Europe facing unprecedented risk of being cut off from AI, Lagarde warns

European Central Bank President Christine Lagarde warns that Europe must create its own artificial intelligence technology or risk being cut off from the US and China. Lagarde argues that Europe's dependency on AI from these countries could give them significant leverage in negotiations, affecting everything from tariffs to digital taxes.

To avoid this, Europe needs to develop AI models capable of handling most tasks and run on domestic data centers. Currently, the US hosts 75% of the world's AI computing capacity, while Europe has only 5%. Lagarde suggests that adopting AI quickly could lead to a 4% boost in productivity over a decade, but warns that a lack of AI infrastructure could leave Europe vulnerable to economic disruption.