IMF warns AI could widen inequality across Europe

Artificial intelligence could lift European productivity by about 1% over five years but risks widening inequality, straining power grids and deepening the bloc's dependence on foreign technology, the International Monetary Fund warned in a paper prepared for EU finance ministers meeting in Dublin.reuters

The background note, presented at an informal gathering of European Union finance ministers on September 18–19, urged governments to complete the EU single market to spread AI's benefits more evenly across the 27-nation bloc.live.euronext+1

Workers Face Uneven Impact

The IMF estimated that around 60% of workers in advanced European economies hold jobs highly exposed to AI. While some stand to become more productive with AI tools, others face displacement as routine tasks are automated, the paper said, particularly in roles where AI is more likely to replace labor than complement it.reuters+1

The warning echoes concerns raised by former European Central Bank President Mario Draghi and the European Commission that Europe's fragmented capital, labor and energy markets are holding back investment and innovation. More advanced economies within the EU are expected to benefit disproportionately, the IMF said, because they are better prepared for and more exposed to the technology.live.euronext+1

Energy and Strategic Dependence

The paper flagged Europe's growing energy demands from AI infrastructure, noting that the continent's data centers already consume roughly 3% of its electricity — a figure set to rise sharply. Major technology hubs including Frankfurt, London, Amsterdam, Paris and Dublin are among the areas most exposed, with data-center clusters already straining local power networks. The IMF called on the EU to invest in cross-border grid infrastructure and deepen integration of the European energy market.reuters+1

The fund also warned that Europe risks developing a new strategic dependency, given that the United States and China dominate AI model development. Without substantial investment in its own AI industry, Europe could become reliant on foreign technology, the paper cautioned.live.euronext+1