AI appears to be driving a mild productivity upturn in the Eurozone
Our new AI productivity tracker suggests AI has boosted EU productivity by up to 0.1% a year since 2023. Gains remain concentrated in ICT, while a broader Eurozone recovery is underway—but a productivity boom remains distant.
AI’s productivity impact on Europe’s economy is real, growing, and increasingly visible at the macroeconomic level, though it remains modest. Our new AI productivity tracker, which draws on the EU’s rich cross-country data, suggests an upper-bound productivity boost of 0.1% a year since 2023, around a fifth of the overall 0.5% annual gain.
Measurable AI productivity gains remain confined to the information and communication sector (ICT) so far, with ICT productivity in the six most AI-ready EU countries outperforming that in the six least ready by roughly 30% since early 2023. The returns to a country’s AI preparedness have gradually increased over time. Professional services could be the next sector to show significant AI-related gains.
Beyond AI, the Eurozone is seeing a broader productivity recovery. A cyclical productivity rebound in manufacturing is providing a material boost, driven by stronger demand and firms reducing headcounts in response to structural challenges.
We expect stronger productivity growth to continue, with subdued hiring as firms draw on hoarded labour and benefit from wider AI adoption and related labour savings. AI-driven automation appears to be displacing some ICT workers, but we remain sceptical that this will cause meaningfully higher aggregate unemployment.
A productivity boom remains a distant prospect. Despite the ongoing upturn, productivity is still roughly 2% below its already weak pre-pandemic trend, and our baseline doesn’t close that gap until 2029. By contrast, US productivity is roughly 5% above its pre-pandemic trend.
Download the report for more detailed insights.
You might also be interested in
This report was brought to you by the Macro team
Reliable and consistent economic forecasts, analysis, models and scenarios provide the insight necessary to make informed decisions in a fast-changing world.
