European Central Bank president Christine Lagarde has delivered a stark warning, stating that Europe must evolve into a direct developer of artificial intelligence (AI) rather than remaining a customer dependent on foreign technology. Addressing an audience in Vienna, Lagarde stressed that building sovereign capability is vital to safeguarding the continent’s independence and capturing the productivity surges required to sustain its standard of living, as per a report by news agency Reuters. While businesses across Europe have poured money into AI, the vast majority simply license tools created abroad like in the US, the report said, adding that Lagarde warned that this dependence leaves the entire European economy exposed if access is suddenly rescinded or terms are rewritten.
‘The threat of foreign leverage’
Lagarde projected that within a few years, machine learning models will touch nearly every facet of daily public life and administration.“Within a few years (AI) will be screening goods at the border, deciding which tax returns are audited, dispatching trains, watching patients on wards and clearing payments at banks. A withdrawal of access, or a change in its terms, would then reach every sector at once,” Lagarde said.Although the European Union (EU) and the US remain close allies, transatlantic confidence has been tested by frictions over import duties, American proposals to acquire Greenland, and the redeployment of American military personnel away from European soil following political disputes.“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,” she added.
Bridging the data center deficit
To escape this vulnerability, Lagarde argued that Europe must prioritise domestic computational infrastructure. The continent currently lacks the data centre facilities needed to satisfy its own computing demands. Under existing trajectories, that infrastructure shortfall is expected to multiply more than sixfold over the coming ten years.Adopting the technology swiftly could boost European productivity by as much as 4% over a ten-year horizon, providing a major windfall for state budgets, the report noted.