Artificial intelligence could lift European productivity by around 1% over the next five years, but its benefits and costs are likely to be distributed unevenly across countries, regions and workers, according to an International Monetary Fund background note prepared for an informal meeting of EU finance ministers in Dublin.
The IMF argued that deeper economic integration would help Europe capture more of the technology’s potential, with the completion of the EU single market supporting a broader distribution of AI adoption and productivity gains across the bloc.
The warning comes as Europe seeks to close a widening gap with the United States and China in the development and deployment of AI. Speaking at the Dublin meeting on September 19, IMF Managing Director Kristalina Georgieva said European countries continue to trail the two global leaders and that Europe must become a more significant part of the AI value chain.
“Europe, with its size, has to aspire to be all three” – an AI provider, builder and adopter – Georgieva said.
Labour markets are among the areas facing the largest adjustment. The IMF estimates that up to 60% of jobs in advanced economies could be affected by AI. While the technology is expected to complement some jobs and raise productivity, automation could displace workers in others and contribute to greater polarisation in the labour market.
Energy is another constraint as data centres already account for around 3% of European electricity consumption, while Georgieva said AI-driven demand is likely to triple by 2030. The IMF is calling for stronger interconnection between national grids and deeper integration of the European energy market.
The Fund is also urging Europe to improve access to risk capital for technology companies, reduce barriers to cross-border business and strengthen training and social support systems as AI changes demand for skills.
According to Georgieva, European firms tend to use AI more narrowly than their US counterparts, which are increasingly deploying it to redesign entire business processes. This could leave Europe further behind on productivity if adoption does not accelerate.
The IMF’s assessment broadly reinforces the EU’s wider competitiveness agenda, which has increasingly focused on fragmented capital, energy and business markets as obstacles to investment and innovation. The Dublin informal ECOFIN meeting, held on September 18–19, brought together EU finance ministers and central bank governors for discussions on economic and financial policy priorities.
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