IMF warns AI could boost Europe’s productivity while widening inequality and straining power grids
Saturday, 19 September 2026, 15:30
Europe’s AI race promises economic gains, but its biggest costs may emerge in places already facing labor and energy pressures.
Artificial intelligence could increase the productivity of the European economy by approximately 1% over the next five years. At the same time, its spread could widen inequality, place additional pressure on energy grids, and increase Europe’s dependence on foreign technologies.
These estimates are contained in an International Monetary Fund briefing prepared for an informal meeting of finance ministers from European Union countries, held on September 18–19 in Dublin.
The document notes that the benefits and costs associated with artificial intelligence will be distributed unevenly among countries, regions, and workers. Completing the EU single market could help promote broader adoption of the technology and ensure that its benefits are distributed more evenly among the bloc’s 27 member states.
The IMF also highlighted the fragmentation of Europe’s capital, labor, and energy markets. Former European Central Bank President Mario Draghi and the European Commission had previously pointed to this problem, linking it to slower investment and innovation.
Artificial intelligence could transform Europe’s labor market
According to the IMF, around 60% of workers in advanced European economies are employed in sectors that will be significantly affected by artificial intelligence.
For some workers, digital tools could boost productivity. Others risk losing their jobs as routine tasks become automated, particularly in occupations where the technology can replace rather than complement human labor.
More advanced economies are likely to reap the greatest benefits. They are better prepared to adopt artificial intelligence while also being more dependent on the technology. The distribution of benefits could be uneven not only among EU countries but also within them.
Rising demand for electricity
Data centers in Europe already consume approximately 3% of the continent’s electricity. As artificial intelligence becomes more widespread, this share could increase significantly.
Regions with large clusters of data centers are under the greatest pressure, including Frankfurt, London, Amsterdam, Paris, and Dublin. Their energy grids are already facing additional strain due to the concentration of technological infrastructure.
To address the problem, the European Union will need to invest in cross-border energy infrastructure and deepen the integration of the energy market, according to the IMF.
Risk of technological dependence
Europe may also face a new strategic dependency. The development of leading artificial intelligence models is currently concentrated largely in the United States and China.
To avoid relying excessively on foreign technologies, European countries need to make substantial investments in their own artificial intelligence industry. At the same time, deeper economic integration could help the EU distribute technological innovations more effectively, reduce inequality, and strengthen the region’s competitiveness.
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