Business investment has grown less dynamically in the euro area than in the United States since the early 2000s, but in the aftermath of the pandemic the differential has been particularly marked. This box breaks business investment down by asset type and assesses some of the factors behind this disparity. Analysis suggests that demand, competitiveness, confidence and policy efficiency all contribute to higher tangible investment in the United States. Weaker investment growth in intangibles in the euro area seems to be related to less innovation at the firm level. In addition, firms see uncertainty, energy costs, and regulation in product and labour markets as more severe obstacles to investment in the EU than in the United States. Recent EU policy initiatives and the advancement of the capital market union can provide new impetus to closing the investment gap with the United States.
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