Europe needs a much bigger push to hit its Digital Decade targets

By Ben Wreschner, Chief Economist and Head of Public Affairs, Vodafone

For more than a year, we have all relied heavily on digital technology to carry us through the pandemic. We have learned new digital skills and used new digital applications as we connected remotely. Yet while the pandemic may be receding, we can expect digital technologies to continue playing a role in our lives. Indeed, more and more of our business, study and communication will depend on digital applications.

The European Commission already made the digital transition a policy priority before the pandemic struck. Digital is a key part of the European Union’s €672.5 billion Recovery and Resilience Facility (RRF), which says member states must spend at least 20% of their allocations fostering digitalisation. Although Europe has recognised the need to make the digital transformation go faster, it is still lagging. We need to invest more in infrastructure to enable innovation and compete globally with economic powerhouses like the US and China.

This call to action is based on real numbers. Europe must fill substantial gaps if the digital Decade 2030 Targets are to be met, as shown in a new study from Deloitte (commissioned by Vodafone) published today, ‘Achieving the Digital Decade: Recovery & Resilience Plan Contribution.’

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, €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.

This is worrying. We must get 5G connectivity right, as it will power the next digital industrial revolution and will underpin new real-time devices and services in manufacturing, energy, life sciences and agriculture. We must prioritise green Gigabit and 5G networks across Europe as a whole.

Targets are not enough: we need accountability. We will need the full policy toolbox to reach the digital targets. We will need to combine the targets with clear monitoring – through the Digital Economy and Society Index (DESI), ideally enhanced with a strong sustainability element - and implementation to ensure that the money is spent effectively to reach the targets. We must ensure that every policy decision, every new legislation, every regulatory decision is assessed against its contribution to these new targets.

We welcome the EU’s commitment to digital in the recovery programmes: it will be a catalyst foradditional investment flowing into the sector. But the challenge is also bigger than before – and the gaps are already apparent. At EU and member state level, we need to recognise that we need a much bigger push to meet our digital targets. We need a bold and aspirational vision from policymakers and a paradigm shift in policy and regulation. And we need to act now. Even as we emerge from the pandemic, we face new challenges. We know that digital technologies will power the future. We must adopt them as fast as we can and ensure no citizen is left behind.

Read the analysis developed by Deloitte