Is the EU’s AI Act Merely a Distraction from Europe’s Productivity Problem?

Abstract Solving the EU’s productivity problem will require greater use of technologies. Artificial intelligence is of particular interest given its potential to boost productivity in the services sector, where productivity growth in Europe has been particularly weak. While touted as a mechanism to boost trust in and the use of AI in Europe, the EU’s AI Act risks dampening investment. Aspects of its design and implementation should mitigate these risks, however, so that the overall impact of the bloc’s landmark law on European productivity will likely prove modest. The bigger problem is that European leaders’ focus on the law has detracted from more important steps to boost productivity – such as developing the EU’s capital markets union, addressing the lack of digital skills, and developing the single market to boost business dynamism.