ECB President Lagarde warns of capital outflow to US AI companies

At a panel discussion in the "Hofburg im Dialog" series in Vienna, Lagarde quantified Europe's lag with specific comparative figures. Last year, 59 significant AI models were developed in the United States, and 35 in China.

In contrast, France and the United Kingdom each produced only one. The difference in computing capacity – the ability to train and operate large AI models – is even more pronounced: the USA accounts for about 75 percent, while Europe only reaches about 5 percent.

To close this gap in data centers and chips, Lagarde estimates that up to 600 billion euros will be needed over the next ten years. A rapid spread of AI applications could, in turn, boost productivity growth in the Eurozone: according to Lagarde, up to four percentage points of additional growth are possible over a decade, a potential that the continent is currently leaving untapped.

If capacity building does not occur, administrations and companies risk remaining permanently dependent on American and Chinese providers, Lagarde warned according to reports from the event. This gap is also evident in the export controls for advanced models: Washington and Beijing dominate, while Europe's funding programs for its own models remain underfunded.

According to Lagarde's calculations, the necessary capital is actually available. Households in the Eurozone held almost ten trillion euros in bank accounts in May 2026, about one-third of their total financial assets.

For US households, this share is only eleven percent, as more money flows into stocks and funds there. However, deep, cross-border capital markets are largely lacking in Europe.

As a result, around 1.4 trillion euros of European savings flow abroad each year, some of which goes directly into the US technology companies behind the AI boom. According to Lagarde, 440 billion euros from Eurozone households are already invested in such companies; it is independently unverified how exactly this sum is composed.

Lagarde drew a historical parallel: even before 1873, European capital significantly financed the construction of railroads in the United States without participating in the long-term economic returns.

The high savings rate in bank deposits has long been considered by economists as a reason for this capital flight. European money tends to flow into deeper, more liquid US markets rather than into domestic growth companies that lack financing.

Van der Bellen called for a "real European capital market, a real capital market union" during the discussion and warned against the economic self-diminishment of the continent.

The EU Commission is already working on a Savings and Investment Union. It includes, among other things, simpler investment accounts for private investors, a reform of occupational pensions, and a "Listing Act" for cheaper IPOs.

For the fall of 2026, it additionally announced a legislative package on EU capital market infrastructures, which aims to facilitate cross-border investments. Starting in October, a review of the rules for occupational pensions and private retirement products will follow.

It is still open who will receive which additional obligations or reliefs in the future; the Commission refers to pending detailed proposals.

If progress in market integration and supervision falls behind schedule, it intends to proceed with a smaller group of willing member states if necessary. The Commission does not want to wait any longer for unanimity among all twenty-seven states.

It will be crucial whether the announced legislative package actually directs private savings into European data centers and chip factories. The Commission will take stock of the Savings and Investment Union in the second quarter of 2027.

If the inflow of private capital does not materialize, locations like Germany and Austria risk remaining permanently dependent on US providers for AI infrastructure – a risk that aligns with Germany's previous AI location decisions.