How Europe can embrace the GenAI opportunity

Seizing the vast potential of Generative Artificial Intelligence


A decade of generative artificial intelligence

Generative AI (GenAI) is considered one of the most important technologies of our time, and the next ten years will be shaped by advancements driven by GenAI. The potential impact is significant: it could potentially boost Europe's annual GDP growth by 0.4% to 0.7% by 2030, a substantial increase compared to the forecasted growth rate of around 1.4% without AI effects. This technology has the potential to address Europe's ongoing shortage of skilled workers and provide companies with competitive advantages in both the short and long term if they quickly adopt GenAI.

This report explores the impact of technology on businesses and economies in Europe in the coming years. It examines which industries and countries will be most affected by the opportunities and challenges of Generative AI, and discusses strategies and public policies that can support the growth of GenAI capabilities in business.

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What is GenAI?

GenAI represents a significant advancement in terms of variety, flexibility, and ease of use. It is capable of responding to queries that a non-expert person might pose, producing outputs that incorporate visuals, audio, and text in multiple languages. This automated intelligence system is more sophisticated than any previous automated intelligence and learning application, yet simpler in terms of usability.


Potential by industry

The potential benefits of GenAI are unevenly distributed across sectors. Therefore, implementation of the technology will tend to increase the value-added differential between different industries. Across sectors, companies can maximize the advantages of Generative AI through careful assessment of internal use cases, seen through the lens of real-world productivity gains. The technology’s potential for different industries can be defined as:

Companies that have the potential to accelerate the development of the GenAI family of technologies and achieve rapid impact both on revenues and bottom-line performance.

GenAI high impact accelerators ©Strategy&

Companies that can capture new efficiencies from GenAI applications developed largely outside their own domain, with impact on the bottom line.

GenAI aspirants ©Strategy&

Physical labor or production dominates the value chain and automation, supplemented in part by GenAI, can make a notable but lower contribution to productivity.

GenAI low potentials ©Strategy&

Advantage by country

Countries that rely heavily on industries such as technology, entertainment, life sciences, financial and professional services, and ICT are poised to see significant boosts in productivity and revenue by effectively integrating Generative AI into their operations. Meanwhile, countries where industries like agriculture, utilities, construction, manufacturing, retail, and support services are more prominent can also experience benefits from adopting this technology, although the impact may not be as transformational.

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GenAI potential on continental Europe’s GDP

Our research indicates that implementing GenAI in European countries could potentially increase GDP growth by 0.4% to 0.7% by 2030. This could result in an additional $1 trillion in GDP by 2030 - a massive boost to GDP in an era of historically low economic growth, which is currently forecast to be below 1.5% between now and 2030.

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We have derived two implementation scenarios to map the effects of GenAI, in addition to a ‘no-change’ base scenario:

Under this best-case scenario, Europe will see high-impact accelerator businesses take an increasing share of the economy, and 80% to 90% of potential GenAI-driven productivity gains will be achieved by 2030. Total impact: an additional 0.7% GDP growth

Under this moderate-case scenario, Europe has only limited success in attracting or developing more high-impact accelerator businesses, and no more than 40% to 50% of potential productivity gains are realized by 2030. Total impact: an additional 0.4% GDP growth

Ten success factors for a smooth and effective GenAI transition

To capture maximum benefit from the GenAI decade, there is an urgent need for European companies and governments to review and extend their strategy and policy approaches in the following key dimensions:

Company executives should put GenAI at the top of the strategic agenda and commit to make the required investments even though the effective gain from the nascent technology may be hard to assess upfront and the bottom-line impact may only be clear at a later stage

Partnerships with global GenAI behemoths or specialized start-ups could help companies accelerate implementation and enable them to reap the fruits of GenAI investment early on

Companies are advised to assess the impact of GenAI on their business model and funnel funds to areas where the technology promises highest bottom-line impact

Governments are encouraged to join forces with leading financial services players to launch dedicated ‘AI transformation’ investment solutions that allow institutional investors and wealthy individuals to invest in the GenAI opportunity

Governments should direct funds to raise location attractiveness, and start to create comprehensive GenAI ecosystems

Building up GenAI ecosystems to create national GenAI champions and attract foreign high-impact accelerators relies not only on sufficient capital and direct investments, but also on access to high-performance computing power and cloud storage capacities

To build a sustainable and widely accepted GenAI-empowered economy, governments need to ensure buy-in from citizens

The implementation of the recently adopted EU AI Act will have a big impact on how GenAI can create benefits for society and deliver the expected economic boost

Regulatory standards should be defined jointly with industry representatives. They should meet the industry’s needs and susceptibility to risks

The EU’s AI Act should be aligned with like-minded countries such as the US or Japan to ensure a level playing field and develop an international ‘technology coalition’ that seeks healthy competition and advocates common values

Martin B. Rietzel has co-authored this report.

Contact us

Dr. Philipp Wackerbeck

Dr. Philipp Wackerbeck

Partner, Strategy& Germany

Dr. Matthias Schlemmer

Dr. Matthias Schlemmer

Partner, Strategy& Austria

Daniel Ettlin

Daniel Ettlin

Director, Strategy& Switzerland