If you are a woman living in Europe, you are 40% less likely to start or own a new business than if you were a man. Closing this gap could dramatically boost productivity by up to 5.5% in 13 countries by 2040. To compare, Europe’s average annual productivity growth has stood at anaemic 0.1% over the past 15 years. Sarah Snelson from Frontier Economics, one of Europe’s largest economic consultancies, shares with us the findings of their recent study on the potential of female entrepreneurship.

By Sarah Snelson

More than a year after Mario Draghi urged for a step change in European competitiveness, and with productivity and jobs remaining firmly on the agenda across the continent, a EUR 250 billion blind spot has been hiding in plain sight. Gender parity in entrepreneurship – capable of generating this additional annual value across 13 European countries by 2040 – represents a major source of untapped economic potential. This would represent around 2% of current gross value added across these economies.

On 19 and 20 March, the European Council will meet to discuss ‘concrete commitments and timelines in priority areas to push forward EU competitiveness’. Coupled with the European Innovation Act’s goal of creating an innovation-friendly envrionment, this represents a critical and timely opportunity to address the female entrepreneur gap. By improving access to markets, finance and infrastructure for female innovators, Europe will take a huge stride towards enhancing its global competitiveness.

We recently carried out some research, commissioned by Amazon, which puts a spotlight on this important issue and highlights the need for action. Across Europe, women are on average 40% less likely than men to start or own a new business. This gap rises to 88% in Denmark, while Austria and Ireland show smaller but still significant gaps of 21%. The consequences are more than symbolic. Closing this gap could boost productivity by up to 5.5% in 13 countries by 2040 – a dramatic improvement when compared with Europe’s anaemic 0.1% average annual productivity growth seen over the past 15 years. If women started firms at the same rate as men, Europe could close the productivity gap with the US by up to a third.

However, hurdles remain. Nearly 40% of female founders cite both limited access to capital and regulatory complexity as significant barriers. Female entrepreneurs are 25% more likely than their male counterparts to report challenges with digital confidence. Care responsibilities present an even larger disparity, with female founders 36% more likely to cite this as a significant barrier.

If we support female entrepreneurs, will others fall behind? On the contrary, establishing measures to support female entrepreneurs would be beneficial to other SMEs. Unlocking this potential requires immediate, targeted action on five fronts: ensuring that national competitiveness strategies (including the European Innovation Act) support SMEs and female entrepreneurs; enabling access to funding for female founders; simplifying regulatory processes via the EU’s single market strategy; accelerating digital skills initiatives through Digital Europe programmes; and addressing structural barriers such as caregiving responsibilities and discrimination. 

As a female leader with three children, I have seen how often we underestimate the latent capacity of entrepreneurs who don’t fit the dominant mould. The case for change has been made on fairness alone. Now our analysis shows the scale of the economic opportunity it presents – and it’s huge. Closing the female entrepreneurship gap is not just about equality, but about unlocking a powerful, untapped lever to boost Europe’s productivity and competitiveness.

Source: ‘Female Entrepreneurs: Europe’s Untapped Competitive Edge’, Frontier Economics, October 2025. The report studied 13 European countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Poland, Spain, Sweden and the UK.

Sarah Snelson is an Executive Director at Frontier Economics, advising governments, regulators, and businesses on digital and data policy, AI, education and skills, labour markets, justice and regional economic growth. Frontier Economics is one of the largest economic consultancies in Europe.