Frankfurt, April 1, 2025 – Christine Lagarde, President of the European Central Bank (ECB), delivered a welcome address at the conference focused on the economic implications and challenges posed by artificial intelligence (AI).

In her opening remarks, Lagarde highlighted the uncertainty surrounding the rapid advancements in AI technology and the potential transformative impacts on the nature of work.

Lagarde emphasized the necessity for Europe to embrace the opportunities presented by AI, particularly in light of the productivity challenges faced since the last digital revolution.

The productivity gap between the European Union (EU) and the United States has been attributed to the tech sector, which accounts for approximately two-thirds of this disparity since the early 2000s.

This gap has raised concerns about the EU's ability to capitalize on innovations that could arise from AI advancements.

In her address, Lagarde referenced projections indicating that the euro area could witness an annual increase in total factor productivity (TFP) by approximately 0.3 percentage points over the next decade as a result of AI integration.

Comparatively, the past decade has seen annual TFP growth at a mere 0.5%.

More optimistic estimates suggest that a widespread adoption of AI could enhance productivity by an additional 1.5 percentage points annually.

The potential to achieve such gains hinges on improving the environment for AI innovation across Europe, focusing on three key areas: funding, regulation, and energy infrastructure.

Lagarde noted that the EU's venture capital ecosystem is significantly smaller than that of the US, with investments in AI companies between 2018 and 2023 estimated at around €33 billion in the EU compared to over €120 billion in the US. Furthermore, the EU has about four times fewer dedicated data centers than its US counterparts, posing additional challenges for the development of AI technologies.

Regulatory frameworks are also a critical factor, as Lagarde pointed out that effective regulations are needed to facilitate access to data pools essential for training AI models while ensuring data protection.

The necessity for robust legal systems was highlighted to protect non-patentable assets such as AI prompts.

Research by the ECB indicated that enhancing the EU's institutional quality to best practice levels could result in a more than 10 percentage point increase in investment share within AI-intensive sectors.

However, the energy demands of expanding AI applications, particularly with data centers expected to triple in energy consumption by 2030, could further complicate the landscape.

Addressing energy supply constraints will be crucial, especially as the green energy transition increases overall electricity demand.

The anticipated rise in energy needs due to AI training and operation must be balanced against the EU's ambitions to pursue sustainable energy solutions.

In her address, Lagarde also discussed the impact of AI on labor markets, estimating that between 23% and 29% of European workers are at high risk of being affected.

While the integration of AI could lead to job displacement, it may also create new roles as historical patterns suggest.

The pace of technological change and its implications for job reallocation in an economy with strong labor protections present significant challenges.

The debate centers around whether AI will predominantly lead to job displacement or changes in job roles and responsibilities.

Research indicates that a sizeable majority of current jobs are more suitable for augmentation through AI rather than outright replacement.

Studies show that only about 5% of jobs in advanced economies currently meet high automation criteria, while more than 13% could benefit from the augmentative properties of AI.

Lagarde also pointed out that as AI continues to reshape productivity, the distribution of its benefits is likely to exacerbate existing inequalities.

High-skilled workers are expected to experience greater gains than lower-skilled counterparts, leading to a potential increase in labor market disparity.

The urgent need for substantial investments in skills training and educational programs was underlined to ensure workers are well-prepared for the evolving employment landscape.

In conclusion, the ECB's conference aimed to foster discussions on addressing the challenges posed by AI while maximizing its potential benefits for the European economy and workforce.