EU falling behind on AI and risking its future warns Lagarde

Lagarde Urges Swift Action on AI

Christine Lagarde, President of the European Central Bank (ECB), has issued a stark warning that Europe is jeopardising its future by lagging behind in the adoption of artificial intelligence (AI). Speaking in Bratislava, Slovakia, Lagarde emphasised that the European Union (EU) must quickly address obstacles that prevent the broad diffusion of this transformative technology^[1][5].

Global AI Race: The U.S. and China Lead

Lagarde noted that both the United States and China are investing heavily in AI, either propelling a technological revolution or contributing to potential financial bubbles. “With the United States and China ahead of the field, Europe has already missed the opportunity to be a first mover in AI,” she said, highlighting that the continent now faces the residual costs from being slow adopters during previous digital revolutions^[5].

The Urgency of the AI Transition

Unlike past waves of technological innovation, AI’s rapid adoption may bring tangible economic gains much sooner. This makes it urgent for the 27-nation EU to act decisively, according to Lagarde^[5].

• Lagarde cited research suggesting productivity could rise by 1.5 percentage points annually if AI is widely deployed across the EU economy in the next decade^[2].
• She pointed to the U.S. technology sector, where AI-driven productivity improvements are already visible — though sometimes accompanied by declines in traditional employment levels^[2].

Building Europe’s Own AI Capacity

Lagarde cautioned that simply purchasing AI solutions (such as ChatGPT, Claude, or other tools) from global providers would only deepen Europe’s dependency on foreign technology suppliers. To safeguard strategic autonomy, she outlined key priorities:

• Diversify critical AI supply chains: Ensure the EU has essential capacity in areas like advanced chips and data centers.
• Enforce interoperability and open standards: Promote competition and avoid the pitfalls of vendor lock-in.
• Lower energy costs and harmonise regulation: Cheaper, more uniform rules and an integrated EU capital market are crucial to fuel innovation and manage risk.

A Geopolitical and Economic Imperative

Lagarde concluded that Europe must not let “the wave of AI adoption pass us by,” as missing this technological leap could imperil its role in the global economy^[1][5]. She called for a more tech-friendly climate to foster homegrown AI innovation and minimise reliance on technology developed abroad^[2].