Europe’s burgeoning AI sector is still too small and too reliant on imported hardware to drive short-term economic growth, according to new data from Oxford Economics, with the bloc falling far behind the US, where AI already contributes significantly to GDP.  

According to the forecasting firm’s latest briefing, if the EU manages to double its data‑centre capacity by 2030, annual investment will likely top out at about €20 billion, still only around 0.1% of the bloc’s total economic output.

The paper argues that even in an “extreme upside scenario”, where every early‑stage data‑centre project is completed within five years, effectively tripling the EU’s capacity, annual investment would average around €45 billion. 

That would raise data‑centre investment to roughly 0.2% of the EU’s GDP.

However, that extreme upside is unlikely to materialise, with the study stating that slow planning approvals, grid congestion, and energy supply challenges will continue to hamper data centre development across Europe.

Added to that, the report points to rising competition for labour between data centres and public infrastructure, an issue which is likely to end in exacerbated delays across the board for construction-heavy projects like hyperscale facilities.

But even if every planning box is ticked, energy supply chains untangled, and skilled labour pressganged into work, there is the looming hardware problem. Delving into the trade data, Oxford Economics suggests that EU imports of AI‑related hardware have flatlined in the last few years, in contrast to the sharp rise seen in the US since 2024. 

Arguing that since much of the EU’s data centre hardware is still imported, including crucial components like semiconductors and machinery parts, the study claims that this slowdown in foreign-sourced hardware will inevitably lead to softer growth across Europe’s AI sector.

The same patterns hold true in microchip manufacturing. While the EU has secured several major investments, and the EU Chips Act aims to raise €86 billion by 2030, the paper argues the overall boost to chip investment will be modest in comparison to that seen in the US and China.

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Based on an analysis of announced projects, Oxford Economics estimates that the EU’s AI-related manufacturing of chips will see investment of between €40 billion and €50 billion in the next three years, a figure which “won’t move the dial”, adding less than 0.1% GDP annually.

This adds up to a widening gulf between the EU, China, and the US, amounting to a critical problem for European leaders who, faced with hostility and suspicion on all sides, have promised to secure the continent’s long‑term competitiveness.

The paper predicts that with the US having data centre capacity five times that of the EU, and China double, Europe may already be too far behind to close the gap, and unlikely to emerge as a “major player” in the global AI sector.