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The right steppingstones for Europe’s Digital Decade

25 Mar 2021Public Policy

Earlier this month, the European Commission announced its vision for Europe’s Digital Decade, setting out a roadmap for Europe’s future technological direction. Coupled with the EU recovery package, in particular the Resilience and Recovery Facility (RRF) – which sets aside 20% of the €675 billion available for digital investments – this is an exciting time ahead.

Smart cars

However, there is still much to be agreed: EU level blueprints need to be drafted, and national level plans confirmed. It is vital that, during this period, we do not lose sight of the overall prize.

If we get this right, digitalisation will deliver a significant economic boost to European societies, taking the learnings from early pandemic days to build back better, more sustainably and equitably. According to some recent research we commissioned, if every Member State was able to invest in digitalisation to the extent that that they were able to reach a score of 90 on the Digital Economic and Society Index (DESI) by 2027, it could lead to a 7.2% increase in Europe’s GDP per capitathe equivalent of a €1 trillion boost to GDP.

Perhaps unsurprisingly, those countries that currently have the lowest DESI scores have the most to gain economically by investing heavily in digital, although every member state would benefit. For example, if Greece were to raise its score from 31 in 2019 to 90 in 2027, the country’s GDP per capita could increase by 18.7% GDP and productivity in the long term by 17.9%. In fact, a number of significant Member States, including Italy, Romania, Hungary, Portugal and the Czech Republic would all see GDP rises of over 10%.

And even a modest boost to a country’s DESI score has a positive economic impact: a 10% increase in the overall DESI score for a Member State is associated with a 0.65% higher GDP per capita (assuming other key factors remain constant, such as labour, capital, government consumption and investment in the economy).

Although the overall direction is clear, how we get there is less so. There is also considerable scepticism amongst European citizens that the good intentions as laid out in the RRF and Digital Decade will be followed through. A third of Europeans are concerned that RRF funds will be diverted into unagreed areas. We must resist the temptation to spend this money on legacy, analogue industries.

It is then reassuring that the Europe’s Digital Decade vision is built on empowering people and businesses. The Commission’s proposal to set out digital principles to enable a human centric, secure and open digital environment is a testament to that. A testament that citizens are the focal point on this journey to digital transformation, with key milestones such as skills, infrastructure and capacities, public services, and the digitalisation of business.

Focus on areas such as connectivity, eHealth and SMEs are welcome, and will do much to boost European society. Investing in 5G travel corridors will transform the automotive and transport sectors, with benefits estimated at €15 billion a year by 2030: reducing traffic jams that can cost as much as 1% of GDP; improving fuel efficiency and reducing road accidents, which killed over 20,000 Europeans in 2018

Investing in eHealth could generate €48 billion of cost savings, which can then be reinvested in better healthcare, as well as increase healthy life years from 63.7 years to 64.8 years for men and 64.2 years to 65.3 years for women and avoid as many as 165,000 deaths a year.

There are more than 1.2m European businesses with 10-249 employees that have not digitalised. If just 100,000 did so, it would lead to a total increase in turnover of up to €148bn (an average of €1.4m per business, depending on business model and existing level of digital adoption).

We must also ensure that Europe’s digital decade is also green and inclusive. It is, as President von der Leyen noted in her State of the Union speech, unacceptable that 40% of people in rural areas do not to have access to fast broadband connections. A 10% increase in broadband penetration is associated with an increase of GDP growth of 0.6% - 2.8%, while 80 new jobs are created for every new 1,000 broadband users.

And the risk of a ‘lockdown generation’ is increasing, with the pandemic exposing our vulnerabilities. Nearly 1.6 billion learners in more than 190 countries have been affected. In Europe, the EU estimates that nine-out-of-10 future jobs will require digital skills, but 42% of Europeans lack the basics to access remote learning and developments opportunities. We need a strategic vision for digital education and skills, to build a more resilient educational system and unlock job opportunities. Our Connected Education solution aims to support just that. As an end-to-end platform that guarantees access to technology, it helps students, teachers and schools to connect securely to a better future.

We can also harness the power of digital for green. Vodafone is committed to helping its customers save 350 million tonnes of CO2e by 2030, equivalent to Italy’s total annual carbon emissions, mostly by harnessing IoT solutions. Rolling out smart agriculture, smart energy meters and smart logistics solutions across Europe could deliver savings of over 36m tonnes CO2e annually in the EU, equivalent to the emissions from the population of Barcelona each year.

So, we know where we want to be, and we already have ideas and solutions to help get us there. But if we are to make it a reality, we must measure progress and make sure we stay on the right path. By linking the digital decade targets to the DESI, we will be able to assess progress on an annual basis. In addition, all policy and regulatory decisions should be justified on the basis of being fit for purpose to achieve the Digital Decade ambitions.

With the DESI, we have a ready-made framework that can show whether governments and industry are investing in initiatives that deliver improved digital outcomes and clear economic progress. If every Member State committed to spending the digital allocation of the RRF on reaching 90 for 27, citizens can be assured that they will enjoy the digital future they deserve.

  • Digital Society
  • Digitalisation
  • EU
  • Public Policy
  • Recovery