How Europe can make the most of AI

Think tank: Centre for European Reform

Author(s): Zach Meyers; John Springford

September 14, 2023

This report from UK think tank the Centre for European Reform looks at the low take-up of AI technology in Europe.

As it finalises the AI Act, many EU politicians are fretting about the risks and dangers of AI. But the EU faces a bigger problem: low take-up of the technology. China and the US, fuelled by state subsidies, are challenging the EU’s strengths in advanced manufacturing. And in services, which now account for about 70 per cent of the EU’s output, European companies are less innovative than American ones. To maintain its competitiveness, the EU needs to improve its productivity. Artificial intelligence (AI) offers a promising way to do this.

In a new Centre for European Reform report, ‘How Europe can make the most of AI’, Zach Meyers and John Springford argue that European policy-makers should focus on getting businesses to adopt the technology. Europe may not itself be an ‘AI superpower’: most ‘foundation’ AI models that will later be adapted for particular businesses are American. But European firms have been slow to adopt new technologies, and governments can achieve higher economic growth by helping to disseminate existing technologies, rather than focusing on inventing cutting-edge ones. To speed dissemination, European policy-makers should focus on three things.

First, they should ensure there is vigorous competition between companies providing AI foundation models. Antitrust authorities should not assume AI will suffer the same competition problems that plagued other tech markets. But authorities do need to equip themselves with the skills, knowledge and tools to act quickly if AI markets consolidate too much.

Second, European governments should support AI deployment, for example with tax incentives and immigration rules that help firms hire tech-savvy workers.

Third, the EU needs to focus on giving firms certainty about the legal consequences of using AI. The EU’s upcoming AI Act has promise – but EU law-makers should consider ways to ensure low-risk uses of AI are as easy for businesses to adopt as possible.