Lagarde calls for reducing some public spending items to invest in AI

BarcelonaThe president of the European Central Bank (ECB), Christine Lagarde, has argued that countries must reduce certain public expenditure items to be able to finance "necessary investments" in artificial intelligence (AI) and defense –among other issues–, but without unbalancing their accounts.

The head of monetary policy in the eurozone did not specify which items should be cut: "I won't say anything more, as you can imagine," she concluded. At the same time, Lagarde also recalled that the European Commission's fiscal rules provide for "flexibility valves" for investments in the field of defense, and that they give countries temporary leeway to redirect their accounts.

300 billion emerge

In parallel, the ECB president this Friday also lamented that every year some 300 billion euros from the continent are dedicated to investments in other parts of the world, mainly in the United States. Faced with this reality, she has urged the creation of a "fluid, liquid, deep and efficient capital market" in order to increase Europe's capacity to receive this investment.

In other words, Lagarde has defended once again that the continent must have "banking champions", that is, financial entities that have sufficient size to compete with their American counterparts.

In mid-August, the top official of the ECB already pointed to the fragmentation of the single market and the fragmentation of the capital market as the two main obstacles for investment in Europe to "spread and grow".

Do not let the opportunity slip away

Lagarde's diagnosis comes when –in her view– the European growth model of recent decades "is eroding". Faced with this reality, as early as August the head of European monetary policy asked that the continent not lose the revolution that AI represents.

According to her, Europe was already left on the sidelines of the first digital revolution, when it was unable to capture the commercial benefits brought by information and communication technologies. "We cannot afford to repeat this experience with AI, the second digital revolution," she now warns.