IMF: AI could boost European productivity by 1%, but risks widening inequalities

Productivity in Europe could increase by around 1% over the next five years thanks to artificial intelligence. However, the technology could also widen inequalities, strain power grids and make the continent more dependent on foreign technological solutions.

These assessments were presented by the International Monetary Fund (IMF) in a paper prepared for the informal meeting of European Union finance ministers, held in Dublin on September 18 and 19.

The IMF predicts that the costs and benefits associated with artificial intelligence will not be distributed equally among countries, regions and workers. According to the institution, completing the EU single market would enable the use of the technology and its benefits to spread more evenly across the 27-member bloc.

According to IMF estimates, around 60% of workers in advanced European economies are employed in occupations with high exposure to artificial intelligence. Some could increase their productivity through AI tools, while others could lose their jobs as a result of the automation of routine tasks.

The paper emphasizes that the threat is greater in occupations where artificial intelligence is expected to replace human input rather than support or complement it.

The impact on energy is another source of concern. European data centers currently consume around 3% of the continent’s electricity, while the expansion of artificial intelligence is expected to significantly increase demand.

Pressure on local power grids is already being felt in cities with a high concentration of data centers. Frankfurt, London, Amsterdam, Paris and Dublin are among the areas most exposed to this problem.

To manage the situation, the IMF recommends that the European Union increase investment in cross-border electricity grid infrastructure and further strengthen the integration of the European energy market.

The paper also raises concerns about another strategically important dependency. The development of artificial intelligence models is dominated by the US and China, meaning Europe risks becoming increasingly reliant on foreign technologies unless it increases funding for its own AI industry.

The IMF notes that even within the European Union, the benefits of artificial intelligence are likely to be uneven. More developed economies are expected to receive the largest share, as they have higher levels of preparedness and exposure to the technology.