POSITION | DIGITALISATION | ARTIFICIAL INTELLIGENCE
Artificial Intelligence as a driver of transformation in the EU For a sovereign, competitive and innovation-friendly AI ecosystem in Europe
July 2025 Executive Summary Artificial intelligence (AI) is not only an innovation factor, but also a sovereignty factor. The EU must therefore make AI the strategic core of its industrial policy in order to secure its digital sovereignty and competitiveness. Otherwise, Europe runs the risk of regulatory overclocking without ensuring industrial connectivity. An innovation-oriented, well-regulated and capable European AI ecosystem is necessary for the transformation of the European economy. To secure this, Europe must create a coherent growth environment for users and manufacturers of AI by enabling sovereign computing capacity, efficient use of data and data space and coherent and practical legal frameworks. Industrial AI applications in general and AI robotics, defense applications and green tech in particular are drivers of an industrial policy understanding of AI as a central transformation driver in the EU. The current EU policies on AI, including the AI Continent Action Plan, the Apply AI Strategy, the Cloud and AI Development Act, the European Strategy for AI in Science and the EU Simplification Package, are ambitious and necessary steps to strengthen Europe's position in the global AI competition and to bundle AI initiatives. These initiatives aim to secure Europe's technological sovereignty, expand infrastructure, improve access to high-quality data and promote the use of AI in strategic sectors. Despite the positive intentions and ambitious goals, there are considerable challenges and risks that could jeopardize the successful implementation of these policies. Bureaucratic hurdles, slow decisionmaking processes, a lack of pragmatism and dovetailing with national interests and insufficient practical relevance could delay or hinder the implementation of the measures. It is crucial that the EU creates clear and binding framework conditions in order to secure investment, mobilize private capital and promote cooperation between member states and stakeholders. Besides, Europe faces a critical "lastmile" gap between AI research and daily value creation in firms. Case studies show the ultimate barrier is not technology but human capability to integrate AI systems effectively. Europe will thrive on its competitive advantage - human judgement and expertise - if it drives an integrated "AI-literate Europe" framework that builds a coherent capability ladder focused on human-AI teaming. Only through a coherent and coordinated approach Europe can strengthen its technological sovereignty and ensure its competitiveness in the global AI competition.
Polina Khubbeeva | Digitalisation and Innovation | T: +49 30 2028-1586 | p.khubbeeva@bdi.eu | www.bdi.eu