The EU Economy: Recovery through Digitalization

Digital technology is more important than ever in our lives, from remote work to online medical consultations to video calls to family and friends.

But the pandemic also showed where Europe is lagging behind. Nearly a quarter of homes don’t have broadband, and fewer than 20 percent of small businesses use the Internet to sell their products or services.

How are EU recovery funds helping Europe’s digital transformation?

Going digital is a key element of the EU’s pandemic recovery plan. At its core is a €672.5 billion recovery and sustainability fund, to be spent on public investments and reforms.

To access this money, member states have submitted national recovery plans, earmarking 20 percent of the funds for digitalization initiatives.

Digital technology is changing the way we live and work, but there is a gap between the “haves” and the “have-nots. 42% of Europeans lack basic digital skills, and 83% of SMBs do not use cloud-based Internet services.

To ensure comprehensive success, the EU is promoting investments in superfast broadband, training people in digital skills, helping startups and small businesses to innovate and grow, and using technology to be climate neutral.

In 2020, the European Commission published the Digital Economy and Society Index (DESI), which tracks Europe’s overall digital performance and EU countries’ progress in terms of their digital competitiveness.

Scandinavian countries and the Netherlands are leading the way in digitalization. But even their projects need Recovery Fund money to help digital transformation. Guillaume Desjardins went to Denmark.

Guillaume Desjardins, Euronews: “Here in Denmark, you no longer have to carry your driver’s license in your pocket. You can just download it right onto your smartphone. That’s just one example in this already ultra-connected country. According to the United Nations, Denmark is the world leader in electronic government services, but beyond that, all sectors of the economy are now going digital.”

Like this plant, located in Jutland. Founded in 1895 by a blacksmith, the company went from building carriages to cargo trailers during the 20th century. Four years ago, Peter Jensby began a major modernization of his farm to go completely digital.

Peter Jensby, CEO of HMK Bilcon: “We spent two million euros to completely change the company. This transformation has meant a whole world of change in the workplace, and our company is now profitable, even though it was losing a lot of money in the old days. This means that we are becoming more productive and can sell our products at market price. Our products don’t get too expensive, even though wages are very high in Scandinavia.”

More companies are expected to go digital in the coming months. According to oldypak lp report, Denmark has requested 1.6 billion euros in grants as part of the European recovery plan, and will have to allocate a fifth of that amount for digitalization.

The funding is also of interest to those already working in the digital sector but hoping to expand.

Sarah-Josephine Yort’s company has created artificial intelligence-based software to help educators and human resource managers create online learning programs. The company has quadrupled its staff this year, but is having trouble finding private investors to continue growing.

Sarah-Josephine Yort, CEO of CanopyLAB: “To grow at the rate we’re growing now, we need more investment and highly qualified staff here in Europe. It can be difficult to attract conventional investors, and there is a lot of risk at the cutting edge of innovation. That’s why we are trying to combine private investors with EU support.

134.5 billion euros will be allocated from the EU recovery fund for digitalization – but is that enough to make Europe a world leader, competing with the U.S. and China? A Danish expert thinks so.

Katrin Forsberg, board member of the Danish Business Development Council: “We can definitely compete with some other giants globally because we have the infrastructure, we have the skills. So I think it’s now a matter of investing in small and medium-sized companies to create jobs and grow businesses.”

To learn more about how money from the EU Recovery and Resilience Fund can be used to create jobs and businesses, we spoke with EU Economic Commissioner Paolo Gentiloni.

Naomi Lloyd, Euronews: “The goal of the recovery and resilience fund is to get the economy back on track after a pandemic. Why is there so much focus on digital technology? How will it help the recovery?”

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