IMF warns AI could lift EU output modestly while widening inequality and energy strain

In a paper presented to EU finance ministers in Dublin, the International Monetary Fund projected that artificial intelligence could add roughly 1% to European productivity over a five-year horizon. The IMF cautioned that the gains will not be evenly distributed, with more advanced economies and certain regions likely to capture a larger share, while workers in highly exposed occupations face a heightened risk of displacement.

Around 60% of jobs in advanced European economies are considered highly AI-exposed, and the paper notes that routine tasks are most vulnerable. Expanding AI use is also expected to increase electricity demand, as data centres—currently using about 3% of Europe’s power—will need more capacity, putting pressure on local networks in cities like Frankfurt, London, Amsterdam, Paris and Dublin. To mitigate these challenges, the IMF recommends investing in cross-border power infrastructure and deeper integration of the EU energy market, as well as substantial funding for a home-grown AI industry to reduce strategic reliance on the United States and China.