Europe and AI: €191 Billion at Stake by 2030

The Adoption of AI in Europe: An Untapped Potential

By 2025, it is expected that 54% of European companies will have integrated artificial intelligence into their operations. However, only 22% of them will use this technology as a true lever for transformation. This gap could cost Europe €191 billion in unrealized value by 2030. Indeed, while 4.4 million European companies are projected to adopt AI for the first time by 2025, the advanced use of this technology remains limited. This lack of commitment to advanced AI usage could hinder the continent's innovation and competitiveness.

The momentum towards AI adoption is real, with a European company adopting AI every seven seconds. However, this adoption does not translate into sustainable transformation. While 54% of companies now use AI, up from 33% two years ago, advanced adoption is stagnating. Investments in AI have increased by 26% this year, but most companies remain stuck in the early adoption phase, using AI only for basic tasks. Only 22% of companies have progressed to advanced usage, where AI transforms business processes and enables the development of new products and services. This figure has barely changed since last year, although companies that advance in AI adoption are 55% more likely to see significant productivity gains.

Nowhere is this more evident than in agentic AI, systems that not only assist but can autonomously plan and execute complex end-to-end workflows. Only 24% of European companies have heard of it, and just 3% of those familiar with it have deployed it. The transition from dial-up internet to 3G took a decade. The leap from generative AI to agentic AI has taken less than a year.

Major Obstacles to Advanced AI Adoption

A study conducted among 34,000 companies and citizens in 17 European countries highlighted three main barriers to advanced AI adoption:

• Regulatory Fragmentation: Mario Draghi pointed out that Europe has a single market for toothpaste but not for AI. Companies must navigate 27 different regulatory systems, complicating the scaling of AI. This regulatory complexity consumes 42% of technology budgets, a rate significantly higher than in Japan. More than 80% of companies expect these costs to rise further. 41% of companies cite this fragmentation as a major obstacle to scaling their AI projects, and 68% of companies say they do not understand their obligations under the European AI Act.

• Lack of Skills: More than half of companies report shortages of digital skills, hindering AI adoption. While citizens want to upskill, they face obstacles such as cost, lack of time, and insufficient information about available programs. These are solvable issues.

• Insufficient Funding: 43% of companies do not have a dedicated budget for AI. Startups, in particular, struggle to access the capital needed for their growth. For startups, the challenge is even more acute: access to growth and development capital remains a bottleneck.

European Startups Seeking Better Opportunities

In light of these challenges, 40% of European startups are considering relocating outside of Europe. They seek better access to funding, more favorable regulations, and increased capacity to expand internationally. Among the fastest-growing companies, one in two startups is contemplating packing up. This trend could deprive Europe of the talent and technological leaders of tomorrow. When these companies relocate, Europe loses jobs, tax revenues, supply chains, and the next generation of tech leaders. Currently, 78% of startups are ready to adopt next-generation technologies, paving the way for Europe's competitive future.

Priority Actions to Unlock AI Potential

To overcome these obstacles, Europe must adopt a coordinated and prioritized approach:

• Promote AI Adoption in the Public Sector: Companies are more likely to increase their use of AI when the government leads the way. The UK's Department for Work and Pensions uses generative AI to identify the most vulnerable cases among 25,000 daily letters, achieving a success rate of 91%. The European Parliament uses AI to make over 2.1 million official documents more accessible, reducing search time by 80%.

• Harmonize Regulations: A single market for digital innovation would free up resources for innovation. Today, 42% of technology budgets are wasted navigating 27 different regulatory systems. Harmonization would free up considerable resources for what truly matters: innovation.

• Enhance Skills and Capabilities: Integrate AI into education and support SMEs and regions in their transition to AI. This includes incorporating AI into education, launching public-private partnerships for upskilling, and funding the development of AI strategies for businesses.

A Call for Collective Action

Europe has a solid foundation in research and technology, with a tech sector valued at €4 trillion. However, to remain competitive, it must act quickly and decisively to remove the barriers to AI adoption. Companies, technology providers, and policymakers must collaborate to make Europe a global leader in AI. The evidence is already there: Lovable achieved unicorn status in eight months, Iktos accelerates research on rare diseases, and Ericsson and Mercedes-Benz automate critical processes on a global scale.

Talent, ambition, and technology are present: the question is not whether Europe has what it takes, but whether Europe will act decisively while the window remains open. For business leaders, the challenge is to change their mindset: no longer asking where AI can cut costs, but imagining how they would build their business today if AI were at its core. This question will distinguish leaders from basic AI users.

Technology providers also have a role to play, as innovation advances fastest when companies can access the best available technologies, freely combine tools, and shift models as their needs evolve. In this regard, 82% of European companies tell us that having access to global technology is important for their AI adoption.

For policymakers, the imperative is clear: make Europe the best place to grow, not just to start. The structural obstacles are known, the solutions are within reach; what is lacking is coordinated action.

This is not just a technological revolution; it is a cultural revolution that starts with the human element. The window is open: the choice to enter the AI industrial revolution is ours.