European Central Bank President Christine Lagarde declared on Wednesday that Europe's fragmented single market cannot support its global AI ambitions. Speaking in Geneva to the International Business Council of the World Economic Forum, Lagarde insisted that Europe must complete its single market and integrate capital markets to compete with global giants such as the US and China. This push for unfettered capital movement stands in stark contrast to the EU's increasingly militarized and fragmented approach to human mobility.
Lagarde warned that Europe "largely missed out on the first digital revolution, as the commercial gains from the spread of information and communication technologies were captured disproportionately elsewhere." She added, "We cannot afford to repeat that experience with artificial intelligence (AI), the second digital revolution," which she described as having "the full potential to compete." Her analysis mirrors that of her predecessor, Mario Draghi, who in 2024 delivered a seminal report on relaunching EU economic competitiveness, identifying AI as Europe's "last chance" to rejoin the international tech race. Following Draghi’s recommendations, the European Commission has launched several initiatives to promote AI uptake in strategic sectors and finance "massive data centres" in an effort to develop "new generations of the technology."
Capital's Free Movement, Human Walls
Access to capital, Lagarde argued, limits Europe's AI investments. She noted that EU businesses primarily rely on bank credit, while national capital markets remain too limited. Legal fragmentation, she explained, creates practical barriers for firms, increasing costs and timings, and hindering their ability to operate across borders. A European company, she stated, faces more hurdles to scale up than a US-based rival, potentially forcing it to seek non-EU capital markets. "Scale is particularly important as new technologies reshape the sources of productivity growth," Lagarde asserted.
This emphasis on removing barriers for capital and corporations highlights the hypocrisy of a bloc that erects ever-higher walls against human beings. While capital is encouraged to flow seamlessly across borders, workers and asylum seekers are met with biometric databases, detention centres, and violent pushbacks. The EU's commitment to "free movement" is clearly reserved for capital, not for the people criminalised for seeking survival or opportunity.
The Neoliberal Blueprint for AI
Lagarde maintained that Europe possesses the "full potential to make the most of new technologies," citing "encouraging signs that European firms are investing in AI." She pointed out that the EU, representing around 6% of the world's population, accounts for as many as 15% of its researchers and produces almost one-fifth of the world’s most-cited scientific publications. Survey evidence, she added, suggests euro area firms expect to allocate an average of 9% of their total investment to AI this year.
The challenge, she argued, is transforming this knowledge into "commercial success" that spreads technology across the economy. "Too often, the barriers that prevent firms from scaling also hold back that diffusion," she concluded. This vision of "commercial success" for AI, driven by corporate interests, risks further entrenching the existing power structures that benefit a few while excluding many. The development of "new generations of technology" and "massive data centres" can easily be co-opted by the border regime, enhancing surveillance and control over migrant populations.
Lagarde urged the acceleration of key reforms under negotiation in Brussels, specifically the Savings and Investment Union and single market integration reforms like EU Inc. The Savings and Investment Union, a legislative package, aims to create more integrated capital markets. Legislators hope for a deal by the end of the year, though "significant divisions" remain among EU member states, particularly concerning the centralised supervision of capital markets. EU Inc., a Commission proposal, offers an optional, EU-wide company structure. It aims to make it faster and cheaper for firms, especially startups, to incorporate and operate across borders, bypassing the "current patchwork of 27 national systems." This file, also under the single market integration umbrella, is expected to be approved by the end of the year. These reforms prioritize corporate mobility and profit over human rights and solidarity, solidifying the EU's role as a neoliberal border regime.