Europe must ‘wake up’ and boost competitiveness — or risk falling behind in the Trump era, CEOs warn

European business chiefs on Tuesday warned that the region risks falling behind its U.S. and Asian counterparts, if it fails to innovate and adapt to a fast-changing world that is expected to see an acceleration of global policy changes during President Donald Trump’s second term in office.

Europe was “always lagging behind” its counterparts in Asia and the U.S. when it comes to innovation, Mario Greco, the chief executive of Zurich Insurance, told CNBC from the World Economic Forum in Davos, Switzerland.

“In a world which is going very fast forward, with lots of innovation, it’s a wake up call, again, for Europe. And I hope that Europe takes it seriously,” Greco said.

“Take all the developments in AI [artificial intelligence] and digital. Europe has not invested in that, as America and China have done. It is also the integration of financial markets in Europe. It is still [an issue of] how complicated it is to do business in Europe … And this is why I’m saying it again, Europe needs to wake up,” Greco added.

Greco added that Europe had become too preoccupied with regulation and that it was stifling progress, particularly in new technologies needed to drive growth — and as we enter the Trump 2.0 era of “America First” policies that mean the region will need to further defend its economic interests.

President Donald Trump signed a slew of executive orders on his first day in office Monday, including withdrawing from the Paris climate agreement and revoking a 50% electric vehicle target, as well as moves to crack down on immigration.

On the global front, along with stating that tariffs of 25% could be levied against Mexico and Canada as soon as early as February, Trump also sent a warning signal that the European Union needed to buy more American goods, as well as oil and gas, or it would be a target for tariffs.

Novartis CEO Vas Narasimhan told CNBC that the Trump 2.0 era was “a big moment for Europe,” during which the region needs to deregulate and boost competitiveness.

“Europe has to decide now, in a world where the U.S. is so heavily deregulating and trying to increase competitiveness, is Europe going to continue to sit on its hands, continue to increase regulation in the [European] Commission, increase regulation in the various individual countries, or are we finally going to get a more pro-competitive, pro-innovation environment in Europe?,” he asked.

“We’ll have to see. History suggests that while there’s a lot of talk, not a lot of action comes out of the [European] Commission. And right now, this is the moment. Because, if not, I think Europe will be even further left behind versus the U.S.,” he said.

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— CNBC’s Karen Gilchrist and Chloe Taylor contributed reporting to this story