Current Recovery & Resilience plans will not be enough if Digital Decade 2030 ambitions are to be achieved

Brussels, 21st June: A new report, Achieving the Digital Decade: Recovery & Resilience Plan Contributions, conducted by Deloitte and commissioned by Vodafone, reveals Europe must fill significant gaps in order to achieve the European Union’s ambitious Digital Decade 2030 goals. Based on financial analysis of 20 Member States’ National Recovery and Resilience Plans, against Digital Decade 2030 targets, gaps appear greatest in regard to digital infrastructure, ICT specialists, the digitalisation of SMEs and cloud adoption.

Contribution of the National Recovery and Resilience plans to the Digital Decade 2030 Targets

Despite Digital Infrastructure being the foundation that will support all four of the Digital Decade priorities (Skills, Digital Transformation of Businesses, Secure and Sustainable Digital Infrastructures and Digitalisation of Public Services), Member States appear to be investing the lowest amount of Recovery and Resilience Funds (RRF) towards this area. Combined EU recovery plans from the 20 Member States allocate €47 billion to Skills, €40 billion to supporting the Digitalisation of SMEs and cloud adoption for businesses, €30 billion to Public Services and just €18 billion to Digital Infrastructures. Investment across 20 Member State National Broadband Plans and EU recovery plans for digital connectivity amounts to just 46% of the estimated €210bn EU-wide investment needed to meet 2025 targets, with further investment needed to close this gap.[2]

Whilst significant investments are being made by Member States via National Broadband Plans, it is evident that the Recovery and Resilience Funds alone will not drive the step change required to achieve the Digital Decade 2030 Targets. Further public investment will be needed, in addition to policy reforms that encourage private investment and improve the overall health of the sector, if Europe is to achieve its ambitions by the end of the decade.

What can be seen across all EU recovery plans, is that recovery funding linked to SME digitalisation only accounts for around 10% of the current SME digitalisation spend across the EU. This may prove to be insufficient when considering that meeting the 2030 target will require an additional third of all SMEs to digitise by 2030. Smaller European businesses may struggle to reach a basic level of digital intensity by 2030, scale up their operations or reap the benefits of cloud, AI and Big Data.

The size of the gap to achieving 2030 Digital Decade Targets varies across Member States

The report shows that Member States have varying gaps in relation to the Digital Decade 2030 Targets. For example, in regards to Very High Capacity Networks coverage (VHCN), Denmark and Luxembourg are already less than 10% away from their 2030 Target, whilst other countries have over 90% to go to fill this gap. Whilst digitalisation measures are often correlated, the comparison suggests that some Member States may face greater challenges in certain areas. For example, whilst Latvia, Portugal and Romania have already achieved significant levels of Very High Capacity Networks, they may face a risk that employees and firms lack the capability to fully exploit this connectivity as a driver of growth, since their Basic Digital Skills, and ICT specialist percentages are lower in comparison.

Sam Blackie, Partner and Head of EMEA Economic Advisory, Deloitte, said:

“While Member States are committing significant funds to the digital transformation of their economies, the research shows that further private and public investment may be needed in certain areas to achieve targets. In the years to come, each country will have to assess how best to bridge the potential gap in funding, taking into account several factors including the economy, population density, demography and the geography of the territory.”

Joakim Reiter, Chief Corporate Affairs Officer, Vodafone Group, said:

“As we rebuild our societies and economies from this devastating pandemic, Europe’s recovery program and funding offer a once-in-a-generation opportunity to address Europe’s digital divides and propel the EU towards the next digital decade and beyond. This is why everything must be done to draw the maximum benefit from the Recovery and Resilience funds.

Connectivity is the enabler of every single one of the European Commission’s Digital Decade 2030 targets. Unfortunately, in sharp contrast to US or many parts of Asia, we are not seeing Gigabit and 5G prioritised across Europe as a whole. If Europe is to achieve its shared Digital Decade ambitions, there must be clearly defined targets along the way that ensure the right level of ambition. All EU recovery funding streams must work together in harmony, driving towards the same end point. If we can get this right, leveraging funds, reforms and the scale of the European single market, together we can build back better for Europeans and make Europe more prosperous, green and competitive.”

Several changes needed to realise a future connected Europe, according to Vodafone

In light of these new findings, Vodafone encourages Member States, policymakers, regulators and operators to consider 5 actions:

[1] A recent study commissioned by the EIB and cited in a European Commission working document has estimated an investment gap on an annual basis of around €42bn until 2025, in order to achieve the Digital Agenda for Europe and European Gigabit Society targets, and taking into account expected private funding over that period. Over the period 2021-2025, this implies a total gap of around €210bn.

[2] A recent study commissioned by the EIB and cited in a European Commission working document has estimated an investment gap on an annual basis of around €42bn until 2025, in order to achieve the Digital Agenda for Europe and European Gigabit Society targets, and taking into account expected private funding over that period. Over the period 2021-2025, this implies a total gap of around €210bn.

Notes to Editors

The report uses the targets set out by the Digital Compass across four pillars (Infrastructure, Skills, Businesses and Public Services) as a framework to assess the contribution of Member State NRRPs towards achieving these targets. The scope of the report covers 20 Member States, who together account for c.72% of the RRF funding available.

Using data from the Digital Economy and Society Index and the Digital Intensity Index, the report identifies the current gaps to achieving the 2030 Digital Decade targets across the four pillars. Projections are provided as a high-level indication of the potential future trajectory of each metric, based on current trends.

Based on a review of NRRP documents published by Member States, the report estimates the amount of funding that appears to be linked to each of the Digital Decade pillars and target areas, at aggregate level and also at national level for selected Member States. The funding linked to individual pillars or target areas may represent an over-estimate in some cases, as some investments or packages may include multiple areas that cannot be disaggregated based on the information identified. However, the total amount of NRRP funding linked to Digital Decade targets as a whole is adjusted to avoid double-counting where feasible.

Further detail on methodology, caveats and limitations can be found within the report.

About Vodafone

Vodafone is a leading telecommunications company in Europe and Africa. Our purpose is to “connect for a better future” enabling an inclusive and sustainable digital society. Our expertise and scale give us a unique opportunity to drive positive change for society. Our networks keep family, friends, businesses and governments connected and – as COVID-19 has clearly demonstrated – we play a vital role in keeping economies running and the functioning of critical sectors like education and healthcare.

Vodafone is the largest mobile and fixed network operator in Europe and a leading global IoT connectivity provider. Our M-Pesa technology platform in Africa enables over 48m people to benefit from access to mobile payments and financial services. We operate mobile and fixed networks in 21 countries and partner with mobile networks in 49 more. As of 31 March 2021, we had over 300m mobile customers, more than 28m fixed broadband customers, over 22m TV customers and we connected more than 123m IoT devices.

We support diversity and inclusion through our maternity and parental leave policies, empowering women through connectivity and improving access to education and digital skills for women, girls, and society at large. We are respectful of all individuals, irrespective of race, ethnicity, disability, age, sexual orientation, gender identity, belief, culture or religion.

Vodafone is also taking significant steps to reduce our impact on our planet by reducing our greenhouse gas emissions by 50% by 2025 and becoming net zero by 2040, purchasing 100% of our electricity from renewable sources by 2025 and by July 2021 in Europe, and reusing, reselling or recycling 100% of our redundant network equipment.

For more information, please visit www.vodafone.com, follow us on Twitter at @VodafoneGroup or connect with us on LinkedIn at www.linkedin.com/company/vodafone.

About Deloitte

In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk.