European Central Bank President Christine Lagarde has sounded the alarm on Europe's dependence on foreign artificial intelligence, warning that the continent must develop its own AI or risk being cut off from it. In a speech in Vienna, Lagarde emphasized the importance of European sovereignty in the age of AI, citing the potential for trade partners to use Europe's reliance on foreign AI as leverage in negotiations.
Lagarde's comments come as Europe trails behind the US and China in AI development, with the US producing 59 notable AI models last year and China producing 35, compared to just one each from France and the UK. The US also hosts three-quarters of the world's AI computing capacity, while Europe hosts just 5%.
The ECB president described the options facing Europe as an "awkward choice": either hold back on AI adoption due to concerns over data protection, or adopt AI quickly and risk becoming highly dependent on foreign technology. Lagarde warned that this dependence could compromise Europe's ability to run its economy according to its own values.
Despite these challenges, Lagarde sees significant potential for AI to drive growth in Europe, with ECB estimates suggesting that fast adoption could lift productivity by up to 4% over a decade. To achieve this, Lagarde outlined three key steps: increasing European computing capacity, developing AI models that are "good enough" for most tasks and run on European infrastructure, and accessing frontier models to stay competitive.
Lagarde also highlighted the need for European capital markets to support the development of sovereign AI, arguing that this requires a shift in the way savings are invested. With European households saving around €1.4 trillion per year, Lagarde believes that building sovereign AI needs capital markets that direct more of these savings towards European projects.
The AI boom is already having an impact on European finance, with AI-related borrowing making up around a quarter of the growth in credit to firms in the first quarter. The big US cloud providers have issued over $100 billion in bonds, some of which is being borrowed in Europe, driving up costs for other borrowers. Meanwhile, euro area households hold around €440 billion in US technology firms, making them vulnerable to any market correction.
Against the backdrop of strained transatlantic relations, Lagarde's comments take on added significance. The EU and US remain key allies, but trust has been shaken by US tariffs, demands to take over Greenland, and troop withdrawals from Europe. Recent data centre announcements in Europe, including Google's €13 billion plan for Finland and a UAE investment in Germany, may help to address the continent's data centre gap, but more needs to be done to support the development of sovereign AI.
Este artículo fue escrito con la asistencia de IA.
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