Lagarde Sees AI as a Catalyst for Productivity Growth Across Europe

Christine Lagarde told policymakers and markets that artificial intelligence offers a meaningful opportunity to raise productivity across Europe, but that the outcome is neither automatic nor immediate. She described AI as an efficiency amplifier whose macroeconomic payoff depends on timely private capital reallocation, public digital infrastructure and large‑scale workforce reskilling. Lagarde cautioned that if investment and skills upgrading lag, productivity improvements could remain concentrated in a small set of firms, weakening competition and limiting wage growth. She flagged a related financial dynamic: outsized capital deployments into specialized compute, data centers and other AI infrastructure have concentrated procurement through a narrow group of hyperscalers and suppliers, amplifying vendor lock‑in and execution risk. That capital intensity can support headline demand now but, without broadened wage income, risks creating an unstable basis for consumption if investment assumptions about future revenue and cost declines do not materialize. To avoid such outcomes, Lagarde recommended a policy mix that combines incentives for private adoption, targeted public investment in open infrastructure, standards to reduce vendor lock‑in, and more robust labor‑market support to ease transitions. She referenced emerging policy experiments — from small guaranteed‑income pilots to retraining stipends — as complementary short‑term tools that can stabilize households while reforms bolster supply‑side diffusion. From a monetary policy perspective, Lagarde said central banks will treat any sustained AI‑driven productivity shift as a key determinant of inflation and the appropriate stance of policy, while noting timing and magnitude remain uncertain. For business leaders she urged coordinated spending on technology, managerial change and worker training rather than relying on passive productivity gains. For European governments, the message was clear: choices on competition enforcement, public infrastructure and education will shape whether AI raises living standards broadly or amplifies inequality. Overall, Lagarde reframed AI from a sectoral technology story into a macroeconomic governance challenge that requires both market and public‑policy responses to translate innovation into durable, inclusive growth.