The EU is teetering on the edge of a regulatory overhaul that could redefine how artificial intelligence grows, who pays for its energy, and where Europe’s digital government stack ends up in the world. A new paper from the Tony Blair Institute for Global Change argues that today’s fragmentation and high costs are choking AI adoption and European competitiveness, raising urgent questions about sovereignty that go beyond simple ownership.
Solution 1 Reforming digital regulations and capital access The report urges a Europe-wide rethink of decision making to create an innovation-friendly digital market with Europe-wide responses. It cites the AI Act as a practical example of existing hurdles and calls for a Digital Omnibus to simplify reporting, harmonise enforcement, and streamline cross-border regulation, alongside fast-tracking Savings and Investment Union and a 28th regime. It also advocates a continent-wide stock exchange and labour-market modernization, arguing that current rules limit scale and global competitiveness.
Solution 2 Building physical and digital foundations The authors reference EU Gigafactories and EuroHPC JU, but stress the need to scale AI infrastructure and attract large-scale private investment in AI platforms. On energy, they push for a European energy union and a continental program to accelerate permitting for renewables, grids, storage, and, where appropriate, new nuclear capacity, noting that Europe’s energy prices are among the world’s most expensive and pose a direct barrier to adoption and export of digital capabilities.
Solution 3 Realistic incentives to accelerate adoption A trusted, interoperable ecosystem based on open-source innovation is proposed to unlock data and compute. The Data Union Strategy would unlock strategic datasets and use public procurement and compute-credit incentives to drive market pull. Sector-specific AI adoption regulation packages would offer regulatory clarity and faster approvals. The report also calls to align universities with today’s innovation economy by reforming career structures, boosting autonomy, and offering competitive pay and pathways between academia and industry, while recognizing the risk that some institutions may need selective autonomy and funding based on performance.
Solution 4 Export the European digital stack Strengthening global tech engagement is framed around exporting Europe’s digital government stack via Global Gateway, establishing European regional tech hubs, and creating an European Investment Acceleration Mechanism to help navigate regulatory requirements for strategic projects. Critics note that reforming Global Gateway may be easier said than done, yet the paper argues that these tools are essential to project Europe’s values and technology leadership globally, even as debates about leverage versus autarky continue.
Overall, the paper frames true digital sovereignty as leverage and choice rather than autarky, urging policymakers to harmonize rules, energize investment, and expand Europe’s global influence. While the path is complex and the political calculus delicate—especially around GDPR considerations for AI and the balance with open-source innovation—the suggested reforms aim to accelerate adoption, reduce fragmentation, and position Europe as a trusted global AI partner.