Christine Lagarde, president of the European Central Bank, called for Europe to invest in domestic artificial intelligence technology and computing infrastructure to reduce the risk of economic coercion by the United States or China. She delivered these remarks during a speech in Vienna, highlighting what she described as a critical gap in European technological capabilities.
Lagarde noted significant disparities in AI model development globally, with the US producing 59 notable models in the preceding year and China 35, while France and the UK each produced only one. Additionally, the US hosts approximately 75% of the world’s AI computing capacity through its datacentres, with Europe accounting for just 5%. She emphasized that Europe requires AI systems that are sufficiently capable to handle most tasks and operate from European datacentres to diminish the vulnerability to external pressure.
The ECB leader warned of the strategic risks posed by this dependency imbalance. She outlined a difficult choice for Europe: either limit AI adoption to protect data and sacrifice economic growth, or rapidly embrace the technology while accepting significant reliance and potential loss of economic autonomy. She cautioned that cutting Europe off from AI or altering access terms would produce widespread economic consequences across multiple sectors within years, affecting border screening, tax administration, transportation, healthcare, and financial systems simultaneously.
Lagarde stressed that such leverage would represent an unprecedented negotiating advantage for external powers, potentially influencing discussions on tariffs and digital taxation. She noted that while the EU and US maintain a strategic partnership, recent actions by the Trump administration, including tariff implementations and territorial demands, have strained confidence. The ECB president projected that AI adoption could enhance productivity by up to 4% over a decade, providing transformative benefits to public finances.
On infrastructure, Lagarde warned that Europe currently faces insufficient datacentre capacity to meet its own demands, with projections showing this deficit could expand more than sixfold within a decade. She also flagged concerns about US technology firms’ substantial borrowing in European debt markets, which increases costs for other borrowers, and noted that European pension funds’ significant holdings in US technology stocks expose European savings to market volatility.
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