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The Great Divergence
Money and new ideas are like people; they go where they’re welcome.
Malcolm Frank, CEO
October 20, 2025
The Great Divergence
In 2008, Europe’s economy was 10% larger than America’s. By last year, America had flipped the script; its economy now 50% larger than Europe’s.
The numbers don’t seem real until you do the math: Mississippi (the poorest U.S. state) now has a higher per capita GDP than every part of the UK outside London, and 20% higher than all of France.
And this is before the AI wave meaningfully hits national economies.
For centuries, Europe’s fortunes were built on leadership with the new machine: the steam engine, the textile loom, the printing press. But this time is different. US investment in AI now outpaces Europe’s by a factor of ten to twelve (depending on how you count). And beyond a few bright spots like Mistral and Hugging Face, Europe has little to rival the US lineup; a murderer’s row of firms like OpenAI, Anthropic, xAI, Google, AWS, Microsoft, Meta, NVIDIA, Databricks, and Palantir - all of which are increasing their capabilities at a geometric rate.
As Belgium’s central bank governor warned this week, Europe may end up “#3 at best” in AI. That’s not a ranking, it’s a diagnosis. The capital, the talent, and the confidence are migrating elsewhere.
After all, money and new ideas are like people; they go where they’re welcome.
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