A study published on Wednesday revealed that most European small and mid-sized enterprises are prioritizing artificial intelligence systems over basic digital tools, losing ground to larger firms investing in core digital systems. While large corporations are embracing AI software and scaling up investments, small businesses in Europe often lack the expertise and infrastructure necessary for successful digital transformation. This shift towards AI technologies is aimed at automating tasks and reducing costs, but it is also leading to job cuts that are reshaping entire industries.

The survey, conducted by French fintech Qonto, found that while 46% of European SMEs use AI tools daily, they lag behind in implementing essential digital tools such as digital accounting, video conferencing, and data analytics. This inconsistency poses a potential threat to Europe’s economic backbone, highlighting the need for small businesses to build strong digital foundations for long-term growth and innovation. The report suggests targeted interventions to close Europe’s digital gap, including reducing regulatory burdens in Germany, addressing skills shortages in Spain, and overcoming cultural resistance in France to strengthen competitiveness in the face of better-equipped rivals leveraging AI technologies.