Lagging Behind in Artificial Intelligence: Lagarde and Van der Bellen Call for a European Capital Markets Union

Lagging Behind in Artificial Intelligence: Lagarde and Van der Bellen Call for a European Capital Markets Union

ECB President Lagarde warned that a lack of venture capital financing threatens the continent’s technological independence, as reported by ORF. She estimated that up to 600 billion euros in investment would be needed over the next ten years to close the gap in data centers and semiconductor chips.

Lagarde drew historical parallels to the “Gründerzeit” period before 1873, when European savings financed the construction of the U.S. railroad network. A similar phenomenon is unfolding today in the technology sector: households in the eurozone currently hold around 440 billion euros in U.S. technology companies, while, due to the lack of deeply diversified financial markets in Europe, approximately 1.4 trillion euros in savings flow abroad each year.

At the same time, Lagarde warned against a dangerous dependence on foreign providers: If AI systems come to control key sectors such as logistics, finance, and tax audits in the future, a withdrawal of access by third-country trading partners would constitute a massive lever of pressure. Yet the rapid deployment of AI holds enormous potential: It could boost productivity growth in the eurozone by up to four percent over a decade, thereby counteracting the ongoing labor shortage.

A Call Against “Self-Diminishment”

As reported by ORF, Federal President Alexander Van der Bellen emphasized to numerous representatives from the business community that, given strained public finances, private investment is the key to transformation. He called for more confidence and courage: “We need a genuine European capital market, a genuine capital markets union. Let’s not make ourselves smaller than we are,” said the head of state, appealing against hasty “self-limitation.” Business leaders must now actively invest, create jobs, and drive innovation.

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Business Community Calls for Single Market Reforms and Venture Capital

In the subsequent panel discussion, industry representatives and experts outlined the most pressing obstacles facing Europe as a business location. Martin Kocher (Governor of the National Bank), for example, emphasized that venture capital alone is not enough. Europe needs reliable framework conditions, a secure energy supply, and significant relief for businesses. Regulation must promote innovation rather than stifle it.

Sabine Herlitschka, CEO of Infineon Austria, warned against rampant bureaucracy in the EU single market and called for Europe to strategically leverage its strengths in key technologies such as microelectronics. Regulation must serve as a lever for competitiveness in the global market. Furthermore, access to affordable, green energy is a prerequisite for the transformation. Johannes Brandstetter, co-founder of the AI startup Emmi AI, pointed to serious problems with scaling European AI companies. While early-stage financing is available, there is a lack of venture capital in later growth phases, which continues to drive European founders to the U.S. His appeal was therefore: “We need to think much bigger.”

Presidential Chancellery of Austria