Lagarde Warns Europe Faces Existential Threat Without Urgent AI Adoption

European Central Bank President Christine Lagarde issued an urgent call to action on artificial intelligence during a speech at the BratislavAI Forum on November 24, 2025, warning that Europe cannot afford to repeat past mistakes by moving slowly on technology adoption. With global corporate AI investment reaching $252 billion over the past year and private AI firms raising a record $100 billion, Lagarde emphasized that Europe has already missed the opportunity to be a first mover but can still emerge as a "strong second mover if it acts decisively."

The ECB President highlighted that AI possesses unique characteristics that could deliver productivity gains faster than previous general-purpose technologies like electricity or computers. AI's recursive nature, where systems use their own output to enhance performance, has already demonstrated remarkable results. In fifty years, science resolved approximately 200,000 protein structures, while AI achieved over 200 million predictions in just one year through AlphaFold. Research suggests AI could boost European productivity growth by 0.8 to 1.3 percentage points annually, with some estimates indicating AI-augmented research and development could double recent US productivity rates to between 1.6 and 2.4% annually.

Europe's path forward leverages existing structural advantages, Lagarde argued. The EU's economic diversification, with top firms accounting for only 18% of market capitalization across twice as many sectors as the US top ten (40% across four sectors), positions the continent well for broad AI deployment. European firms are already adopting generative AI at comparable scales to American companies, with ECB contacts reporting heavy investments in databases, cloud solutions, and AI services showing double-digit growth.

Critical to Europe's strategy are industrial-scale data spaces that enable cross-sector collaboration. Initiatives like Manufacturing-X and Catena-X in automotive, along with the European Health Data Space leveraging anonymized patient datasets from universal healthcare systems, create training datasets no single firm could assemble independently. However, Lagarde warned that if these data spaces rely on technology stacks owned outside Europe, the continent deepens rather than reduces strategic dependencies.

The speech identified persistent structural barriers threatening Europe's AI future: high energy costs, lengthy permitting delays, fragmented regulations, and incomplete capital market integration that restricts long-term risk-bearing funding. Lagarde emphasized that allowing these obstacles to persist would result in slower AI diffusion and further competitive losses across multiple sectors. She concluded by invoking 2024 Nobel Prize winner Demis Hassabis's projection that AI "will be ten times bigger than the Industrial Revolution and maybe ten times faster," underscoring that institutions and regulations remain unprepared for the pace of change ahead.