Europe Is Finally, Slowly Getting Its Act Together

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Within Italy, Banca Monte dei Paschi di Siena SpA also got two suitors in this week, including a bid from Intesa Sanpaolo SpA that would create one of Europe’s most valuable banks. 

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“If we don’t create European banks, it is going to be almost impossible to have a European capital market,” said Angel Ubide, an economist and European policy expert at the financial firm Citadel, in an interview with Bloomberg Radio.

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While Europe’s banks and telecom firms seize the merger-friendly moment, defense contractors are seizing on governments wanting to buy more, together.

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The EU is handing out €150 billion in loans to promote joint military purchases. And a €90 billion loan to Ukraine will be steered toward European firms.

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“What I saw was that if you put up just a bit of incentive, you know, a small pile of money that maybe will cover the cost of coordinating and getting things in place, then you see members saying, ‘OK, if that’s the name of the game, we will actually buy a lot of stuff together,’” said Vestager, the former EU commissioner.  

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Growing pains remain. Germany and France finally killed a joint fighter-jet project this week, conceding that their aspirations for unity couldn’t overcome years of cross-border disputes, cost overruns and delays.

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Still, companies are reaping the rewards of swelling budgets.  In January, weaponsmaker CSG NV scored the world’s largest-ever initial public offering by a defense firm, Tankmaker KNDS NV could soon join with an IPO at roughly the same level. More niche firms are likely to follow. 

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“I definitely want us to be a long-term, recognized, and reliable NATO supplier to European armies,” CSG Chief Executive Officer Michal Strnad said in an interview. “This is our home market, and we will keep building on it.”

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Fights Ahead

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Europe’s big powers say they’re committed to seeing these changes through after years of false starts. They’re even willing to try taboo-breaking tactics. 

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Invigorated by Trump’s threats to take Greenland, the bloc’s six largest economies have formed a unified front to push reforms and break Europe from Washington’s whims — proclaiming that European integration should eclipse national squabbles in this critical moment.

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“There is no lack of insight in Europe; there is a lack of implementation,” German Finance Minister Lars Klingbeil said in an interview.

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But the route from rhetoric to reform is littered with roadblocks. 

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The six countries’ first priority is unifying Europe’s capital markets — a way to make investment funds more available across Europe and centralize oversight. They’re pushing for the EU to reach a deal by the year’s end, an aggressive timeline. Some countries remain wary, particularly of giving EU regulators more authority. 

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Then there’s the funding component. If the EU is going to find Draghi’s desired €1.2 trillion, governments will need money they don’t have. 

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Countries like France, with Draghi’s backing, want the EU to use billions in joint debt, or eurobonds, to get cash now at attractive interest rates. Without eurobonds, said Citadel’s Ubide, the European economy will be held “hostage to a foreign denominated asset.”

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Historically, though, the EU has eschewed debt-fueled spending. Germany also remains opposed. By later this year, the debate will become an identity-bending, anger-inducing fight as the EU negotiates its long-term budget for 2028 to 2034. 

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Artificial intelligence remains the wild card in all this. Thus far, Big Tech — which is amassing the wealth and influence to compete with nation states — is largely ignoring Europe. In 2025, the US drew roughly three quarters of the world’s AI venture capital funding. The EU got 6%.