ECJ EUROPEAN Cleaning Journal

How are we performing in the global race to a digital future? This question has engaged EU policymakers in much navel-gazing of late, leading to the conclusion that the bloc urgently needs to pick up the pace, reports Hartley Milner.

Not since the Industrial Revolution has the world experienced a period of such sweeping and sustained change as in this age of technological innovation. Now as then, human ingenuity is fundamentally disrupting the status quo and ushering in unprecedented benefits for national economies, their businesses and populations.

Countries at the cutting edge of the digital transformation are likely to see higher productivity and growth, as well as the more efficient delivery of critical services such as hospitals, schools, energy, food production and internal security. Greater connectivity is opening up swathes of opportunities for businesses, enabling tech startups to create jobs in burgeoning renewable energy markets and for traditional industries to become greener and more sustainable in the quest for net-zero carbon.

The European Commission is all too aware that the adoption and development of advanced technologies will be crucial for Europe’s future competitiveness and prosperity. It says this is particularly true in today’s unstable geopolitical landscape where increasing cybersecurity threats demand “enhanced resilience and robust counter-measures”.

In July, the Commission published its second State of the Digital Decade report on the progress made towards objectives and targets set by the EU Digital Decade Policy Programme to 2030. It comes with a stark wake-up call that the region risks losing ground in the digital transformation to its international competitors. For the first time, individual member states are assessed, and their collective performance is found to fall far short of the EU’s level of ambition.

For the community to meet its transition targets, countries will need to invest more heavily in digital skills, high-quality connectivity, AI and data analytics, as well as semiconductor production and start-up ecosystems. Member states must “strengthen their actions?and be more ambitious” in achieving their targets, the report asserts.

The report flags up some of the most concerning gaps in meeting EU connectivity targets. Fibre networks – critical for delivering gigabit connectivity and enabling the take-up of technologies such as AI, cloud services and the Internet of Things – have been rolled out to just 64 per cent of households. Only 50 per cent of the EU is covered by high-quality 5G networks, and their performance is still insufficient to deliver advanced 5G services. To address these challenges, countries should work with the European Commission to create a “truly functional digital single market”.

Below target

The uptake by European companies of AI, cloud and/or ‘big data’ – software for processing extremely large and diverse data sets – is well below the Digital Decade target of 75 per cent. Current trends indicate that only 64 per cent of businesses will be using Cloud services, 50 per cent big data and only 17 per cent AI by 2030.

The report places a huge stress on the importance of SMEs to the digitalisation of the business sector. SMEs comprise more than 90 per cent of all EU businesses and provide 100 million jobs, nearly two thirds of the region’s employment total. For all that, figures from Eurostat show that in 2023 only 58 per cent had achieved a basic level of “digital intensity”, around 30 percentage points below the end-of-decade target. Only four per cent attained a very high level of intensity and 20 per cent a high level. By comparison, 91 per cent of large businesses had achieved at least a basic level.

SMEs must be incentivised to take up innovative digital tools, especially the Cloud and AI, says the report. And it calls for further private investment in high-growth startups, which will be “crucial to maintain Europe’s competitiveness in terms of data-driven innovation, efficiency and growth”.

So why are smaller businesses lagging behind in the technology race and how can they be brought up to speed?

“Beyond the ‘whys’ and ‘hows’, what we should be asking is ‘when’ can small to medium-sized enterprises be brought up to speed,” says Astrid Meier of the EU Digital Decade programme. “This, ultimately, is the most pressing question begging an answer. SMEs play such an influential role in the prosperity of Europe’s economies, and this is the case globally as well. Yet, to a large extent, they are still confined to basic digital services and seem to shrink away from advanced AI-based tools and applications, which could have damaging implications.

“We know, for example, that SMEs make up the bulk of the business and industrial fabric of most countries and regions, but they also represent a critical link in the supply chains of large corporations. If that chain breaks or is jeopardised due to a weak link, there could be reputational, financial and security outcomes for both the supplier and the client company.

Bridging gaps in the digital uptake of smaller enterprises needs to be addressed as a matter of urgency as digital technologies become ever more sophisticated. This will help eliminate or minimise damaging disruptions to critical private and public infrastructures that we increasingly hear about these days.

“We know also that SMEs are running up against formidable barriers to their uptake of advanced technologies in an extremely challenging trading climate. Many are still struggling to recover from the impacts of the Covid pandemic and supply chain disruptions, skill shortages, rising running costs and high inflationary pressures brought about by global economic instabilities and sudden geopolitical shocks such as the invasion of Ukraine.

“Crucially also, SMEs may struggle to put up the collateral funders and investors require as loan guarantees, or lack the expertise or awareness to source funding options available to them. All this is inhibiting their ability to innovate and grow, which impacts on the wider EU economy.”

Project support

Alert to the financial restraints on businesses, in 2021 the EU launched the Digital Europe Programme, a €7.9 billion funding initiative with a brief to bring digital technology to businesses, citizens and public institutions. The programme supports projects in five crucial areas: supercomputing, AI, cybersecurity, advanced digital skills and the rollout of digital technologies more widely across the economy and society.

Critically, Digital Europe has a special focus on smaller businesses. Key actions include support through a network of 240 digital innovation hubs across the EU and providing crash courses to skill up employees in areas such as AI, cybersecurity or blockchain databases. To find out more and how to get funding, visit the Digital Europe programme website at https://digital-strategy.ec.europa.eu/en/activities/digital-programme.

Funding is also available through?a myriad of other multi-billion euro schemes, such as Horizon Europe (for research and innovation), the Connecting Europe Facility (for digital infrastructure), the Recovery and Resilience Facility and European Structural Investment Funds.

Another major challenge highlighted in the State of the Digital Decade report is the limited spread of digital technologies beyond large cities. To close the gap, the Commission is calling for greater cooperation at cross-border and local level through multi-country projects such as the European Digital Infrastructure Consortia (EDIC). Some progress has been made since 2023, with three EDICs established by the end of May this year.

The EU continues to have worryingly low levels of digital literacy. In 2023, only 55.6 per cent of the population had basic or above basic digital skills, well below the Digital Decade target. ICT specialists in the bloc are projected to number around 12 million by 2030, but with a persisting gender imbalance. Men in the sector outnumber women by a ration of more than 4-1. The Commission wants countries to take a?“multi-faceted approach” to promoting digital skills?at all levels of education, and to provide young people – especially girls – with incentives to take an interest in science, technology, engineering and mathematics.

On a more positive note, member states are making progress towards hitting targets for making?all key public services?and?health records?accessible to citizens and businesses online via secure electronic identification (elD). Despite uneven take-up across countries, eID is currently available to 93 per cent of the EU’s population, and the EU digital identity wallet is expected to further encourage its use. However, achieving 100 per cent of digital services for citizens and business by 2030 remains a challenge, the report says.

More competitive Europe

EU countries now have until December 2024 to review and amend their national digital roadmaps to align more closely with the bloc’s Digital Decade ambitions. The European Commission will publish its next assessment of their progress in 2025.

Summing up the State of the Digital Decade findings, Thierry Breton, EU commissioner for the internal market, said: “We are building a more competitive Europe, which leverages its competitive edge and asserts itself in the global technology race. The report clearly identifies the areas where our collective action has to accelerate to achieve this result and meet the Digital Decade targets by 2030. Investments, cross-border cooperation, completing the digital single market, boosting take-up of key technologies such as AI … this is the recipe of success that is the essence of the recommendations that we issue to member states.”