Christine Lagarde: Hearing of the Committee on Economic and Monetary Affairs of the European Parliament

Speech by Christine Lagarde, President of the ECB, at the Hearing of the Committee on Economic and Monetary Affairs of the European Parliament

It is a pleasure to be back before this Committee as part of our regular dialogue.

The topic for today’s hearing goes to the heart of Europe’s economic future.

Artificial intelligence has the potential to transform how we produce, work and innovate. Firms are set to devote around 10% of total investment to AI in 2026, and AI-related borrowing already accounts for roughly a quarter of credit growth to firms. [1]

AI could significantly enhance Europe’s productivity, competitiveness and living standards. But it will also affect – and to some extent is already affecting – investment, labour markets and inflation, and it therefore also matters for monetary policy.

Europe has a real opportunity to harness this technology. But success is not automatic. We need to seize the benefits, while managing the risks appropriately.

In my remarks today, I will first discuss the outlook for the euro area economy and explain our latest monetary policy decisions. I will then elaborate on how artificial intelligence may affect inflation and the wider economy.

Incoming data and the outlook for the euro area

Despite headwinds from the energy shock, the euro area economy proved resilient with solid real GDP growth in the second quarter of 2026. Growth was broad-based across most countries and sectors. This pattern is expected to have continued in the third quarter.

Manufacturing is performing solidly, supported by higher government spending on defence and infrastructure. Consumer confidence has rebounded from the low levels in the spring, helping services recover. And increased AI-related activity is visible in digital services, business investment and exports.

The labour market remains robust. Unemployment stood at 6.4% in July, although growth in employment and the labour force continue to slow. Productivity has gradually picked up.