Bad news: Europe, as happened with the birth of the Internet, was not a pioneer in the artificial intelligence boom called to turn the global economy around. Good news: European companies are adopting generative AI on a similar scale to those in the United States. The President of the European Central Bank, Christine Lagarde, spoke on Monday about the rise of this new technology in Bratislava (Slovakia), at an event organized by the OECD. And his message to European leaders could not be clearer: excessive regulatory zeal would “slow the spread of artificial intelligence and therefore hinder the prosperity of all Europeans in the coming decades.”
For years, if not decades, the EU has been talked about as a bureaucratic giant, very capable of imposing regulations such as the obligation to put caps on plastic bottles, or passing powerful data protection laws that are a reference around the world, but ineffective when it comes to generating an ecosystem conducive to entrepreneurship.
For this reason, Lagarde fears that the desire to contain the dangers of the expansion of AI (which exist, and are not minor, according to experts), will lead to obstacles to innovation. “We must remove all obstacles that prevent us from embracing this transformation. Otherwise we risk missing out on the wave of AI adoption and endangering Europe’s future,” he warns.
The Frenchwoman’s confidence in the impact of future change is firm. Compare artificial intelligence to the advent of electricity, computers or the Internet. And he sees parallels with them in the trajectory that AI can follow, which he perceives not as immediate, but irrevocable. “The crisis came early, and widespread productivity gains emerged only slowly. For example, it took about thirty years before the impact of electricity became evident throughout the economy. Electricity grids had to be built, factories redesigned, and workers reassigned from old to new tasks. Computers also required long-term investments in hardware, softwareskills and new business models before they translated into measurable improvements,” he recalls.
Lagarde is convinced that artificial intelligence will bring a significant improvement in productivity, which if it were similar to that of electricity it would be 1.3 points every year, and if it were more similar to the explosion of the internet it would increase it by 0.8 points. And it also sets this innovation above its predecessors in the speed with which it can come into force. “There are reasons to believe that AI could spread more rapidly and generate tangible economic benefits before previous technological waves,” he predicts.
To support his thesis he uses the omen of the Nobel Prize winner for chemistry Demis Hassabis. “It will be ten times bigger than the Industrial Revolution, and maybe ten times faster.” And he believes the system is not ready. “The question is no longer whether this new frontier will arrive, but when, and the pace of progress in recent years suggests it will likely happen sooner than our institutions and regulations are prepared.”
In a world where the five largest companies by stock market value are five American technology companies (Nvidia, Apple, Alphabet, Microsoft and Amazon), and where China has already shown its teeth with surprising developments such as DeepSeek, capable of competing head-to-head with ChatGPT at a much lower price, Lagarde assumes that the battle to be pioneers is lost and fears that the script of the Internet and smartphone revolution will repeat itself. “We are still bearing the cost of slow adoption during the latest digital revolution. We cannot afford to make the same mistake.”
The speech, however, was not intended to be, in any way, the prerequisite for defeat. Lagarde estimates that with rapid adoption, “Europe can turn a late start into a competitive advantage.” Because just like in a transport network, where it doesn’t matter so much who builds it first as its extension, in the universe of artificial intelligence it is not the first who wins, but whoever creates it in a generalized way. “And European companies are already adopting generative AI on a similar scale to the US. What the ECB hears from large European companies confirms this trend: many are investing heavily in data centers, cloud solutions and artificial intelligence.”
Bubble?
The risk of a bubble on these assets passed very briefly thanks to Lagarde’s intervention. “Some see its growth as a temporary exuberance that outpaces underlying fundamentals. But a debate framed solely in terms of short-term ups and downs can miss the bigger picture.”
In any case, the risk of a stock market explosion occurring in Europe is much lower, because while the ten largest American companies by stock market value represent 40% of the market and are part of only four sectors, the ten largest in the EU add up to 18% in almost double the sectors. It is the positive part, or perhaps just a weak consolation, in the face of the fact that large European companies are very far from American ones in the technology that is fashionable among investors.
