Lagarde Warns Foreign AI Dependence Threatens European Industries

European Central Bank (ECB) President Christine Lagarde sounded an alarm about Europe's dependence on foreign artificial intelligence providers. In a recent speech in Vienna, she warned that reliance on these providers could disrupt multiple sectors if access were withdrawn or their terms changed.

The capacity gap is substantial: the United States hosts three-quarters of global AI computing capacity, while Europe hosts 5%. This imbalance has significant implications for industries and businesses across Europe. Lagarde emphasized the need to expand computing capacity and develop models that run on European infrastructure.

Europe's data-center capacity gap is projected to rise from 3 gigawatts in 2025 to about 20 gigawatts by 2036 under a baseline scenario. Closing this gap could cost as much as €600 billion, an upper-bound estimate that includes chips and assumes a projected 19-gigawatt shortfall.

Lagarde framed the challenge as balancing faster AI adoption and its potential economic gains with concerns about dependence on systems governed by foreign providers and laws. She called for models that are 'good enough' for most tasks and run on European infrastructure, reducing the impact of losing access to foreign systems.