AI can significantly boost productivity across various sectors, foster growth, and enhance Europe's competitiveness. A new report by Implement Consulting Group, commissioned by Google, estimates that generative AI could add EUR 1.2–1.4 trillion to the EU's GDP, representing an 8 percent increase over ten years, said Matt Brittin, President of Google Europe, the Middle East, and Africa, in a blog post on October 1, 2024.
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AI Adoption in Europe
This ability of generative AI to boost economic growth and competitiveness is particularly significant for Europe, the report said. The report emphasises that AI can significantly improve productivity across various sectors, with 74 percent of European workers acknowledging the positive effects of generative AI, and 43 percent of workers in European countries expecting AI to have a positive impact on their jobs.
The report estimates that the majority (61 percent) of jobs will be augmented by generative AI, while around 7 percent face a long-term transition to automation, Google said.
Google also cited Mario Draghi, who noted, “With the world on the cusp of an AI revolution, Europe cannot afford to remain stuck in the ‘middle technologies and industries’ of the previous century.” To catch up, the EU must unlock its innovative potential.
Mario Draghi, a former President of the European Central Bank and a prominent European economist, was tasked by the European Commission with preparing a report outlining his personal vision for the future of European competitiveness.
Google's EU AI Opportunity Agenda
Seizing this opportunity, Google also released its EU AI Opportunity Agenda, a series of recommendations for governments to harness the full economic and societal potential of AI. The Agenda outlines the need to revisit Europe's workforce strategy and to invest in AI infrastructure, research, adoption, and accessibility, according to Google.
To capitalise on the potential of AI, Google's report outlines several strategic recommendations, including:
- Investment in R&D: The EU must prioritise research and development in AI to support home-grown technology companies and startups, Google said.
- Infrastructure Enhancement: Increased funding is needed for high-performance computing technologies, data centers, and renewable energy to enable AI innovation at scale.
- Skills Development: A revitalised European Skills Agenda should focus on integrating AI education into school curricula, ensuring all demographics benefit from technological advancements.
- Widespread Adoption: Outreach initiatives targeting traditional industries and small businesses can facilitate AI adoption, supported by government procurement policies.
- Regulatory Reform: Simplifying the complex regulatory environment will encourage innovation and streamline compliance for AI initiatives.
Google states that, through its initiatives and other partnerships, it is committed to working with others to get this right. "In many ways, Europe is well-positioned to seize this moment. AI has the potential to help us build a better, fairer, healthier society — and to support competitiveness and inclusive growth," said Google in a blog post.
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Insights from McKinsey: Europe's AI Opportunity
Interestingly, it’s not just Google; McKinsey & Company, a global management consulting firm, also released a report on the same day titled "Time to Place Our Bets: Europe's AI Opportunity."
The report highlighted that a three-pronged approach—focusing on adoption, creation, and energy—is required to assess Europe's competitiveness in the emerging generative AI (gen AI) economy. Adopting a holistic approach to fully capitalise on gen AI’s potential could boost European labour productivity by up to 3 percent annually through 2030, it said.
McKinsey noted that, with the technology still in its early stages and much of its productivity gains yet to be unlocked, the window of opportunity for Europe remains wide open.
The report points out that Europe is a challenger in three segments: foundation models, AI applications, and AI services. However, it holds less than 5 percent market share in the remaining four: raw materials, AI semiconductor design, AI semiconductor manufacturing, and cloud infrastructure and supercomputers.
Additionally, McKinsey’s report states that generative AI could add USD 575.1 billion to the European economy by 2030. The productivity potential of generative AI spans various sectors, including consumer goods and retail, construction and real estate, professional services, transportation, advanced manufacturing, healthcare and pharmaceuticals, banking and capital markets, high tech and software, chemicals and materials, energy and utilities, media and entertainment, telecommunications, insurance, and agriculture.
As an adoption scenario, McKinsey highlighted AI-driven drug discovery in pharmaceuticals as a high-impact use case.
According to the 2023 McKinsey Global Survey on the state of AI, Europe lags behind North America in generative AI adoption by 30 percent, with 40 percent of surveyed North American companies reporting adoption of generative AI in at least one business function, compared to about 30 percent of surveyed European companies.
"Europe's participation in the current AI boom is important not merely for today’s gains but also to secure a foothold in future technological advances," McKinsey stated.
The EU AI Pact: A Commitment to Responsible AI
Before the release of Google and McKinsey reports, big tech companies, including Google, Microsoft, OpenAI, Nokia, Vodafone, Samsung, Amazon, Cisco, Deutsche Telekom, IBM, KPN, Logitech, Qualcomm, Telefonica, Telenor, Orange, and India’s IT service companies Tata Consultancy Services, Infosys, and Wipro, are among more than 100 companies that have voluntarily joined the European Union's (EU) Artificial Intelligence (AI) Pact, as announced by the European Commission on September 25.
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By joining the pact, these companies are signalling they'll voluntarily work to ensure compliance with the EU’s upcoming AI Act. Signatories pledge to implement an AI governance strategy, map high-risk AI systems, and promote AI literacy among their staff.
In addition to these core commitments, over half of the signatories have made additional pledges, including ensuring human oversight, mitigating risks, and transparently labelling certain types of AI-generated content, such as deepfakes. The signing of the EU AI Pact by companies across the globe showcases the support that its framework, with three core actions, has garnered from various sectors.
Alongside these efforts, the European Commission is striving to boost innovation in AI across key European sectors such as healthcare, energy, automotive and transport, defence and aerospace, robotics and manufacturing, and clean and agritech.
The AI Act, which has been partially in effect since August 1, 2024, will be fully applicable in two years, with certain provisions activated sooner.
