In a speech at the BratislavAI Forum, European Central Bank President Christine Lagarde argued that artificial intelligence is advancing rapidly but has not yet shown up clearly in aggregate productivity data, and that Europe needs to act to avoid falling behind in adoption. She framed the priority as removing obstacles that slow diffusion so that Europe can translate a late start into economy-wide deployment rather than trying to out-build leading AI models. Lagarde pointed to global corporate investment in AI of USD 252 billion over the past year and USD 100 billion raised by private AI firms, while noting that general purpose technologies historically deliver productivity benefits only after lengthy disruption and reorganisation. For Europe, she cited illustrative scenarios in which annual productivity growth could be about 1.3 percentage points higher if AI diffusion resembles the spread of electricity in the 1920s, or about 0.8 points if it follows the US digital boom of the late 1990s, and referenced estimates that AI-augmented research and development could lift US productivity growth to between 1.6% and 2.4% annually. Two factors could shorten the lag, in her account: faster innovation due to AI’s recursive improvement and faster diffusion because many applications run on existing internet-connected devices even as compute, data centre and energy constraints remain binding, particularly in Europe given higher energy costs and longer permitting delays. A European strategy, as outlined in the remarks, would emphasise connecting data across sectors through industrial-scale data spaces, while limiting strategic dependencies where technology stacks are owned and governed outside Europe. She also highlighted maintaining minimum capacity in foundational layers such as chips and data centres, using the Single Market to enforce interoperability and open standards to reduce platform lock-in, and addressing structural frictions including high energy costs, fragmented regulation and insufficiently integrated capital markets for long-term, risk-bearing funding.
European Central Bank 2025-11-24
European Central Bank President Lagarde urges Europe to accelerate AI diffusion by removing energy, regulatory and funding barriers
European Central Bank President Christine Lagarde stressed the urgency for Europe to accelerate AI adoption to avoid lagging, citing high energy costs and fragmented regulation as obstacles. She noted AI could boost productivity, with annual growth potentially increasing by up to 1.3 percentage points. Lagarde advocated for a European strategy on data connectivity, reducing strategic dependencies, and enhancing foundational capacities like chips and data centers.