European firms make digital shift unevenly

ECA: Digitalisation could generate more than €110bn a year

Iliana Ivanova.

EU businesses are not taking full advantage of cutting edge technologies to innovate and remain competitive. Almost five years ago, the Commission kicked off the Digitising European Industry (DEI) initiative, but despite its efforts to support national authorities, progress has been uneven among the Member States, the European Court of Auditors finds in its latest report.

There are estimates that digitalisation in the EU could generate more than €110bn of revenue a year, said Iliana Ivanova, the member of the European Court of Auditors responsible for the report. Stressing that so far, progress has been uneven across the EU Member States she added that to be a success the DEI initiative needs the continued commitment of all stakeholders – EU, governments and businesses.

There are EU countries that still do not have national digitalisation strategies or have not taken certain specific actions, such as establishing Digital Innovation Hubs, one of the key elements of the initiative. Digitalisation is not just acquiring new IT equipment and systems associated with better business performance across productivity, but also management practices, innovation, growth and higher-paying jobs.

Embracing the digital transformation is essential for many EU businesses to remain competitive. As 99 % of EU’s businesses are SMEs, it is particularly important to get this sector to address digitalisation.

 According to the EU auditors, digitalisation of EU industries has progressed in recent years, but at different speeds between countries, regions and sectors. There are also large disparities between large companies and small and medium-sized enterprises.

The auditors also note that the total cost of creating and maintaining a framework for supporting EU industry digitalisation is unknown. Concerning the use of EU funds, Horizon 2020 supported the initiative and there were also measures potentially supporting the implementation of the DEI in the European Regional Development Funds (ERDF) programmes reviewed. The Commission has not, however, encouraged Member States to allocate ERDF funding to the initiative.

The report points out also that the take-up rate of fast broadband varies greatly between companies of different sizes. In 2019, only 46 % of SMEs had fast broadband access, and this is inevitably holding back the digital industrial revolution across the EU, the report says. The auditors also made a number of recommendations, which also take into consideration the proposed new Digital Europe 2021-2027 programme.

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