags US
Euro area business investment in digital assets has shown robust growth over the past decade, significantly outpacing tangible asset expansion. However, a new ECB assessment reveals that this growth notably lags behind the United States.
Intangible assets lead investment surge
Euro area business investment has displayed a two-speed dynamic since 2020, with intangible assets driving the expansion.
These assets, including computer software, databases, and R&D, accounted for approximately 80 percent of the cumulative business investment growth since late 2019.
Measuring digital investment is challenging, but a proxy built on annual accounts reveals a notable rise between 2014 and 2024, growing more than three times the cumulative GDP growth.
This proxy comprises physical digital infrastructure (e.g., data centers), tangible ICT equipment, and intangible IPP investment within the information and communication sector, as well as software and database investment in the broader business economy.
Intangible investment forms the largest share of this digital growth, with ICT equipment also contributing significantly, while data center construction remains comparatively small.
Transatlantic digital divide widens
Euro area digital investment accelerated in 2025, but its growth remains notably slower than in the United States.
Between 2014 and 2025, euro area digital investment expanded by just over 60 percent, while a similar US proxy more than doubled, partly due to a strong pick-up in data center investment.
This widening gap warrants further research into factors like smaller European firm size, structural rigidities, or the US's 'first mover' advantage.
Digital investment is expected to continue growing, driven by venture capital and EU funding.
However, insufficient energy supply, skilled staff shortages, overregulation, or unfulfilled AI productivity gains could hamper this acceleration.