AI adoption in Europe

The European Central Bank (ECB) notes that while advanced AI model development is concentrated in the United States and China, AI adoption is becoming a critical factor for productivity growth in the euro area. Expenditure on AI-related technologies is providing a notable stimulus to the region’s economy, with European firms playing an active role in the global AI supply chain. The ECB’s analysis draws on surveys and data to assess how AI integration is reshaping investment patterns and economic activity across sectors.

Digital investment in the euro area has risen by 73% in real terms since 2014, increasing from 2.3% to 3.3% of GDP. This growth reflects a structural shift, with a majority of investment directed toward intangible assets such as software and research and development rather than physical infrastructure like data centres. The ECB’s Corporate Telephone Survey indicates that AI has contributed approximately 10% to firms’ capital expenditure plans in the current year.

ECB data show that AI-related trade in goods has been a key driver of global trade over the past year, with European firms contributing to the supply chain for AI infrastructure. Exports and imports of AI-related goods, particularly core data centre components, have expanded rapidly in the euro area. The ECB attributes this growth to increased demand for hardware linked to AI compute, storage, and networking capabilities.

The ECB reports that AI-related price increases have contributed to higher goods inflation but have had a limited impact on headline inflation due to the relatively small weight of AI-exposed goods in the consumer price index. The share of AI-related goods in non-energy industrial goods is 13.3%, while their contribution to the Harmonised Index of Consumer Prices (HICP) is 3.4%. Software licence imports from the United States have surged since 2022, reflecting greater reliance on AI technologies developed by leading US firms.