Europe Must Build Its Own AI or Risk Being Cut Off, Says ECB’s Lagarde
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Europe
Europe must produce its own AI or risk being cut off from it, says Christine Lagarde, president of the European Central Bank. She warned that a trade partner could use Europe’s reliance on foreign AI as leverage in negotiations.
In a speech in Vienna on 14 September, she argued that:
“A withdrawal of access, or a change in its terms, would then reach every sector at once. That is leverage of a kind no trade partner has ever held over Europe, and it could be used in any negotiation, on tariffs or on digital taxes, for example.”
Within a few years, she predicts, AI will be screening goods at borders, picking tax returns for audit, dispatching trains, watching patients on wards, and clearing bank payments.
AI in Europe: The Current Landscape
Lagarde highlighted the following points:
- AI development is primarily occurring outside Europe. Last year, the US produced 59 notable AI models and China produced 35, with France and the UK producing just one each.
- The US hosts three-quarters of the world’s AI computing capacity, while Europe has only 5%.
- Europe already lacks enough data center capacity to meet its own demand, and this gap is expected to grow significantly over the next decade, potentially reaching €600 billion.
Europe’s Options: An Awkward Choice
Lagarde described Europe’s options as “an awkward choice”:
- Hold back on AI due to data protection concerns, sacrificing growth.
- Adopt AI quickly, becoming highly dependent and risking loss of control over economic values.
She noted that rapid adoption could lift productivity by up to 4% over a decade, benefiting public finances.
Lagarde’s Three-Pronged Strategy
To address these challenges, Lagarde proposed three steps:
- Increase European computing capacity.
- Develop AI models that are “good enough” for most tasks and run on European infrastructure, reducing the risk of being cut off.
- Ensure access to frontier models to maintain competitiveness.
She tied this strategy to Europe’s capital markets, emphasizing the need for capital markets to channel more of the €1.4 trillion saved annually by European households towards European projects.
Recent Calls for Action
On the same day, a Nobel laureate and a former EU commissioner stated that Europe has one year to act. Additionally, a Capgemini survey found that most large organizations believe full digital sovereignty is unrealistic.