ECB’s Lane says AI offers growth gains but raises financial risks

ECB chief economist Philip Lane said artificial intelligence could raise Europe’s productive capacity and help offset a shrinking working-age population, while warning that the global investment boom is tightening euro area financing conditions.

Speaking at the International AI Summit in Dublin on October 13, Lane said firms are expected to devote about 10% of their investment to AI this year. AI-related lending accounts for roughly a quarter of recent growth in credit to businesses, he said.

ECB surveys show that 52% of workers now use AI at work, up from 26% in 2024. A fourth-quarter 2025 survey found that 64% of firms used AI experimentally or moderately, while 7% reported significant use.

Lane said adoption is growing rapidly, but a material effect on aggregate productivity is not yet detectable. Reported time savings are concentrated in particular sectors and tasks, including coding.

He said employment trends have not changed substantially overall, although subdued hiring plans are affecting new graduates. The prospect of replacing some workers with AI could weaken wage bargaining and reduce labor’s share of income, he added.

Europe’s AI expansion remains smaller than those in the United States and East Asia. Lane said US digital investment grew twice as fast as euro area investment over the past two years, while the US hosts 75% of global AI computing capacity, compared with Europe’s 5%.

Lane said global AI spending and expectations of future productivity gains are plausibly contributing to higher long-term interest rates. Spillovers into European bond markets represent a material tightening of financial conditions relevant to ECB policy, he said.

He also warned that high AI equity valuations and rising related debt issuance pose financial stability risks if expected technological progress or investor sentiment weakens. The ECB is monitoring these exposures and associated cyber risks.