Kroes: Europe "flattened by global competitors" without more ICT investment

An extensive report from the European Commission has found that EU citizens, businesses and innovators are generating enough demand for digital products and services, but are being let down by insufficient investment in information and communication technologies (ICT).

The second edition of the EC’s Digital Agenda Scorecard tracks the progress of policy actions across seven domains: digital single market; interoperability and standards; trust and security; fast and ultra-fast internet access; research and innovation; digital literacy, skills and inclusion; and ICT-enabled benefits for EU society.

Whilst the report finds that progress in the 12 months to May 2012 has been “mildly positive” in many areas, it warns that European businesses will be “flattened” by global competitors if more investment is not urgently made in the region’s ICT industries and infrastructure.

“Europeans are hungry for digital technologies and more digital choices, but governments and industry are not keeping up with them,” said Neelie Kroes, Vice President of the European Commission.

“This attachment to 20th century policy mindsets and business models is hurting Europe’s economy. It’s a terrible shame. We are shooting ourselves in the foot by under-investing. Europe will be flattened by its global competitors if we continue to be complacent.”

The EC acknowledges that Europe remains in the midst of a profound economic crisis, and that high stocks of public debt limit the ability of governments to increase demand by government spending.

However, it adds that macroeconomic crisis management alone is not sufficient to restart growth, and that the key to growth “must be found in structural change to the economy”. This must include a “strong dose of digitisation”, according to the EC, which adds that almost all newly created jobs require good ICT skills, as do most existing jobs.

The report’s positive points include the fact that broadband is now nearly ubiquitous in Europe, with 95 per cent of Europeans having access to a fixed broadband connection. Also, consumers and businesses are adopting mobile broadband quickly, with such services growing by 62 per cent in the past 12 months to 217mn subscriptions EU-wide.

Greece, Portugal and Ireland have also made great progress with their eGovernment initiatives: many of the greatest increases in this area have been made in cash-strapped economies, according to the EC.

The big areas of concern highlighted by the report include estimates that half of Europe’s labour force does not have sufficient ICT skills to change or find a job (although 43 per cent are described as having medium or high Internet skills).

Nearly a quarter of the labour force is not thought to have any ICT skills at all. Taken together, these problems are expected to make it hard to fill the 700,000 ICT vacancies which will be created by 2015.

Online shopping continues to go from strength to strength, with 58 per cent of EU Internet users accessing such services. Only one in ten however have purchased from a website based in another EU member state, with the report recommending more work be done on removing obstacles such as red tape and language barriers.

Mobile roaming charges remain prohibitively high according to the EC, with consumers still paying an average of three and a half times as much for roaming calls as for national calls, leaving the continent a long way off its target of placing these services at comparable price levels by 2015.

The use of eCommerce services by small and medium enterprises (SMEs) has also stalled, with the majority of such firms in the EU neither shopping nor selling online, and thus limiting their export and revenue potential.

Finally, European investment in ICT research & development is also falling behind competitors in other global regions: public research has been protected from austerity measures, but is still well below the six per cent annual growth needed to double public investment by 2020.

Commercial R&D investments meanwhile are falling, and the EU’s ICT sector now has less than half the R&D intensity of its counterpart in the US, according to the study.

The EU’s second Digital Agenda Scoreboard can be accessed in full here.