Europe Risks Economic Sovereignty Over AI Dependence on US and China

European Central Bank President Christine Lagarde has warned that Europe risks losing its economic sovereignty if it continues to rely heavily on AI technology from the US and China.

Lagarde made this statement at a recent event in Vienna, drawing parallels with the 19th-century age of capital. She noted that while European savers currently finance the global AI boom, holding approximately 440 billion euros in US technology firms, the continent risks repeating historical patterns where foreign investors fund transformative technologies without capturing the resulting domestic growth.

The adoption and productivity gap between Europe and the US is significant. While Euro area firms are devoting around 10 percent of total investment to AI in 2026, and the share of workers using AI on the job has doubled in two years to exceed 50 percent, progress remains slower than across the Atlantic.

Lagarde emphasized that Europe must drastically expand its domestic computing capacity. The US currently hosts three-quarters of the global AI computing capacity, while Europe accounts for just 5 percent. Closing this deficit could require up to 600 billion euros in investment over the next decade.