ECB’s Philip Lane says AI is reshaping the euro area economy, but Europe is still playing catch-up

Euro area firms are pouring money into artificial intelligence, yet the region trails the US and China on computing power and model development The European Central Bank has a new variable in its economic models, and it isn’t oil prices or wage deals. It’s artificial intelligence. Philip R. Lane, a member of the ECB’s Executive Board, has spent much of 2026 arguing that AI is already driving economic activity in the euro area. He also says it could lift productivity and growth over the long run, though that payoff hasn’t fully arrived yet. Lane made the case across several speeches, including a keynote on AI adoption in Europe on March 23 and a dinner address on October 13 at the International AI Summit in Dublin. The message was consistent. Europe is spending real money on AI, but it is spending from behind. Follow the money Start with investment. Euro area firms are projected to put around 10% of their total investment into AI in 2026. The banking data tells a similar story. According to Lane, AI-related lending accounts for roughly one-quarter of recent credit growth to euro area companies. Lane also pointed to Europe’s role beyond its borders. European firms sit inside the glob...