IMF tells EU ministers AI could boost growth but increase economic strains

The paper ​echoes concerns raised by former European Central Bank President Mario Draghi and the European Commission that Europe's fragmented capital, labour and energy markets are holding back investment and innovation.

Read More:Gemini hacked three companies in first known breakout by Google's AIThe IMF estimated that around 60% of ​workers in advanced European economies are employed in occupations highly exposed to AI.

While some ​could become more productive through AI tools, others faced displacement as routine tasks become automated, it said, ‌particularly ⁠in jobs where AI is more likely to replace labour than complement it. The paper said Europe's data centres already consume roughly 3% of the continent's electricity and that demand would rise sharply as AI use expands.

Major technology hubs such as Frankfurt, London, Amsterdam, Paris and ​Dublin are among the ​areas most exposed, with ⁠data-centre clusters already putting pressure on local power networks. To address that, the EU should invest in cross-border grid infrastructure and deepen integration ​o.f the European energy market, the IMF said.

The paper also warned that ​Europe risks ⁠developing another strategic dependency because the US and China dominate the development of AI models. It said Europe would need significant investment in its own AI industry to avoid becoming reliant on ⁠foreign ​technology.

AI's gains are also likely to be unevenly distributed ​across and within the EU, the paper said. More advanced economies are expected to benefit disproportionately because they are ​better prepared for and more exposed to the technology.