Top economists warn Europe faces ‘permanent’ AI marginalization

A coalition of Europe's most prominent economists, politicians, and AI experts on Monday published a sweeping strategy warning that the continent risks permanent dependence on foreign AI powers unless European leaders act with urgency this year.

The Transformative AI Strategy, whose authors include Nobel laureate Philippe Aghion, former EU Commissioner Margrethe Vestager, ifo Institute President Clemens Fuest, and Canadian AI pioneer Yoshua Bengio, sets out more than 40 recommendations for EU Member States and the European Commission. The report lands as Europe controls less than 5% of the world's AI computing capacity and its frontier model developers generate less than 2% of the revenue of just two American competitors.ieu-monitoring+1

A Supply Chain Alliance and Infrastructure Push

Among the strategy's most concrete proposals is the creation of a Member State alliance to secure AI supply chains, leveraging Europe's existing chokepoints in the global semiconductor industry — most notably ASML ↘ 7.25%, the Dutch company that holds a monopoly on leading-edge chip-making equipment. The Hague, Berlin, Paris, and other willing capitals should formally establish this alliance by year's end, according to Euractiv, which reported that the group wants the alliance tied to the EU's existing anti-coercion instrument.euractiv

The strategy also calls for tripling Europe's share of global AI data centre capacity from roughly 5% to 15% by 2030. Monika Schnitzer, chair of the German Council of Economic Experts and a co-developer of the strategy, said Europe will need an additional 45 gigawatts of power for data centres by 2030, requiring investment of around €1.3 trillion.tech+1

"Without decisive action starting this year, Europe faces permanent marginalisation," Fuest said.ieu-monitoring

Draghi Adds His Voice

The strategy's release coincides with a Financial Times letter by former European Central Bank President Mario Draghi, who argued that Europe can achieve AI-driven growth without ceding control to foreign oligarchs — but only if it acts on the one layer where sovereignty remains possible: data. Draghi pointed to ECB scenarios suggesting rapid AI adoption could add 0.3 to 0.4 percentage points annually to European total factor productivity, a measure that has been near-flat since 2022.eualive+1

His practical prescription: pool purchasing power from large European companies to finance data centres under European control, citing a deal by firms including ASML, Capgemini, and Amadeus to buy computing capacity from France's Mistral. But he warned against channeling demand to a single champion, cautioning that Europe should not "swap Silicon Valley oligarchs for a home-grown version".eualive

A Closing Window

The strategy's authors stressed that every other major power — from Washington to Beijing — is treating AI with the urgency it demands. Vestager put it bluntly: "We must not allow Europe to become a playing field for foreign powers". With the European Commission still defining its next moves on AI and the Trump administration already restricting American AI companies' international releases, the coalition argues the window for Europe to shape its own future is narrowing fast.euractiv+1