Lagarde urges Europe to reduce reliance on US AI

European Central Bank President Christine Lagarde warned in Vienna that Europe’s reliance on imported AI, chiefly from the United States, creates a strategic vulnerability that could affect every sector at once if access were withdrawn or contract terms changed. She said AI will soon be used in border checks, tax audits, train dispatching, hospital monitoring and bank payments, making dependence on external providers a source of leverage in disputes over tariffs or digital taxes.

Lagarde argued that Europe must become a producer of AI technology to preserve autonomy and support productivity growth. The region already lacks enough data center capacity to meet domestic demand, and the shortfall is expected to expand more than sixfold within a decade. Her proposed response includes building domestic computing capacity and developing AI models that are sufficient for most tasks while operating on European infrastructure.

The economic stakes extend beyond technology policy. Rapid AI adoption could lift productivity by up to 4% over ten years, while U.S. technology firms are already borrowing in European debt markets, crowding out other issuers and raising financing costs. European pension funds also have significant exposure to U.S. tech stocks, leaving savings vulnerable to any market correction.