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July 14, 2022updated 15 Jul 2022 2:19pm

EU agrees digital transformation strategy, but barriers remain

The Path to the Digital Decade policy programme aims to power Europe's digital transformation.

By Sophia Waterfield

The European Union has reached political agreement on a policy programme that aims to deliver digital transformation across the bloc. The 2030 Policy Programme, known as “Path to the Digital Decade”, aims to help the EU reach the transformation targets set out in the “2030 Digital Compass,” which cover areas such as skills and infrastructure and aims to bolster Europe’s digital sovereignty.

By the end of the decade, the EU is pushing for at least 90% of small to medium enterprises (SMEs) to have “basic digital intensity” and that at least 75% of all companies use artificial intelligence, cloud and big data technologies. However, significant hurdles must be cleared to achieve these targets.

Digital Compass targets have a long way to go to be met. Image shows the European Union flags in front of the blurred European Parliament in Brussels, Belgium
2030 Digital Compass targets have a long way to go to be met as there are several barriers to digital adoption in Europe. (Photo by artJazz/iStock)

The European Commission and the European Parliament announced today they had reached political agreement on the Digital Decade plan following the adoption of the Digital Compass in March.

What is the EU Digital Compass?

The Digital Compass is set around four key points: a digitally skilled population and highly skilled digital professions; secure and sustainable digital infrastructures; digital transformation of businesses, and the digitalisation of public services. It also proposes a set of specific targets for each point including 80% of citizens possessing basic digital skills, 100% 5G coverage across the EU and a share of enterprises using cloud, AI and big data. It also has objectives for digital adoption in public services and eHealth and digital identity.

European commissioner Margrethe Vestager said that the Digital Decade is about making digital technology work for people and businesses and having the skills to participate in the digital society. “It is about empowering businesses,” she said. “It is about the infrastructure that keeps us connected. It is about bringing government services closer to citizens. Europe’s digital transformation will give opportunities for everyone.”

The commissioner for the internal market, Thierry Breton, added that the policy programme is a way to move towards a more “[innovative], inclusive and sustainable future” for the EU.

The political agreement reached by the European Parliament and the Council is now subject to formal approval by the two co-legislators.

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National and multi-country projects will drive digital adoption forward

The EU will work with its member states to develop national and continent-wide plans to meet the targets in the documents. These could include investment and regulatory interventions. Progress will be measured based on the Digital Economy and Society Index (DESI) and will be evaluated against the developed trajectories in an annual report. The EU will also review the targets again in 2026 to take stock of technological, economic and societal developments.

Member states and the Commission will cooperate to address areas where progress is insufficient and where there are continuous deviations from national roadmaps. The Commission and member states can undertake joint commitments and establish multi-country projects to meet the 2030 digital targets – the EU believes that large-scale multi-country projects will be critical for achieving its objectives.

EU will make funding available for 5G, blockchain and more

An initial list of areas for investment for multi-country projects has been identified, including common data infrastructure, deployment of 5G corridors, connected public administration, high-performance computing, developing European blockchain services infrastructure and the bloc’s own low-power processors.

The EU plans to work with its member states in defining and developing multi-country projects. It has also created a new legal instrument known as the European Digital Infrastructure Consortium (EDIC), which can help in the implementation of multi-country projects.

Several cross-border initiatives already exist around emerging technologies with varying degrees of success, including GAIA-X, a programme to define standards and a common architecture for cloud computing, and the European High Performance Computing Joint Undertaking, which aims to grow the bloc’s supercomputing capabilities.

The policy programme creates a new legal instrument, the European Digital Infrastructure Consortium (EDIC). The EDIC will help in the implementation of multi-country projects and make it easier for member states to join efforts when they invest in digital infrastructures.

Also, depending on the needs of the multi-country projects, member states can combine funds from a directly managed EU programme such as the Digital Europe Programme, InvestEU, Horizon Europe and others, as well as from their own regional and national budgets. The European Investment Bank (EIB) and other entities, whether public or private, may contribute to multi-country projects where appropriate, the EU says.

Digital Compass policy programme welcomed, but there are barriers to digital adoption

The Renew Europe group of MEPs welcomed the EU’s agreement, which it believes reinforces “inclusive and sustainable digital policies that empower citizens and businesses”.

Renew Europe says it has advocated for a “cooperation mechanism” between European countries in key areas such as Gigabit broadband connectivity, 5G, digital skills, data infrastructures, the digitalisation of businesses and public services.

“The agreement reached sets the right conditions to bring a real impulse to digitalisation in the EU by 2030,” says MEP Martina Dlabajová. She also says that multi-country projects will be a “key instrument” to advance the EU’s digital leadership on the global stage.

However, there are barriers to digital adoption and several member states have a long way to go in reaching the targets set out.

One of the targets is for at least 90% of SMEs in the EU to have a "basic level of digital intensity" which means using at least four technologies defined by the EU. However, in 2020 only 60% of SMEs were at that level. As it stands, Denmark and Finland are already very close to the EU target with 88%, but countries such as Bulgaria and Romania are lagging far behind (33%).

In a policy paper by the Open DEI group, a non-profit coalition which supports the digitisation of Europe, and analyst group IDC, there are four main barriers to the adoption of digital platforms - regulatory, economic efficiency, technology and business and organisational. It says that the economic efficiency barrier includes the "significant gap between SMEs and large enterprises in Europe in terms of access and usage of digital technologies".

One solution, the report says, could be to set up digital innovation hubs to support SMEs in their digitisation efforts.

Read more: The EU wants to create a digital single market with Africa. It won’t be easy.

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