AI Adoption In Europe

Keynote speech by Philip R. Lane, Member of the Executive Board of the ECB, at the Federal Reserve Bank of San Francisco Economic Research Symposium on AI and the economy

My aim today is to describe how AI is reshaping the euro area economy.^[1]

Although the development of frontier AI models is primarily taking place in the United States and China, the adoption of AI will be a key determinant of European productivity growth in the coming years, while expenditure on AI adoption also currently constitutes a significant stimulus to the euro area economy.^[2]

In addition, European firms are part of the global AI supply chain, while European investors are contributing to the funding of the global buildout of AI infrastructure through equity and debt markets and the banking system.

I will also describe the key patterns we see in the data, with a primary focus on how the surveys conducted by the ECB can provide insights into the AI adoption process and the implications for the financial system.^[3]

^[4]

Aggregate trends

Digital investment in the euro area has expanded by 73 per cent in real terms since 2014, increasing from 2.3 per cent to 3.3 per cent of GDP (Chart 1a). While digital investment has grown far more quickly in the United States, the surge in digital investment (with an estimated clear acceleration since 2024) marks a distinct shift in the structure of the euro area economy.^[5]

As shown in Chart 1b, in the euro area digital investment has primarily been in intangible assets, while investment in data centres has constituted a relatively small share.^[6]

In the ECB Corporate Telephone Survey, firms report that AI has added about 10 per cent to their capital expenditure plans this year. AI-related demand has helped activity to hold up over the last two years - as reflected by the contributions of the "computers and other electronics" and "information and communication services" sectors to total market production (Chart 2a). As illustrated in Chart 2b, Purchasing Managers' Index (PMI) indicators show that output, employment and new orders have developed considerably more favourably in the technology equipment subsector than in other manufacturing subsectors. For services, the software subsector has performed better than other services sectors in terms of output, albeit not in terms of employment and new orders.

AI has been the main driver of global goods trade over the last year (Chart 3a). European firms are contributors to the global AI supply chain. Table 4 shows that AI-related exports and imports are growing quickly in the euro area, especially in relation to core data centre goods, which contain directly deployed hardware components related to AI compute, storage and networking capacity. Possibly related to differences in composition, the increase in AI import prices in the euro area is more muted than for the other major economic regions (Chart 3b). Chart 5 shows that, while AI-related price increases have contributed materially to the upward shift in goods inflation, the impact on headline inflation is limited owing to the relatively low weight of AI-exposed goods in the consumer price index (13.3 per cent in the non-energy industrial goods subcomponent and 3.4 per cent of the HICP).

In relation to trade in services, Chart 6 shows a significant upward movement in software licence imports from the United States since 2022, consistent with increased purchasing of AI licences from the leading US firms.^[7]

European investors are also major purchasers of US technology-related equities (Chart 7). Listed European tech firms have also benefited from rising stock market valuations (Chart 8a). Stock returns, revenue growth, operating margin growth and earnings per share growth are all increasing in AI-intensity (Chart 8b).

US firms (especially the hyperscalers building out the AI infrastructure) have been large-scale issuers of euro-denominated bonds (reverse Yankees). So far, the available data show that purchases by European investors of euro-denominated bonds issued by US firms have increased alongside a decline in their purchases of US Treasury bonds (Chart 9a).^[8]

The AI boom has also led to large initial public offerings (IPOs), including the SpaceX IPO in the second quarter of 2026. In this context, euro area investors have stepped up their acquisitions of US equities, and at the same time they have lowered their purchases of other foreign equities (Chart 9b). Overall, these developments, together with analysis of credit spreads and the book-cover ratios of euro area corporate issuers and credit spreads, suggest only limited crowding-out up to now.^[9]

Finally, lending to AI-related firms has contributed substantially to aggregate credit growth. This is evident in Chart 10, which shows that the ECB Broad Intermediate Gauge (ECB-BIG) index would have indicated a tighter credit environment in the absence of AI-related lending. In response to a dedicated question in the October 2026 bank lending survey on the significance and impact of AI adoption, several banks indicated that they expect a gradual but sustained increase in loan demand to finance digital infrastructure, particularly data centres. Banks also reported that their current and prospective AI-related lending is more likely to target infrastructure providers rather than software developers or firms adopting AI, with this focus expected to become more pronounced over the coming months.

I will now turn from aggregate trends to firm-level and household-level surveys on AI adoption before examining how AI is being funded by the financial system.

AI adoption

The pace of AI adoption by European firms has trended upwards since the launch of ChatGPT in late 2022. Chart 11 shows that the proportion of firms citing AI-related topics in earnings calls has expanded from about 10 per cent to about 40 per cent over this period. A similar pattern is evident in our Corporate Telephone Survey.

The earnings calls data show significant variation across sectors.^[10]

The left panel of Chart 12 shows that there has been an increase in the range of sectors in which firms frame AI as an innovation that expands the technology frontier. Although less widespread, there has also been an increase in the range of sectors in which AI is seen as potentially reducing costs by improving production efficiency (right panel).