Learn how the EU is helping to shape a digital transformation in Europe to benefit people, companies and the environment. The digital transformation is one of the EU's priorities. The European Parliament is helping to shape the policies that will strengthen Europe's capacities in new digital technologies, open new opportunities for businesses and consumers, support the EU's green transition and help it to reach climate neutrality by 2050, support people's digital skills and training for workers, and help digitalize public services, while ensuring the respect of basic rights and values, Society .
MEPs are preparing to vote on a report on shaping the digital future of Europe, calling on the Europea Commission to further tackle challenges posed by the digital transition, especially to take advantage of the opportunities of the digital single market and to improve the use of artificial intelligence. What is digital transformation?
- Digital transformation is the integration of digital technologies by companies and the impact of the technologies on society.
- Digital platforms, the Internet of Things, cloud computing and artificial intelligence are among the technologies affecting ...
- ... sectors from transport to energy, agri-food, telecommunications, financial services, factory production and health care, and transforming people's lives.
- Technologies could help to optimise production, reduce emissions and waste, boost companies' competitive advantages and bring new services and products to consumers.
Funding of the EU's digital priorities
Digital plays an essential role in all EU policies. The Covid crisis accentuated the need for a response that will benefit society and competitiveness in the long run. Digital solutions present important opportunities and are essential to ensuring Europe's recovery and competitive position in the global economy.
The EU's plan for economic recovery demands that member states allocate at least 20% of the €672.5 billion Recovery and Resilience Facility to digital transition. Investment programmes such as the research and innovation-centred Horizon Europe and infrastructure-centred Connecting Europe Facility allocate substantial amounts for digital advancements as well.
While the general EU policy is to endorse digital goals through all programmes, some investment programmes and new rules specifically aim to achieve them.
Digital Europe programme
In April 2021, Parliament adopted the Digital Europe programme, the EU’s first financial instrument focused specifically on bringing technology to businesses and people. It aims to invest in digital infrastructure so that strategic technologies can help boost Europe’s competitiveness and green transition, as well as ensure technological sovereignty. It will invest €7.6bn in five areas: supercomputing (€2.2bn), arfitifical intelligence (€2.1bn), cybersecurity (€1.6bn), advanced digital skills (€0.6bn), and ensuring a wide use of digital technologies across the economy and society (€1.1bn).
Online safety and platform economy
Online platforms are an important part of the economy and people's lives. They present significant opportunities as marketplaces and are important communication channels. However, there also pose significant challenges.
The EU is working on new digital services legislation, aiming to foster competitiveness, innovation and growth, while boosting online security, tackling illegal content, and ensuring the protection of free speech, press freedom and democracy.
Among measures to ensure safety online, the Parliament adopted new rules to prevent the dissemination of terrorist content online in April 2021. MEPs are also considering rules on a new European cybersecurity centre.
Artificial intelligence and data strategy
Artificial intelligence (AI) could benefit people by imroving health care, making cars safer and enabling tailored services. It can improve production processes and bring a competitive advantage to European businesses, including in sectors where EU companies already enjoy strong positions, such as the green and circular economy, machinery, farming and tourism.
To ensure Europe makes the most of AI's potential, MEPs have accentuated the need for human-centric AI legislation, aimed at establishing a framework that will be trustworthy, can implement ethical standards, support jobs, help build competitive “AI made in Europe” and influence global standards. The Commission presented its proposal for AI regulation on 21 April 2021.
Read more on how MEPs want to regulate artificial intelligence.
The success of AI development in Europe ilargely depends on a successful European data strategy. Parliament has stressed the potential of industrial and public data for EU companies and researchers and called for European data spaces, big data infrastructure and legislation that will contribute to trustworthiness.
Digital skills and education
The Covid-19 pandemic has demonstrated how important digital skills are for work and interactions, but has also accentuated the digital skills gap and the need to increase digital education. The Parliament wants the European skills agenda to ensure people and businesses can take full advantage of technological advancements.
42% of EU citizens lack basic digital skil
Fair taxation of the digital economy
Most tax rules were established well before the digital economy existed. To reduce tax avoidance and make taxes fairer, MEPs are calling for a global minimum tax rate and new taxation rights that would allow more taxes to be paid where value is created and not where tax rates are lowest.
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More on Europe's digital policies
- A Europe fit for the digital age (European Commission)
- Europe's Digital Compass (Commission proposal)
- At a glance: Digital Europe programme
- EU's long-term budget
- Parliament approves seven-year EU budget 2021-2027
- The EU’s long-term budget explained
- Covid-19: the EU plan for the economic recovery
- Rule of law: new mechanism aims to protect EU budget and values
- MEPs clear another hurdle for the COVID-19 recovery plan
- Rule of Law mechanism applies without further delay as of 1 January, MEPs stress
- Why has Parliament called for new EU revenue-raising powers?
- Vote on Own Resources: MEPs clear way for COVID-19 recovery plan
- Covid-19 recovery: how the main EU instrument will work
- President Sassoli to EU leaders: help get the budget negotiations moving again
- Debate on EU budget and recovery: “A deal in the Council is not the final deal”
- Video: what is the multiannual financial framework?
- Long-term EU budget deal: a “win-win” result to face the challenges ahead
- Sassoli on budget negotiations: Parliament is not obstructing anything
- Budget and recovery: no more excuses for delays, says budgets committee chair
- EU budget: Parliament pushes for new revenue sources
- MEPs debate recovery fund, condemn major cuts to long-term EU budget
- MEPs debate EU summit results on long-term budget, rule of law, climate
- InvestEU: EU programme to encourage investment
- Health threats: boosting EU readiness and crisis management
- Horizon Europe: how the EU invests in science (infographics)
- MEPs adopt landmark research programme Horizon Europe
- LIFE programme: more EU support for climate action
- Digital transformation: importance, benefits and EU policy
- Covid-19: boosting EU’s response capacity for emergencies
- EU long-term budget deal must be improved for Parliament to accept it
- Sassoli calls for action on recovery: "Our citizens expect bold action"
- Budget and recovery: MEPs push for clarity on EU own resources
- Sassoli: The decisions we will take will reshape the Union for decades
- Covid-19 recovery fund must be added to EU long-term budget
- Parliament: EU27 need €2 trillion recovery package to tackle COVID-19 fallout
- The EU’s Covid-19 recovery plan should prioritise climate
- COVID-19: MEPs call for massive recovery package and Coronavirus Solidarity Fund
- Sassoli: Parliament won’t accept just any long-term budget agreement
- Rebuilding Europe after Covid-19: MEPs call for decisive action
- MEPs want ambitious, future-oriented budget with the recovery fund as part of it
- EU future at stake: MEPs broadly welcome Commission’s recovery package proposals
- Europe must emerge stronger from this crisis
- Quiz: test your knowledge of the EU’s long-term budget
- Long-term EU budget: Parliament wants safety net for beneficiaries
- Campaign materials
- Long-term budget: EU needs proper funding to tackle crises, say MEPs
- More than money: the long-term EU budget is a tool for Europe’s future
- Show us the money for new policy proposals, MEPs tell budget commissioner
- MEPs have modest expectations for crucial EU budget summit
- Parliament’s case for an ambitious EU long-term budget (infographics)
- MEPs demand Council starts talks on the EU's long-term budget
- Long-term budget: MEPs want EU to have more own resources
- Post-2020 EU budget plans show purpose, but lack ambition, say MEPs
- “InvestEU”: MEPs support new programme to boost financing for jobs and growth
- Lamassoure: Changing how EU is funded won't shift power to Brussels
- EU's long-term budget: Parliament sets out its priorities
- EU's long-term budget: more flexibility to help tackle crises
EU to step up digital push with digital identity wallet
The European Commission will today (3 June) announce plans for a digital identity wallet to allow Europeans to access public and private services, prompted in part by the COVID-19 pandemic which has seen a massive surge in online services, writes Foo Yun Chee.
The move also seeks to counter the growing popularity of digital wallets offered by Apple (AAPL.O), Alphabet (GOOGL.O) unit Google, Thales (TCFP.PA) and financial institutions which critics say could pose privacy and data protection concerns.
The digital identity wallet "can be used anywhere in the EU to identify and authenticate for access to services in the public and private sectors, allowing citizens to control what data is communicated and how it is used", according to a Commission document reviewed by Reuters.
The wallet will also enable qualified electronic signatures that can facilitate political participation, the 73-page document said.
The adoption of an electronic wallet could generate as much as 9.6 billion euros ($11.7 billion) in benefits for the EU and create as many as 27,000 jobs over a five-year period, the document said.
By reducing emissions related to public services, the e-wallet could also have a positive environmental impact, the document said.
Currently 14 EU countries have their own digital identity schemes, of which only seven are mobile apps.
($1 = €0.8189)
Digital Assembly 2021: Leading Europe's Digital Decade
On 1 and 2 June 2021, the European Commission and the Portuguese Presidency of the Council of the European Union will host the Digital Assembly, which this year will be dedicated to Europe's Digital Decade. This high-level event will focus on the EU targets for 2030 for the Digital Decade and on the Digital Europe Programme, a new €7.5 billion funding programme for the deployment of European digital projects. The event will bring together ministers from several member states, representatives of the European Parliament and the Commission, as well as representatives of the private sector and the civil society. They will discuss ways to promote European leadership across the areas and the 2030 targets outlined in the Commission's Digital Decade Communication, including on digital skills, digital transformation of businesses, high-speed connectivity and secure and sustainable digital infrastructure, as well as digitisation of public services.
The discussions will also focus on how European values and rights can best be promoted and protected in the digital world. On the first day of the Digital Assembly, the President of the European Commission, Ursula von der Leyen, will present the preparations for a joint inter-institutional Declaration of digital rights and principles for the Digital Decade. The Prime Minister of Portugal, António Costa, will present the Lisbon Declaration, which will contribute to these preparations. The upcoming Declaration of digital rights and principles for the Digital Decade will include commitments such as ensuring access to high-quality connectivity across Europe, promoting digital skills to all citizens, and building a fair online world without discriminations. More information is available in this joint press release by the European Commission and the Portuguese Presidency of the Council of the European Union.
Digital transformation could turbocharge CEE economies
With some of the fastest average internet speeds in the EU, there are several nations in Central Eastern Europe (CEE) who stand to benefit from expansion of their connectivity infrastructures and enhanced digitalization of their business sectors. In Romania, for example, a recent survey in which PwC polled a number of executives revealed that Romanian companies have sharply ratcheted up their digitalization over the past year. More than 40% of the executives polled estimated that they were two or three years ahead of schedule in terms of digitalization—a trend which would only be accelerated further by removing regulatory barriers to digitalization and offering targeted support to SMEs, writes Colin Stevens.
In Hungary, meanwhile, average broadband connections are in the top 10 worldwide – but availability in more remote areas is less developed. Given that small- to medium-sized enterprises (SMEs) comprise 99% of all business across Europe, and that SMEs often operate outside of large urban metropoles, addressing connectivity deficits is a key step in driving CEE economies forward as they seek to extricate themselves from the lengthy and deleterious downturn engendered by the Covid-19 pandemic.
Bucharest looking to boost digital performance
Romania accelerated its push towards a deep-seated digital transformation last year with the creation of the Authority for Digitalization of Romania (ADR), with the goal to set up digital tools for public and private institutions in order to drive digitalization forward. Regulatory obstacles are apparently the second biggest barrier to the digitalization of Romanian SMEs, so it’s hoped that the ADR will be able to help address such issues effectively.
The other main difficulty for SMEs in Romania to overcome is a lack of financial resources. Given that studies have shown that digitalization produces an average increase in revenue of 25% and reduces costs by 22% in SMEs, getting over the first hurdle appears to the biggest challenge facing the sector. With EU member states able to access 13% of the funds allocated to them in the Next Generation recovery instrument this year, Bucharest would do well to use that money to support SMEs in the country, since the long-term benefits of doing so could be huge. Indeed, a recent report from Deloitte found that digitalization of European services and supply chains could boost Romanian productivity by 16.7% and GDP by 16.5%.
Hungarian potential hampered by practicalities
As for Romania’s neighbor to the west, Hungary’s average internet speed of 99Mbps is the fastest in the CEE region, outstripping all of the Big 5 economies in Europe by some distance. However, the country’s overall digital performance could be improved; it is ranked 21 out of 28 EU member states in the Digital Economy and Society Index (DESI) for 2020, with connectivity the only metric in which it outperforms the European average. That deficit is costing the country a potential €9 billion per year, according to a study by McKinsey.
Commerce is one of the key areas which must be addressed by the Hungarian government if it is to access those untapped resources. The fact that 62% of Hungarian SMEs (and 82.3% of all businesses) regard Industry 4.0 as a priority in the years ahead is encouraging, but that positivity is immediately offset by the pitifully low percentage of them (8.5% of SMEs and 18.6% of all businesses) which actually have a viable plan in place. Managing this transition and providing the resources and expertise which business owners need to upgrade their operational models will be key to unlocking that lucrative potential and the raft of other benefits that digitalization brings.
UK offers educational case study
Regional CEE governments on the lookout for inspiration could do worse than to examine the Broadband Connection Voucher Scheme that was implemented in the UK between 2014 and 2016. Covering 50 cities across the country, the initiative allowed 42,500 SMEs to improve their connectivity speeds by an average of 18 times their previous velocity. That resulted in an average profit of £1,300 each year per company, with an overall return on the government’s investment of £8 for every £1 spent. The fact that only 17% of the funding went to the three biggest providers was also instrumental in encouraging competition and consumer choice in the sector.
For its part, the EU is introducing a similar €200 million scheme in Italy, though at the moment it is reserved exclusively for use by low-income families and students. While the initiative could play a vital role in allowing the bloc to achieve its goal of connecting 50% or more of European households to broadband networks with a speed of 100Mbps or higher, the latent potential of the policy is far greater. Were the EU to open it up to businesses as well, that would signify a true leveraging of the digital single market and a statement that member state economies and businesses are amply supported by Brussels.
CEE countries must act now to leverage EU aid
The rewards of doing so could be incredible for all involved. In fiscal terms, one report found that new digital technologies could deliver cumulative GDP benefits of €2.2 trillion across the bloc by 2030. The environment could also benefit, with improved fuel consumption (facilitated by the Internet of Things technology) saving up to 4.8 tonnes of carbon emissions annually, while public health would prosper thanks to the 165,000 deaths that could be prevented each year by a full rollout of eHealth services.
Therefore, it makes prudent sense for the EU and individual CEE governments to put their heads together and settle upon a course for utilizing the former’s funds and the latter’s policies to equip their business communities with the tools they need to excel. The internet speeds in Hungary, Romania and other CEE countries are already brisk enough to facilitate their success; all that’s required now is a similarly clipped pace in accelerating the digital transformation across the board.
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