European Central Bank (ECB) President Christine Lagarde has urged Europe to become a leading producer of artificial intelligence (AI) technology, citing the need to preserve the continent’s autonomy and achieve vital efficiency gains. The ECB is the central bank of the 19 European Union member states which have adopted the euro. Its primary role is to maintain price stability in the Eurozone, thereby preserving the purchasing power of the single currency. Lagarde warned on Monday that whilst European firms are investing in AI, they predominantly import the technology from overseas, particularly the United States, leaving the region vulnerable to potential access restrictions and jeopardising every economic sector.
Speaking in Vienna, Lagarde emphasised AI’s impending pervasive role in daily life, predicting its use in screening goods at borders, auditing tax returns, dispatching trains, monitoring patients, and clearing bank payments within a few years. She cautioned that a withdrawal or alteration of access terms would simultaneously affect every sector, granting trade partners an unprecedented level of leverage in negotiations, such as those concerning tariffs or digital taxes. This concern arises amidst recent geopolitical tensions and trust issues between the EU and the U.S., including disputes over tariffs and troop withdrawals.
To counter this vulnerability and secure its future, Lagarde proposed a strategy centered on building greater European computing capacity and developing “good enough” AI models capable of running on European infrastructure. Such rapid adaptation, she suggested, could boost productivity by up to four per cent over a decade, significantly transforming public finances. However, Europe currently faces a deficit in data centre capacity, a gap projected to expand more than sixfold within the next ten years. Lagarde also pointed out that US technology firms’ extensive borrowing in Europe is pushing up costs for other entities and noted that European pension funds’ significant investments in US tech stocks expose European savings to market corrections.
