Notes from the AI frontier: Tackling Europe’s gap in digital and AI

Article Synopsis :

Europe is trailing behind the global leaders in the development of artificial intelligence (AI) technologies. And unless these companies get with the programme, the gap could become wider, says this McKinsey Global Institute paper.

Europe must address digital gap 

Digitisation is for AI to become more widely adopted. However, Europe’s digital gap has not been closed in recent years and only two European companies feature in the worldwide digital top 30. It’s understandable when you consider that only 10% of the world’s digital unicorns are based in Europe.

True, Europe has a quarter of AI startups, but China and the US are beating it hands down when it comes to early-stage investment. If you discount smart robotics, Europe lags the United States in its spread of AI, with fewer than half of European businesses adopting a single piece of AI technology. This could be worth some €2.7 trillion – or 19% – to output by 2030 if only leveraged its position.

The opportunity is there, but in a narrow range of sectors. With the exception of Scandinavia and the UK, Europe is behind the US in AI terms, simply because it isn’t ready for it. Closing the “current readiness gap” just with the US could add another 0.5% (€900 billion) to Europe’s GDP growth by 2030, says the McKinsey paper.

Delay could put Europe further behind other regions, though it comes with some risks.

It will disrupt parts of the labour market and it could be misused. As AI is adopted, so unemployment and income wage inequality may increase as the shift in skills occurs. Though careful management could result in enough new opportunities to replace the jobs lost by AI’s implementation.

In order to achieve this, there are five things Europe must prioritise:

• the continued development of a Europe-wide, vibrant ecosystem of deep tech and AI startups;
• the acceleration of digital transformation and AI innovation among incumbent firms;
• progress on the digital single market;
• fundamental development of research, education, and practical skills; and
• bold thinking about how to guide societies through the potential disruption.

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