On Monday in Bratislava, Christine Lagarde did something central bankers rarely do. She told Europe to hurry up.
The president of the European Central Bank warned that if the region does not move faster on artificial intelligence, it risks “jeopardising Europe’s future”.
At the same time in Brussels, the European Commission is moving to soften parts of its famed tech rulebook.
It wants to relax data rules under GDPR and push back strict AI Act obligations to 2027 in the name of growth.
Put simply, European leaders now see AI in Europe not as a niche tech issue, but as a test of economic survival.
The question is whether this late push turns into a real “AI moment” or another missed wave.
Why AI has become an emergency for Europe
The numbers explain the urgency. Internal and industry studies suggest AI in Europe could add more than €1.2 trillion to EU GDP if adoption spreads across the economy.
That is not a small productivity boost. It is the difference between a slow, ageing continent and one that can pay for its social model.
Yet adoption is still low. Only about 14% of European firms use AI tools today. In China, that share is estimated to be above 80% for generative AI.
America also runs ahead, thanks to its cloud giants and venture capital.
Lagarde connects this gap directly to Europe’s long-term growth problem.
In her Bratislava remarks, she recalled how the region fell behind in the first digital revolution because it did not deploy new tools fast enough.
She argues that AI is different in one way.
The technology itself can speed up research, and it can spread through existing devices and simple chat interfaces.
That means the productivity payoff could arrive faster than earlier waves like electricity or the early internet.
For the ECB, this is no longer a nice-to-have. Higher productivity is one of the few ways to lift living standards without fuelling inflation.
AI in Europe is now an essential part of the macro story.
From rulemaker to fast follower
Brussels was proud to be the world’s digital referee. GDPR set the global standard for privacy.
The AI Act was the first full law on artificial intelligence systems. The EU liked this role as it made it feel powerful in a way.
But things are changing, due to necessity.
The new “Digital Omnibus” package proposes easier data sharing, fewer cookie pop-ups, and more time for high-risk AI systems to comply with strict rules.
Companies could train AI models on more personal and pseudonymised data as long as they respect other privacy safeguards.
Oversight is meant to become simpler, especially for smaller firms.
Supporters in business circles say this is overdue.
They argue that layers of overlapping laws made AI in Europe slow and costly, and that firms were voting with their feet by investing abroad.
Opponents see a “massive rollback” of digital protections and warn of a gift to Big Tech.
Civil groups and several lawmakers fear that loosening GDPR and delaying AI rules weakens fundamental rights and hands more power to large US platforms.
Whatever the political spin, the direction is clear. Europe is moving from “regulate first” to “adopt faster.”
Talent-rich, deployment-poor
The irony is that Europe’s problem is not a lack of brains, but rather lack of deployment.
The region hosts some of the best AI labs and universities in the world.
Founders are not the issue either. At the Slush conference in Helsinki last week, which drew 13,000 people and 3,500 investors, the mood on European talent was positive.
General Partners of some of the biggest European funds expressed how bullish they are about Europe.
The gap opens later in the chain. Many European companies still run on old IT stacks.
Boardrooms worry about liability under complex rules.
Capital markets are shallow compared with the US, so scaling requires either heavy dilution or foreign ownership.
Lagarde flagged three structural blockers in her speech.
High energy costs that hit data centres, fragmented regulation inside the single market that slows scaling, and the capital markets are still not integrated enough to fund large, risky projects in AI and advanced computing.
This combination leads to a simple pattern. Europe produces ideas and talent. The US and China turn more of them into platforms and products.
AI in Europe will not change that unless these pipes are fixed.
The money, the hype, and the risk
While policymakers rewrite rules, investors have already moved.
According to PitchBook, European AI startups pulled in more than €17 billion this year. Term sheets are being signed in a day.
Early-stage valuations have jumped.
Many VCs in Helsinki admitted they expect a correction. Some spoke openly of a coming “trough of disillusionment” for AI.
Yet few doubted that the long-term impact on business would be deep.
They see the current wave as noisy but necessary. Easy money will wash out, but strong companies will remain.
There is also a new focus on defence technology.
The Russia-Ukraine war, along with wider security worries, has pushed European governments to spend more on drones, cyber tools, and sensing systems that often lean on AI.
Investors now treat defence as a serious growth sector.
Defence spending is one of the few reliable buyers of high-end computing, edge hardware, and complex software in the region.
That demand can help pay for some of the infrastructure Europe needs for AI in other sectors.
If used well, the defence awakening can spill over into manufacturing, logistics, and security applications for civilian use.
What will decide whether this really is Europe’s AI moment
The pieces on the board are starting to move. Lagarde is telling governments that AI is a productivity tool, not only an ethics debate.
Tech firms are already spending billions on data centres, cloud regions, and security hubs.
The Commission is rewriting digital law to cut red tape.
Investors are pouring money into the technology in Europe, even as they whisper about AI bubbles.
The real test will not be the number of AI press releases that’ll come out, but the pace at which ordinary firms in Europe use these tools in their daily work.
If AI in Europe stays confined to a handful of big banks, telcos, and US platforms, then this will be another moment of high talk and low impact.
If thousands of mid-sized firms start to treat AI as basic infrastructure, like email or accounting software, then the story changes.
That is what Lagarde means when she talks about Europe as a “strong second mover”.
The region has probably lost the race to build the very largest foundation models.
It has not yet lost the race to apply artificial intelligence across factories, clinics, farms, and public services.
Whether this really becomes Europe’s AI moment depends on that last step, not on the slogans.
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