An International Monetary Fund research paper states that artificial intelligence might increase European productivity by roughly 1% over a five-year period, but unless governments strengthen economic integration, there is a risk that inequality will increase, power networks will be strained, and reliance on foreign technology will grow.
The background note, which was written for an unofficial gathering of European Union finance ministers in Dublin on September 18–19, stated that the advantages and disadvantages of artificial intelligence would probably be dispersed unevenly among nations, areas, and laborers.
It claimed that the completion of the EU single market would contribute to a more equitable deployment of AI and its benefits throughout the 27-nation union.
The report underscores worries expressed by the European Commission and former European Central Bank President Mario Draghi that investment and innovation are being impeded by Europe’s fragmented labor, capital, and energy markets.
According to IMF estimates, almost 60% of workers in developed European countries work in fields where artificial intelligence is a major factor.
It stated that while some people could increase their productivity with AI tools, others feared displacement as regular tasks became automated, especially in jobs where AI is more likely to replace labor than to complement it.
The report said data centers in Europe currently account for about 3% of the continent’s electricity consumption, and as AI use grows, demand will rise significantly.
Local power networks are already under pressure from data-center clusters in major technology hubs like Frankfurt, London, Amsterdam, Paris, and Dublin.
According to the IMF, the EU should strengthen the integration of the European energy market and make investments in cross-border grid infrastructure to meet it.
The study also cautioned that because the US and China dominate the development of AI models, Europe runs the risk of becoming another strategic dependency.
It stated that to avoid becoming dependent on foreign technology, Europe would need to make large investments in its own AI sector.
The benefits of AI are also expected to be unevenly distributed across and within the EU. Because they are more exposed to and ready for the technology, more developed economies are expected to gain disproportionately.
