"We need to remove all the obstacles that stop us from embracing this transformation," she told a Bratislava conference.

"Otherwise we risk letting the wave of AI adoption pass us by and jeopardise Europe's future."

Proponents of AI technology say Europe has lagged behind the United States and China, which many of them argue is due to overregulation, a lack of innovation and underinvestment.

"Europe has already missed the opportunity to be a first mover in AI," Lagarde conceded.

But if the continent deploys the technology decisively across its key industries, "Europe can turn a late start into a competitive edge", she emphasised.

She listed several barriers to rapid adoption in Europe ranging from fragmented regulations to the high cost of energy -- which makes it expensive to run the enormous data centres that power AI.

The consequences of further foot-dragging go beyond "losing the race in AI models", Lagarde said.

"We would eventually face a further loss of competitiveness for many of our sectors and industries."