Digitalisation in the European Union: Progress, challenges and future opportunities

Digital infrastructure, innovative environments and the availability of skilled workers all play a crucial role in driving digitalisation, but EU-wide disparities persist.
The European Union has narrowed the gap with the United States in adopting advanced digital technologies (EU 69% vs. US 71%).

The COVID-19 crisis prompted a surge in the digitalisation efforts of EU firms. According to a new report, Digitalisation in Europe 2022-2023: Evidence from the EIB Investment Survey, more than half (53%) of EU firms took steps in 2022 to enhance their digital presence, such as offering services online. The European Union has also narrowed the gap with the United States in adopting advanced digital technologies. In 2022, 69% of EU firms implemented advanced digital technologies, such as advanced robotics, big data analytics and artificial intelligence, compared with 71% of US firms. The gap has narrowed steadily over the last four years.

While EU firms have made substantial strides, US firms overall made more progress in digitalisation as a response to the pandemic, primarily because of lower digital investment by micro and small firms in the European Union. Only 30% of microenterprises in the European Union prioritised digitalisation, compared with 62% of large firms.

“To achieve the digital transition and leverage its long-term benefits, the European Union should go beyond technology adoption and consider the broader societal implications. Empowering workers to enhance their digital skills will be crucial to create an innovation-friendly environment within the European Union, which in turn will make companies and regions more competitive and resilient,” said Debora Revoltella, director of the EIB’s Economics Department.

“Digital infrastructure, including high-speed internet access, innovative environments and the availability of skilled workers play a crucial role in driving digitalisation. Regions with better digital infrastructure witness higher returns on digital investments and a greater presence of digital firms. By embracing the digital transformation holistically, the European Union can build a prosperous and sustainable future,” said EIB Vice-President Ricardo Mourinho Félix.

For a summary of the report, click here. To consult the EIB Investment Survey data for each individual EU country, click here.

Despite progress, substantial disparities in digital infrastructure persist across EU regions, with 14% of firms seeing limited access to digital infrastructure as a major obstacle to investment.
Moreover, the digitalisation efforts of firms heavily depend on the availability of workers with digital skills. Regions where workers have above-average digital skills tend to implement advanced digital technologies, and businesses in these regions invested more in digitalisation during the COVID-19 crisis. Therefore, it is essential that regions improve education and training systems to continually upgrade workers’ skills and provide online learning opportunities to bridge the digital divide.

The environment in which firms operate also influences digitalisation efforts. Firms in highly digitally innovative environments were more likely to invest in digitalisation as a response to the pandemic.

Trade also plays a vital role in digitalisation, as firms engaged in international trade adopt advanced digital technologies more frequently. Digital firms exhibit greater resilience to trade disruptions and deal more proactively with those disruptions. Additionally, digital technologies can help address environmental challenges, for instance through smart urban mobility, precision agriculture and sustainable supply chains, helping to lower emissions and facilitate the transition to a greener economy.

Digitally advanced firms are also more inclined to invest in climate change measures: 57% of these firms have already invested in such measures compared with 43% of non-digital firms. These findings underscore the potential of digitalisation to support the shift towards a more sustainable economy

The EIB Group Survey on Investment and Investment Finance (EIBIS) is a unique, annual survey of some 12 800 firms. It comprises firms in all EU Member States, as well as a sample of US firms which serves as a benchmark. It collects data on firms’ characteristics and performance, past investment activities and future plans, sources of finance, financing issues and other challenges.

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Reference

2023-203-EN

5 May 2022

The 2021/2022 digitalisation in Europe report: The pandemic has made the digital transformation an integral part of European society

Close to half of the firms in the European Union report that they invested in digitalisation as a response to COVID-19. Digital firms fared better than non-digital firms through the pandemic. They were less likely to experience a strong decrease in sales from the beginning of 2020, and used the crisis more often as an opportunity to accelerate digitalisation. On average they were more productive, innovative, grew faster and paid higher wages.

21 July 2021

EIB Corporate Digitalisation Index 2020/2021: Most EU countries are trailing the United States in digitalisation

By 2020, 37% of European firms had still not adopted any advanced digital technology, compared with 27% in the United States. The slow adaptation of digital technologies threatens to impede European firms’ competitiveness in the long term, as digital firms tend to perform better than non-digital firms do. They invest more, are more innovative, have better management practices, grow faster and create higher-paying jobs. Digital firms are also more likely to invest in tackling the transition and physical risks of climate change. While EU firms are overall lagging behind US peers in adopting and creating new digital technologies, Europe excels in one area — the intersection of green/digital technologies.

20 April 2020

Only four EU countries lead the US in digitalisation – EIB launches new report on digitalisation in the EU and US

In the fight against the Coronavirus, digital technology is playing an unprecedented role in the maintenance of daily life and economic and social activities, as well as in the recovery of industry and business. The Coronavirus pandemic is becoming a tipping point for digitalisation – the dawn of a new era – by accelerating the maturity of digital technology: what was once a ‘nice to have’ could now become a ‘crucial to have’. For businesses and organisations to thrive and become more resilient in the medium and longer term, it may be more relevant than before to revisit digital transformation plans in order to stay competitive in the ‘new normal’.