Europe must build own AI or risk being cut off by US or China, says ECB’s Lagarde

European Central Bank President Christine Lagarde has warned that Europe faces a critical risk of economic dependency if it fails to develop its own artificial intelligence infrastructure. In a speech in Vienna, Lagarde highlighted that the US and China currently dominate the AI landscape, with the US hosting 75% of global computing capacity compared to Europe’s 5%. She argued that relying on foreign models leaves Europe vulnerable to geopolitical leverage, potentially impacting everything from tax audits to banking and border security. Lagarde urged the continent to significantly expand its domestic datacentre capacity to avoid a projected sixfold increase in the infrastructure gap over the next decade. While acknowledging the potential for AI to boost productivity by 4%, she cautioned that Europe must choose between rapid, dependent adoption or investing in sovereign technology to maintain economic autonomy and protect its values against external trade pressures.