IMF Says AI Could Help Europe Grow, But May Cause Problems Too

A major international finance group says that artificial intelligence, or AI, could make Europe's economy about 1% more productive over the next five years. But the International Monetary Fund, known as the IMF, also warned that AI could create serious problems if European countries don't work together. The IMF shared these findings at a meeting of European Union finance ministers in Dublin, Ireland, on September 18 and 19.

The IMF said that the benefits and costs of AI will probably not be shared equally. Some countries, regions, and workers will gain more than others. Richer and more advanced countries are expected to benefit the most because they are already better prepared for AI technology. This means poorer or less developed parts of Europe could fall further behind.

About 60% of workers in advanced European countries have jobs that are strongly affected by AI. Some of these workers could become more productive by using AI tools to help them do their jobs faster and better. But others might lose their jobs entirely, especially those who do routine or repetitive tasks that AI can handle on its own.

AI also uses a huge amount of electricity. The IMF noted that data centers in Europe already use about 3% of all the electricity on the continent. As AI grows, that number will rise quickly. Cities like Frankfurt, London, Amsterdam, Paris, and Dublin are already feeling pressure on their power grids because of large clusters of data centers nearby.

To handle the growing need for energy, the IMF said European countries should build better power connections across their borders and work more closely together on energy. Right now, Europe's energy markets are divided, which makes it harder to share power where it is needed most. Fixing this would help the whole continent handle AI's growing electricity demands.

The IMF also raised a warning about foreign technology. Right now, the United States and China are the world leaders in building AI systems. If Europe does not invest heavily in its own AI industry, it could become too dependent on technology made in other countries. That kind of dependence could be a big problem for Europe's security and independence.

To solve many of these challenges, the IMF said European countries need to work more closely together as a group. Completing the EU's 'single market' — a system where goods, money, workers, and services can move freely across all 27 member countries — would help spread AI's benefits more evenly. Former European Central Bank President Mario Draghi and the European Commission have also said that Europe's divided markets are slowing down investment and new ideas.