Europe Faces 'Dependency Trap' as AI Gap Widens

European Central Bank President Christine Lagarde has sounded an alarm about Europe's lack of investment in artificial intelligence (AI). In a recent speech, she warned that the continent risks becoming too dependent on foreign technology and facing severe consequences if it loses access to AI tools.

Lagarde cited the numbers: last year, the US produced 59 notable AI models, while China produced 35. Europe managed only two, one from France and one from the UK. The European Union holds a mere 5% of global AI computing capacity, with the US dominating at around 75%.

The president estimated that closing this compute shortfall could require investments of up to €600 billion over the next decade. If nothing changes, Europe's data-center capacity gap is expected to widen more than sixfold within the same timeframe.

Lagarde identified French AI company Mistral and Dutch semiconductor equipment maker ASML as firms that could anchor a credible domestic AI ecosystem. She also highlighted the need for deeper capital market integration across Europe to channel savings into local innovation.