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Unlocking Europe's Digital Potential

How cloud computing can support the EU’s Digital Decade



Executive Summary

The 2020s are the European Commission's Digital Decade, with ambitious targets in four areas to accelerate progress in skills, government, infrastructures and business (see Box 1).1

Public First, an independent consultancy, was commissioned by Amazon Web Services (AWS) to explore the role cloud computing can play in unlocking the EU’s digital ambitions, and to gain insight from consumers and businesses on the current state of these goals. Public First constructed new economic modelling and conducted polling of over 6,500 consumers and 7,000 businesses across nine EU member countries (Denmark, Finland, France, Germany, Italy, the Netherlands, Poland, Spain, and Sweden), (see Box 2).

In total, we estimate that achieving the Digital Decade goals could unlock over €2.8 trillion in economic value.2 This is equivalent to 21% of the EU’s current economy. We estimate that a majority (55%) of this potential economic value is reliant on cloud computing.

What is the Digital Decade?

AWS_COMPASS_V001

The Digital Decade is a vision for Europe's digital transformation by 2030. In 2021 the European Commission (EC) announced the Path to the Digital Decade, including as part of it a Digital Compass with key metrics to achieve the EU’s goals. These are laid out above and form the basis for the report’s analysis and recommendations.

The Potential of the Digital Decade

Across the EU, we saw that citizens recognised the importance of digital technology and the Digital Decade. Digital technology was seen as second only to Health in its importance for their country's economy according to respondents.

While Member States are making progress towards the EU’s digital decade targets, this needs to be accelerated to ensure we fully realise the potential in areas such as digital skills and the adoption of key technologies such as cloud (Graph 1). At the current rate of progress, it would take until 2040 – 10 years behind schedule – for all the Digital Decade goals to reach their targets. The EU is on track to unlock just €1.3 trillion in economic value by 2030. If the EU can accelerate progress, up to €1.5 trillion in additional economic value could be unlocked by 2030.   

In this report, we look at the progress the EU has made to date and how further acceleration can be achieved through partnership between governments, businesses, and citizens.

Accelerating progress will require a sustained, collective focus – across the public and private sectors – on digital adoption, skills development, infrastructures, entrepreneurship, and digital transformation of government and businesses.

Recent progress against selected Digital Decade goals
Potential Economic impact of Digital Decade (€ mn)

Business

State of Play: The EU’s tech sector is growing rapidly, but many companies haven’t fully taken advantage of existing technologies such as the cloud.

Key Insights

  • The EU’s tech economy is growing rapidly. In 2021, the EU had just over 200 unicorns, which in itself is a doubling of the level four years before. The region looks set to comfortably meet its target to double again the number of unicorns by 2030.
  • Don't forget about the importance of technology for the rest of the economy. Digitising the overall economy would boost growth by 20% - 8.5 times the value of growing just the EU’s tech sector to US levels.3
  • Not enough companies are taking advantage of the power of existing digital tools. Only 26% of European companies have taken up key technologies such as the cloud, 25% AI, and 14% big data. Deploying digital tools like Customer Relationship Management (CRM), Enterprise Resource Planning (ERP) or online accounting can boost business productivity by 10-25%. 
  • Increasing cloud adoption will play an important role in laying the groundwork for the next generation of innovations. We estimate that a majority (55%) of the potential impact from the Digital Decade agenda is reliant on cloud computing. If we could accelerate cloud, AI, and big data adoption in EU businesses by 10 percentage points over current trends, this would add another €370 billion in Gross Value Added (GVA), a larger amount than the EU’s financial services industry.

Our Recommendation: The EU is well placed to take advantage of the next wave of digital technologies. The next generation of €1billion+ companies are as likely to be created in the automotive, energy, or construction sectors as they are making a new social network or photo sharing website. However, to take full advantage of the next wave of technology, more will be needed to ensure businesses are taking advantage of existing tools, such as cloud and software applications through the cloud e.g. CRM. Many businesses we surveyed were simply unaware of the benefits digital technology could create. Governments and industry can play a crucial role in providing training, business support and best practice in how to best take advantage of digital technology.

Skills

State of Play: Progress over the last five years in improving basic digital skills or the number of female ICT specialists has been slow, and based on current trends the targets are unlikely to be met. For example, only 61% of the EU’s population is projected to have basic digital skills by 2030, versus a target of 80%.

Key Insights

  • A shortage of digital skills is impeding growth for the most digitally advanced companies. 79% of businesses view digital skills as important or essential - rising to 93% for digitally intensive businesses.4 40% of digitally intense businesses said that the shortage of digital skills has slowed their growth, 33% that it has increased costs, and 35% that it has slowed the development of new technology.
  • While boosting the number of ICT specialists is important, improving the digital skills of the average worker could be just as impactful. Not everybody needs to be able to write code for their job, or create their own machine learning (ML) model from scratch - but almost everyone could benefit from possessing good intermediate digital skills. In one estimate, over 40% of workers who use office software daily still do not have sufficient skills to use it effectively.5
  • It will be hard to meet the EU’s target for 20 million ICT specialists by 2030 without improving inclusion. Based on current trends less than 25% of ICT specialists will be female in 2030, rising from 19% in 2021. In many countries, the share is actually falling.

Our Recommendation: Much of the economic impact of the Digital Decade agenda will come from using technologies such as machine learning to automate existing tasks. This is likely to accelerate the need to reskill and upskill existing workers, and support them as their job description shifts. The EU can play a crucial role in helping its Member States learn from each other in what sorts of programmes are most effective in supporting workers to retrain, or just helping improve the level of basic digital skills.

Infrastructures

State of Play: The EU looks likely to meet its Digital Decade targets for internet connectivity, with 59% households already covered by fixed Very High Capacity Networks (VHCN). More work is needed to support the development of low-latency solutions, such as edge computing, which enables data processing, analysis and storage closer to the source of the data.

Key Insights

  • Digital infrastructure is seen as more important than traditional forms of investment such as transport. In our polling, both consumers (42%) and businesses (53%) chose faster or more reliable internet as their leading priority for connectivity infrastructure investment, ahead of other types of investment such as roads (42% and 33%), railways (32% and 22%) or airports (7% and 6%).
  • More digital tools are needed to support Europe’s green transition. 89% of European businesses agreed that the current importance of sustainability would either be maintained or grow as a factor in their business’ decisions. However, businesses were much less confident they currently had adequate digital tools to monitor and improve sustainability, with just 44% agreeing with this statement.
  • Technology choice and having access to the best technology matters more than the nationality of the company providing it. Technologies like the cloud are not just an undifferentiated commodity, but a way of delivering many types of digital services. In our business polling, just 6% of businesses identified the nationality of the provider as one of the most important factors in choosing a cloud provider, making it the least important of 14 potential factors.

Our Recommendation: The EU’s leadership in developing shared international standards could further contribute to the EU’s lead role in the global digital economy. Similarly, continued efforts to increase funding of R&D and focus on flagship programmes such as the European Innovation Council (EIC) will ensure that the continent remains home to some of the most innovative companies worldwide.

In order to develop world-leading services, European tech companies need the freedom to choose the technologies that work best for them, without restrictions that could limit their ability to grow, innovate, and compete in the global economy.

Government

State of Play: The EU continues to see steady progress in digitising core public services. At present, the EU has achieved 75% of its target for digital public services for citizens and 84% of its target of digital public services for businesses.

Key Insights

  • The EU is a world leader for digital government. The UN’s Online Services Index rates Estonia, Denmark and Finland, second, third, and fourth in the world respectively. 64% of EU citizens currently use e-government services, and 66% of EU consumers said they were confident they could find information or a service through their government’s websites or apps. 
  • Many Europeans would feel comfortable using more digital government services - over half would be comfortable accessing their medical records online. Our polling found that just over a third have accessed their medical records (35%) or been asked to prove their identity (35%) online. 55% said they would be comfortable accessing their medical records, and 46% comfortable proving their identity online, suggesting potential for further uptake.
  • The cloud can play a significant role in creating a more agile and efficient digital government. In our polling, we saw that citizens of countries that followed a ‘cloud-first’ policy are more likely to say they thought their government did a good job at taking advantage of digital technology. We estimate that moving 10% of government IT systems to the cloud could save European taxpayers over €900 million a year.

Our Recommendation: Across the EU, we found there was a willingness from citizens to use digital public services if available, but progress relies on the EU learning from its existing leaders. The EU should act as a facilitator between Member States to help them learn from each other, to scale and replicate best practices for digital transformation, including how best to standardise and open up data, automate routine transactions, and break down organisational silos.

Methodology

In this study, we used a range of different methods to quantify the economic potential of the EU’s Digital Decade agenda, and the role of the cloud:

  • We ran new nationally representative consumer polls in nine countries, reaching 6,830 Europeans in total, and sought their opinion on a range of issues related to digital technology and skills.
  • We ran new economically representative business polls in nine countries, representing 7,184 European senior decision makers.
  • We interviewed 10 policy stakeholders from across Europe, asking their opinion on the progress of the Digital Decade agenda.
  • We conducted new literature reviews on the impact of digital technology, skills, cloud computing and AI on economic growth.
  • Based on the data from our polling and the results from our literature reviews, we produced new modelling to separately estimate the impact of increasing the level of basic digital skills, business digital tool adoption, cloud computing and the use of AI and big data.

To learn more about our modelling approach, please see the Methodology section in the report’s appendix.

Public First is a member of the Market Research Society. The full tables for the data used in this report is available to download from our website. While AWS commissioned this report from Public First, all economic estimates are our own.

Foreword

How can policymakers help shape digital transformation that benefits everyone? It’s the prevailing question in many conversations I have as the Head of Artificial Intelligence and Member of the Executive Committee at the World Economic Forum. This question has become even more important in the face of cataclysmic disruptions to global and European economic performance, cooperation and productivity.

The European Union’s ‘Digital Compass’ goals are perhaps the boldest and most ambitious answer by a policymaking body globally in pursuit of a sustainable vision for our digital society. In reading the Unlocking Europe’s Digital Potential report I was struck by how profoundly the EU’s digital agenda could benefit European citizens: potentially unlocking €2.8 trillion in economic value. Beyond these economic benefits, the societal benefits for EU citizens of building a greener and better future, using responsibly sourced designed and developed technology will be felt by generations to come and bring new ways to learn, entertain, work, explore and fulfil ambitions.

What’s clear from this report is that meeting these goals will not happen automatically. Only 26% of European companies are using cloud computing and even fewer are using AI and big data. We need collective action to accelerate progress towards meeting Europe’s full digital potential and to address the challenges of adoption such as the digital skills gap and design, development and use of inclusive and responsible technology. 

As the EU gets set to meet its target for doubling the number of unicorns in 2022 on its path to the Digital Decade, access to the best technologies globally and the right policies will be vital. Technologies such as cloud computing and AI are already transforming economies and improving our societies, while raising fundamental questions about our digital future. The record speed at which mRNA vaccines were developed and brought to market in the wake of COVID-19 and the overnight global adoption of online meeting tools during the pandemic, are just two examples. AI and cloud computing have the potential to transform all sectors and whatever our roles we must support Europe to achieve the benefits which come from advancements in these areas at home and globally.

The key to harnessing the potential of these emerging technologies is public-private partnership. Only when we work together can we successfully and sustainably strengthen the EU’s competitiveness in the digital arena. 

This cooperation will not only benefit the EU, it will also benefit allies, trading partners and the global community. It could also be the answer to how technology can help achieve the vision of a world that is both tech-enabled and focused on people’s needs. Therefore, I look forward to seeing the acceleration of prosperity through technology and partnership this Digital Decade will bring.


Kay Firth-Butterfield
Head of Artificial Intelligence and Machine Learning;
Member of the Executive Committee,
World Economic Forum

Amazon Web Services: A partner for Europe’s Digital Future

Digital technology is one of the most important drivers of economic growth, higher living standards, innovation, and increased sustainability in Europe. Digital advances such as e-commerce, cloud computing, AI, and blockchain, sit at the very heart of Europe’s Digital Decade ambitions.

AWS shares the European Commission’s vision for Europe’s digital transformation by 2030. We commissioned Public First to undertake the ‘Unlocking Europe’s Digital Potential’ study to understand how we can collectively work together to help Europe unlock its digital ambitions.

Since launching in Europe 15 years ago, AWS has consistently partnered with businesses and governments with the core mission to put the power of the cloud in the hands of everyone. We continue to expand our cloud infrastructure in Europe and through this investment in infrastructure; we create jobs, skills and opportunities within our communities, and help our customers do the same. Thousands of Europe’s fastest growing start-ups, largest enterprises, and governments are using AWS to innovate rapidly and better serve their customers. We remain committed to helping European organisations succeed in the global data economy.

Now is the time to accelerate the take up of digital technologies across Europe. By doing so, the EU can dramatically boost skills, expand digital infrastructure, transform business, and modernize public services. But success will require sustained, collective focus and cooperation — across the public and private sectors.

That is why, as we look to the coming decade, we want to step up our support to accelerate digital transformation and we are reinforcing our commitment to Europe:  

1. Earn Trust

Europe is leading the way in a new industrial revolution towards a green and digital future. We will continue to help customers meet evolving European laws and standards, and achieve the highest levels of security, privacy and resilience. We will work every day to earn trust as a partner in this transformation.

2. Invest in Skills

The next generation of leaders in Europe will need to work differently to succeed in a digital future. We will continue to help economies address the digital and cloud skills shortage through education, training, and support through a range of schemes. AWS has committed to help 29 million people globally grow their technical skills with free cloud computing skills training by 2025. We will play our part inbuilding the innovative skills European citizens and businesses need to compete — and succeed — on the world stage. 

3. Accelerate Sustainability

A digital future for Europe is a green future. We are on course to power our operations with 100% renewable energy by 2025, five years ahead of our original target of 2030. We are working alongside customers on new ideas that harness the potential of emergent technologies to help reduce carbon emissions and protect our environment. As the world’s largest buyer of renewable energy, we will continue to transform our infrastructure to meet our sustainability targets.

4. Power Business

AWS helps customers build tailored solutions that digitally transform businesses through the power of the cloud. European companies need access to the world’s best technologies if they’re to be competitive. To achieve their digital ambitions, AWS’s European customers should have the right to freely choose the technologies they need. AWS respects European values and will support the evolving regulatory landscape to help customers benefit from technology that will drive their businesses forward - helping them comply with current and future European legislation.

5. Enable Innovation

Innovation is the lifeblood of the digital economy. We will continue to reduce the cost of innovation, allowing for rapid iteration, rollout and scaling, by providing inventors and builders the ability to leverage high-powered computing and adopt game-changing technologies such as machine learning, AI and big data. We will help the best and brightest tackle Europe’s most pressing challenges.



The Digital Decade gives Europe an important opportunity to gain leadership in the global digital economy. The goals set forth in the Digital Decade are bold and ambitious — but will require collective focus from government, the private sector, civil society, and citizens — to fully realise them. Meeting these goals will not happen automatically. Achieving them should not be taken for granted. At AWS we’re committed to help solve the challenges that lay ahead in partnership with Europe. Like you, we’re builders. And, like you, we want to help Europe fulfil the promise set out in the Digital Decade. Collectively, we can realize a Europe that leads in the global digital economy, ensures green economic growth, and benefits all citizens.

Tanuja Randery
Managing Director,
AWS EMEA

Introduction

Digital technology is one of the most important drivers of economic growth, higher living standards and increased sustainability. Since the 1980s, digital technology has been responsible for around a quarter of growth in advanced economies.6 Successive technologies such as the personal computer, spreadsheet, internet, smartphone and cloud computing have helped transform the way we live, work and communicate. In our polling, technology was seen as the sector that had done the best job of innovating in the last decade, chosen by 50% of respondents.

In 2021, the European Commission set out a ‘Digital Compass’ with targets in four areas to help support the digital transformation of the EU: business, skills, infrastructures and government.

In this report independent consultancy Public First was commissioned by Amazon Web Services (AWS) to explore how the EU could best make progress on its Digital Decade goals.

In order to do this we:

  • Ran new polling of over 6,500 consumers and over 7,000 businesses across nine countries in the EU to better understand their current uses and attitudes towards digital technology
  • Constructed new economic modelling to better understand the potential of digital technology, and the role of cloud
  • Interviewed policy stakeholders from across Europe, asking their opinion on the progress towards the targets of the Digital Decade

In total, our modelling estimates that achieving the EU’s Digital Decade agenda could unlock over €2.8 trillion in economic value. That is equivalent to 21% of the EU’s current economy. The majority of this value (55%) is reliant on cloud computing.7

While member states are making progress, more is needed to ensure we fully realise the potential in areas such as digital skills and the adoption of core technologies such as cloud. Progress on many of the many metrics varies widely across countries (see Table A).

At the current rate of progress, it would take until 2040 - 10 years behind schedule - for all the Digital Decade goals to reach their targets. The EU is on track to unlock just €1.3 trillion in economic value by 2030. If the EU can accelerate progress, up to €1.5 trillion in additional economic value could be unlocked by the end of this decade.   

Accelerating progress will require a sustained, collective focus - across the public and private sectors - on digital adoption, skills development, infrastructure, entrepreneurship, and digital government.

In this report, we look at the following key questions for each of the four areas of the Digital Compass:

  • What is the current state of play against the EU's Digital Decade goals?
  • What are the opinions of EU citizens and businesses?
  • What is the role of cloud computing in supporting faster progress?
Progress of 2021 Status against key DESI and Digital Decade Metrics

Business

State of Play



EU’s Digital Decade GoalState of Play
At least 75% of European Union enterprises to take up cloud computing services, big data and artificial intelligence.At present, the European Union remains a long way from its 75% target: around 26% of European companies have adopted the cloud, 25% AI, and 14% big data. Based on current trends, the EU will not see 75% of companies adopting the cloud until 2040.
More than 90% of SMEs reach at least a basic level of digital intensity8.The EU is closer to its target for 90% of SMEs to reach at least a basic level of digital intensity. In Denmark, 88% of enterprises already pass this threshold, although other countries are significantly behind.
The European Union grows the pipeline of its innovative scale ups and improves their access to finance, leading to at least doubling the number of unicorns.Based on current trends, the EU looks set to easily meet its target for doubling the number of unicorns. In 2021, the EU had just over 200 unicorns, which in itself represents a doubling of unicorns from four years before. At present, there looks little evidence of a slowdown in the funding pipeline of growing start-ups, scale-ups and unicorns.
Progress towards cloud target

Views from policy makers

“The next generation of technological change will be extremely profound - it will touch upon the way we drive cars to the way we manage electricity supply. Sectors will become connected in a way they haven’t before and this will give rise to new services, new companies, and that will create growth and jobs in the coming years. In many of these sectors Europe continues to have leading companies, if we look for example, at the automotive industry, which is a great provider of jobs and growth in Europe. But we need to make sure we are in a position to build on this heritage to create the new wave of companies” - European policymaker (Brussels)

“It is crucial that digitisation efforts reach beyond those businesses who have already made good progress on their digitisation journeys. Supporting businesses to move from basic to advanced digital skills is key but for a lot of European businesses, particularly small businesses, they are at ground zero and will need more support to digitise – much of this will need to be delivered in person. Only by doing this will we create a really competitive and innovative market.” - Expert on the Digital Economy (Poland)

What did our research show?

The EU’s tech economy is growing rapidly

Europe is home to many of the world’s leading digital companies. While it has lagged behind the US and China in market share of the tech industry, the region is now starting to catch up: in 2021, Atomico, the European venture capital fund, estimated that the European tech sector saw over $100 billion of capital invested, 98 new unicorns and a start-up pipeline on a level with the US.9

The 2020s look likely to see the same rate of progress, if not faster, as the number of new European “unicorns” (those with billion dollar valuations or more) more than quadrupled between 2019 and 2021.10 Given the recent rapid growth in European unicorns and wider market value, the sector already looks likely to be on track to develop a new generation of €100 billion + valued companies by 2030.

Unicorns in the EU

In our business polling, technology companies were optimistic about their growth prospects, with 62% expecting revenue to grow in the next three years, and 26% expecting it to grow by over 10%. When we asked what the most important constraints were on their potential growth, they pointed to finding new customers (49%), the current economic and geopolitical situation (44%) and the costs and complexity from new regulation (28%) as particularly important. 

Which, if any, of the following do you think are likely to be the biggest constraint on your business growing faster? (Technology businesses)

Not enough companies are taking advantage of the power of existing digital tools

Even more important, however, than the economic potential of the tech sector is the potential opportunity from technology in the wider economy. For example, if the EU could boost its tech sector to make up the same share of the economy as the tech sector in the US, this would boost the overall EU economy by only 2.3% - whereas the wider application of digitalisation could boost it by over 20%. In our business polling and wider research, we saw significant potential to further increase digital adoption.

In total, 61% of businesses say digital technology has become more important to their business in the last five years. However, the majority of countries are a long way from the EU’s target for 75% of companies to adopt cloud, big data and AI. Some of the lowest hanging fruit for boosting productivity is the adoption of existing technologies such as cloud or digital tools like CRM, ERP, or online accounting by small businesses. This alone can boost business productivity by 10-25%.11

In order to compare the level of digital technology adoption across businesses, and see what types of businesses were lagging on their digital journey, we gave each business a score of 1-12 for digital intensity, based on the European Union’s 2020 digital intensity index.12 We found that smaller businesses were significantly less likely to score highly for digital intensity, and that industries such as retail or health had a relatively high prevalence of low digital intensity businesses.

While around half of all European businesses reported using online tools to store data, use social media or advertise online, it was only the relatively digitally intense businesses who were taking advantage of more advanced workflows such as analysing internal data or running their own custom applications. 

Which, if any, of the following purposes does your business use online tools for?

When asked about the most important barriers to greater use of digital technology, digitally intense businesses pointed to the cost of implementing new digital technologies (39%) or shortage of digital skills among their workforce (23%), while those with low digital intensity instead gave slightly different reasons such as saying digital technology was unlikely to make a significant difference (26%) or that it was too expensive to implement (30%). For these businesses, awareness and knowledge of potential benefits can be as important an inhibitor as technical barriers. 

Which, if any, of the following do you think it would be possible for your business to use digital technology to help with more than you do currently?

Recommendation: Many businesses in our survey were unaware of the benefits digital technology could create for them. Governments can play a crucial role, particularly for small businesses, in providing training, business support and role models in how to best take advantage of digital technology. Encouraging greater take up and modelling best practice for SMEs should be as much a focus for policy makers as investing in frontier technologies such as quantum computing or 6G.

Increasing cloud adoption could play an important role in supporting digital transformation

By turning compute power and data storage into a flexible service, cloud computing helps reduce costs for business, accelerates innovation, makes it easier to access data everywhere, improves digital security, and helps businesses become more sustainable. It is also a crucial enabler of the next wave of digital technologies such as machine learning, Internet of Things (IoT), and 6G. As part of this project, one of our main focuses was the particular role cloud computing could play in boosting business growth.

In our business polling, 34% of businesses told us they used cloud, and of those cloud users 36% used Infrastructure as a Service or Platform as a Service (IaaS/PaaS). We saw a significant gradient based on business size, however, with companies with greater than 10 employees significantly more likely to be using IaaS or PaaS than those with fewer employees.

Cloud Penetration by Business Size

Types of Cloud Computing

There are three main types of cloud computing:

  • Software as a Service (SaaS). SaaS or cloud tool providers offer consumer facing applications or services that either run or process their data in the cloud. This allows their users to often use the same application on a wide range of platforms apart from their main computer, such as on their phone or through a direct web interface. Examples of leading SaaS providers today include Adobe, Salesforce, Zendesk, Lemlist, UiPath and SAP.
  • Platform as Service (PaaS). In the next level of cloud computing, developers run databases in the cloud, while the underlying hardware infrastructure is abstracted through virtualisation.
  • Infrastructure as a Service (IaaS). In this type of cloud computing, businesses replace their own on-premises services with hired data storage and computing power owned by a public cloud provider. This model was first pioneered with the creation of Amazon Web Services (AWS) in 2006.

In total, we estimate that every day over 5000 new companies are created in Europe that are reliant on the cloud. If we could boost cloud adoption in small businesses across the EU by 10 percentage points, we estimate that that alone would increase the European economy by 0.6% of GVA, or an additional €79 billion.

Today, the global public cloud market is worth over $300 billion.13 Despite this, it is still relatively early days for the cloud, with many workflows yet to be transitioned. In one estimate, just 9% of global IT spend currently goes through the cloud.14 In our business polling, around half of cloud users (45%) said that they had only started using cloud in the last three years.

The Benefits of Cloud Computing for Businesses

The benefits of cloud computing include:

  • Flexibility and Cost Savings. Using cloud computing, companies pay only for the technology they use. This means that they can scale capacity up and down to meet sudden or seasonal spikes in demand, and can avoid paying for unused computing power. On average, business servers often see utilisation rates of under 20%, while cloud server utilisation can exceed 50%.15 We estimate that European AWS users saved around 39% of their IT costs by moving their workloads to the cloud.
  • Innovation and Agility. The cloud allows for the more rapid development, deployment, and scaling of new digital tools and services. European developers told us that using AWS sped up their development times by an average of 25%.
  • Store and Protect Data. By building applications in the cloud, companies can automate manual security tasks, while maintaining ownership and privacy for their data.

At the same time, many businesses are currently only using cloud computing for relatively basic purposes, such as file storage (65%), with only a minority currently taking advantage of more advanced use cases such as big data analysis (39%) or running their own internal applications (42%).

Which of the following purposes do you use a cloud computing provider for?

IaaS and PaaS play a key role in digital transformation for many businesses, with cloud users saying PaaS had enabled them to replace paper or manual processes with digital systems (40%), automate existing business processes (38%) or develop new types of applications (33%).

Has the use of cloud services enabled you to do any of the following?

Sector Deep Dive: Manufacturing

The combination of COVID-19, the need to reduce emissions, and trade tensions have put a spotlight on supply chains and manufacturing processes. Optimising efficiency through robotics, IoT, ML, and AI is one of the ways Europe will create a resilient and secure manufacturing sector.

Key Statistics

  • 44% of European manufacturing businesses are using the cloud
  • 43% of European manufacturing businesses are struggling to find people with digital skills
  • Smart manufacturing can increase labour productivity by 12%

How could digital technology improve the sector by 2030?

Smart manufacturing is growing. A Deloitte study16 found that smart manufacturing investment increased output by 10%, factory capacity utilisation by 11%, and labour productivity by 12%. A further survey found that the majority of manufacturers had increased their relative budgets on smart manufacturing during the pandemic. The focus was on collaborative robots (‘cobots’), computer vision to support virtual customer tours, Augmented Reality (AR) for training, and wearables to enhance safety.17

Manufacturing businesses are highly energy intensive; digital technologies can support sustainable futures. Manufacturing accounts for 21% of European emissions, and is a challenging sector to decarbonise18. An IDC survey found 96% of manufacturers reported that their digital technology investments had improved their environmental sustainability-related performance, indicating a key role for digital technology in the sector’s roadmap to Net Zero.19

Resilience and security. As manufacturing has become more digital, its risks have changed. The European Union Agency for Cybersecurity has found that supply-chain focused cyber attacks are growing and that 58% of these attacks are focused on access to data. Manufacturers will need to use highly secure cloud-based solutions to protect themselves.20

Manufacturing - Case Study - Deloitte’s Global Smart Factory

The Deloitte Smart Factory in Dusseldorf was created in 2017 to showcase the latest technologies that can transform manufacturing operations. The facility seeks to blend physical and virtual experiences - helping leaders to design, test and scale capabilities.

However, the Smart Factory’s original infrastructure, an on-premises data centre, lacked the necessary speed and efficiency in the face of growing technology demands.

As an AWS Global System Integrator (GSI) partner, Deloitte Germany migrated the Smart Factory’s infrastructure to AWS. The move enabled easier integration with technologies such as machine learning, IoT, and visualisation, whilst keeping operating costs as low as possible. Meanwhile, on-demand computing capabilities allowed the Smart Factory to conduct quick and easy experiments to evaluate new solutions in a manufacturing environment.

The Deloitte Smart Factory can now more effectively demonstrate the technology that manufacturers are increasingly investing in, and better support its industrial customers around the world.

Skills

State of Play



EU’s Digital Decade GoalState of Play
80% of those aged 16-74 have at least basic digital skills.While a majority of Europeans possess basic digital skills, there remains a significant differences between countries, with the proportion of the population achieving at least basic digital skills ranging from 29% to 79%. In the last five years, the overall prevalence of basic digital skills has increased by only 2.3 percentage points, and on current trends the region looks unlikely to achieve the EU’s target for 80% of the population to achieve basic digital skills by 2030. At the current rate of progress, the proportion of the population with basic digital skills will only be 61% by 2030.
20 million employed in information and communications technology (ICT), with  men and women representing equal proportions of the workforce.Over the last five years, the share of ICT specialists within total EU employment has increased from 3.5% to 4.3%. This is equivalent to just over 8 million workers. While some progress is being made on increasing the proportion of female ICT specialists, this is happening very slowly. In multiple countries, the percentage of female ICT specialists is actually falling.
Proportion of female ICT specialists
Progress towards Digital Skills target

Views from policy makers

“The question of digital talent is one of the most crucial bottlenecks when it comes to digitalisation, especially in meeting Digital Compass goals related to cloud and Data. Companies will not transition to using the cloud and more data if they can’t find the talent to power it.” - Senior representative from a technology trade association (Germany)

“SMEs make up a large part of Europe’s business community, they often do not have the resources or time to invest in skills. If we want to see the Digital Decade’s ambitions met we must focus on how we can upskill SMEs and support them to adopt more digital technologies and become data-led businesses” - Senior Officer in the Ministry of Transport and Communications (Finland)

What did our research show?

A shortage of digital skills is actively impeding growth for the most digitally advanced companies.

Among businesses, digital skills were seen as important or essential for 79% of businesses and 93% of highly digital intensive businesses.

Around half of business decision makers (47%) reported that they felt like they personally needed to have better digital skills for their job, and 72% reported that basic digital skills were important for their role.

In our polling, the use of dedicated digital specialists was still relatively rare among smaller companies:

Digitally intensive businesses were significantly more likely to say that they found it difficult to find staff with good digital skills (48%) compared to the average business (30%) - and that a shortage of digital skills had affected their business, with 40% saying it had slowed growth, 33% that it had increased costs, and 35% that it had slowed the development of new technology.

One of the challenges in increasing the amount of digital skills is the gender gap between male and female participation in the sector. According to Eurostat, in 2018 just 17% of ICT students in the EU were girls or women, and less than 3% of teenage girls express an interest in working as an ICT professional at the age of 30.21 The World Economic Forum estimates that women make up just 14% of the jobs in cloud computing.22

In our polling, we saw little difference between men and women for stated confidence in various basic digital skills, such as sending an email (92% vs 93%), saving a document (86% vs 83%) or finding a good price for a product online (86% for both). However, we did see that men were slightly more confident in more advanced skills such a programming a small application (29% vs 23%), creating a website (33% vs 24%), or using two-factor authentication (61% vs 48%).

Recommendation: A shortage of ICT specialists will increasingly constrain future digital transformation of the EU economy. Meeting the EU’s target for 20 million ICT specialists by 2030 will require more than doubling the current number. This is likely to be extremely difficult without doing more to increase the number of female ICT specialists.

Basic and intermediate digital skills are likely to be as important as advanced digital skills to the future of the European economy

We asked both consumers and businesses which digital skills they believed were important for the average worker to be able to do their job today. Europeans believed these skills should include basic web and digital skills, while more digitally intensive businesses were more likely to think that data analysis and programming were also important.

Which digital skills do you think it is important for an average worker to be able to do today?

When we asked consumers what digital skills they felt confident with, 29% would feel confident creating their own website. When we asked what digital tasks they had completed in the last three months:

54%

said that they had used word processing software
41%

said that they had used spreadsheet software
49%

said that they had used software to edit photos, video or audio files
13%

said that they had written code in a programming language

While not everybody needs to be able to write code for their job, or create their own machine learning model from scratch, almost everyone could benefit from possessing good intermediate digital skills, such as how to stay safe online, research or learn a new skill effectively, collaborate with their colleagues through new online tools or do basic data manipulation in a spreadsheet. In one estimate, over 40% of workers who use office software daily do not have sufficient skills to use it effectively.23

Similarly, even if relatively few consumers are currently using programming skills in their day-to-day life, there was more agreement that it was important for children to learn programming at school.

When we asked European parents what digital skills were important for their children to learn:

Recommendation: Much of the economic impact of the Digital Decade agenda will come from using technologies such as machine learning to automate existing tasks. This is only likely to increase the importance of reskilling and upskilling existing workers, and supporting them as their job description shifts. The EU can play a crucial role in helping member states learn from each other about programmes that are most effective in supporting workers to retrain, or just helping improve their level of basic digital skills.

Sector Deep Dive: Retail

In the next decade, the division between traditional and digital retail will continue to blur, with consumers increasingly looking for major European retailers to offer more flexibility across all of their sales channels. At the same time, big data and automation offers the chance to radically improve the productivity of the retail supply chain.

Key Statistics

  • 36% of European retail businesses are using the cloud
  • 30% of European retail businesses are struggling to find people with digital skills
  • By 2030, technology could automate up to a third of current retail tasks24

How could digital technology grow the sector by 2030?

Helping businesses adopt omnichannel online and offline retail fulfilment strategies. For many brands, consumers increasingly expect to be able to browse both online and in store, and to order for delivery or click-to-collect, requiring more complicated supply chains for fulfilment.

Creating a more personalised and automated retail experience. New technologies such as automated checkouts (where customers scan with an app as they leave the store, and are automatically charged), or AR/VR showrooms are starting to arrive, offering consumers greater convenience or new ways to demo a product.

Increasing the efficiency of retail supply chains. Retail is traditionally a low productivity sector, backend technologies such as automation in fulfilment centres, or greater use of machine learning to optimise complex supply chains has proven potential to improve the productivity of the sector.

Retail - Case Study - 3Hold and Dinosol Supermercados:

Dinosol Supermercados, a Spanish supermarket chain in the Canary Islands, was experiencing increased demand on its digital ecommerce application. This omnichannel application was being used by thousands of customers to purchase goods in stores and online. However, the company struggled to keep pace with growth owing to its reliance on an out-dated, on-premises data centre.

Working with 3Hold Technologies, an AWS Advanced Consulting Partner, Dinosol set about creating and implementing an AWS-based point-of-sale (POS) data lake solution that provides a centralised view of POS data.

As a result of the migration to AWS, Dinosol can now better meet the increased demand for its e-commerce system and can offer better customer service. Centralised sales information allows the business to better analyse customer purchasing behaviour - as well as visualising updated information on promotions, discounts, payments and surveys across all 200+ stores.

Infrastructures

State of Play



EU’s Digital Decade Goal25State of Play
All European households covered by a Gigabit network, and all populated areas covered by 5G.While investment is still needed, Europe looks likely to meet its Digital Decade targets for connectivity. 59% of households are already able to benefit from fixed Very High Capacity Networks (VHCN), and while 5G coverage currently only reaches 14% of populated households, 4G already reaches 99.7%. Following a similar trajectory as the last mobile generation, we should see universal 5G coverage by the end of the decade.
Progress towards broadband

Views from policy makers

Europe is on the lookout for global champions - European unicorns, but this will require the appropriate infrastructure and environment. At the moment potential Unicorns are being stunted by the lack of harmonisation across the European Union, meaning different legal bases and rules and access to capital and talent. Harmonisation is key to success” - Digital Technology think-tank representative (Spain)

“None of the definitions of tech sovereignty I have heard – and there are many – have convinced me that the ultimate motivation for it is not protectionism. And when policy rhetoric meets the market, we’ve seen active steps taken by some Member States to lock out non-domestic companies. This can – has already started to have – a chilling effect on the competitiveness of European born-and-bred companies with limited access to essential service providers” - Digital economy and trade expert (Brussels)

What did our research show?

Digital technology is one of the most crucial forms of infrastructure

In our polling, both consumers and businesses chose faster or more reliable internet as their leading priority for infrastructure investment, ahead of more traditional forms of transport infrastructure such as roads, railways, or airports. As we have seen in the last few years, in many instances, digital connectivity can act as a substitute for traditional forms of transport, reducing the need to travel for work.

If you had to choose, which of the following types of infrastructure investment would prefer your Government to prioritise in your local area?

While consumers and business decision makers were relatively satisfied with their internet connection while at home or in the office, they were less happy with the quality of their internet connection while travelling:

As important as basic internet connectivity are the other core layers of underlying technology infrastructure, such as access to cloud computing data centres or semiconductor fab capacity. 47% of Europeans told us that they would support the construction of a data centre by an international cloud provider in their local area, compared to 11% who were opposed.

In the next decade, low latency applications will require edge computing nodes to complement the cloud, bringing computing power closer to the end user. This will help support:

  • Smarter energy and transport networks in cities, helping increase efficiency, reduce congestion and supporting autonomous vehicles
  • Real time quality checks in agriculture or manufacturing
  • IoT solutions for the safety of workers in hazardous environments

As one of its Digital Decade targets, the EU has set a goal for the creation of “10,000 climate-neutral highly secure edge nodes.” By 2025, the European Commission expects 80% of all data to be processed in smart devices closer to the user, known as edge computing. Today, it is estimated that 80% of the processing and analysis of data takes place in data centres and centralised computing facilities.26

However, while this kind of local compute will grow in importance, the internet and cloud are likely to remain global. Much of the internet’s economic power has come from reducing international barriers to trade. In our business polling we saw that businesses highly valued retaining the ability to choose the best technology for them.

In our business polling the most important factors for selecting a cloud provider are reliability (41%), security (35%), cost (26%), reputation (21%) and breadth of services offered (21%). The nationality of the cloud provider was seen as the least important (6%).

Recommendation: The EU should focus its efforts on helping to create a neutral, competitive environment where European businesses have the freedom to choose the underlying technologies that work best for them, without artificial regulatory or legislative restrictions.

Digital infrastructure can support the green transition

Alongside digital transformation, the other important structural change facing EU economies in the 2020s will be the transition to a decarbonised economy. Greater use of digital technology will play an essential role in supporting this change.

To start, digital technologies such as the cloud, IoT and machine learning will help create a smarter energy grid, creating greater flexibility, more efficient use of resources and rewarding consumers and businesses who reduce energy waste. Intelligent systems will help homes to react to changing wholesale energy prices and cloud-based systems will automate the provision of flexible services to cut bills and reduce emissions. In our consumer polling, 62% of Europeans said that they would support their government spending more on researching smarter, more resilient energy grids.

This greater energy efficiency can also apply to the computing process itself. Centralised cloud computing data centres can be more energy efficient than equivalent workloads provisioned through on-premises servers. While the total amount of computing output increased by a factor of six between 2010 and 2018, overall energy consumption only increased by 6%.27 451 Research estimates that businesses can reduce their energy use by nearly 80% by using AWS Cloud instead of using their own data centres. If implemented across Europe, this would save millions of households worth of greenhouse gas emissions.28

For individual businesses, digital technology can help them better monitor and reduce their carbon footprint. In our business polling, 89% of European businesses agreed that sustainability would either maintain or grow in importance as a factor in their businesses’ decisions. However, only 44% were confident they currently had adequate digital tools to monitor and improve their sustainability.

Recommendation: The EU could set common international standards for smart grids and transport networks. This can not only help faster deployment of more energy efficient grids, but make it easier for EU energy and transport companies to gain a first-mover advantage, and export globally.

Sector Deep Dive: Automotive and Transport

The EU automotive industry accounts for 6% of employment, 7% of GDP29, and many of the EU’s famous and important companies. For customers - households, companies, and governments - electric vehicles are an ever-greater priority, which will drive the introduction of smart chargers and energy optimisation. Meanwhile new cars will automatically be equipped with autonomous technologies supported by the cloud.

Key Statistics

  • 56% of European transport businesses are using the cloud
  • 43% of European transport businesses are struggling to find people with digital skills
  • Digitally connecting together users, vehicles and operators can reduce journey times by 13%, accidents by 34% and CO2 by 22%30

How could digital technology improve the sector by 2030?

Driving to net zero. In December 2021, sales of electric vehicles (EVs) overtook diesel models for the first time.31 The adoption of electric vehicles means charging supply is increasing across Europe, and there is increasing demand for smart chargers: cloud-connected sensors to manage the distribution of energy and maximise efficiency. For companies, telematic enabled logistics will support the push to Net Zero by allowing smarter journeys - cutting fuel consumption and carbon emissions.

Connected and Autonomous Vehicles. Vehicles will increasingly use specific autonomous systems. The majority of new car registrations in many countries now include, for the first time, Advanced Driver Assistance Systems (ADAS) such as autonomous emergency braking and collision warnings. These are developed on cloud-based platforms and will help European companies intensify their technology R&D, an area highlighted as a key area for European Competitiveness in a recent report for the European Parliament.32

Personalised but shared journeys. Digital technologies such as AI/ML and IoT will increasingly support smart journeys that respond to traffic conditions, customer demand and road works to improve air quality and reduce emissions.

Transport - Case Study - Nordcloud and Finnair

Working with AWS partner Nordcloud, Finland’s national airline Finnair migrated to the cloud in 2020. The pandemic had led to plummeting passenger numbers, and a move to AWS helped the airline cope with this unexpected turmoil.

Finnair’s project was complex, involving approximately 400 servers and 70 applications vital to the company’s daily operations. In addition, some parts of the technology estate, such as ticketing booths, had not been touched for 20 years and required updating before the migration was even possible.

Nordcloud was able to migrate Finnair quickly and without disruption, while also cutting costs and providing the airline with the benefits of a future-ready and agile infrastructure. The airline now has a flexible, scalable system ready for post-pandemic travel as demand for flights returns.

Government

State of Play



EU’s Digital Decade Goal33State of Play
100% online accessible provision of key public services for EU citizens and businesses.For the EU, as a whole, the European Commission judges that 75% of key public services for citizens and 84% for businesses can be performed digitally.34
Proportion of e-government users

Views from policy makers

“Countries within the EU have very different starting points – we look to Estonia and the Nordics as leaders in the field but that does not mean that we can replicate exactly what they are doing. Poland, for example, is ambitious in this space but it has a long way to go. There is progress being made and the Compass goals help to focus minds but we must remember countries' journeys and start points will look very different.” - Digital Policy Expert (Poland)

“There should be a mission-led approach. The clean transition for example should go hand-in-hand with the digital transition. Procurement for public services should for example look to boost and encourage clean and digital solutions wherever possible.” - Senior Officer in the Ministry of Transport and Communications (Finland)

“Governments and public authorities at all levels should move to innovative procurement models - i.e going to the most innovative instead of going for the cheapest. This is a very important signal governments can send to the market. For these innovative companies, these type of contracts are a matter of life and death, they can either grow their business on the basis of government contract or actually not find the necessary market and die.” - Head of a European Fund (Belgium)

What did our research show?

The EU is a world leader for digital government, but there remains significant untapped potential

Around two-thirds (64%) of Europeans currently report using e-government services. Many of Europe’s governments are recognised as among the world’s leading digital governments. The UN’s Online Services Index, for example, rates Estonia, Denmark and Finland second, third, and fourth in the world respectively.

RankCountry NameUN Online Service Index Score
1Republic of Korea1.00
2Estonia0.99
3Denmark0.97
4Finland0.97
5Singapore0.96
6United Kingdom0.96
7United States of America0.95
8Australia0.95
9Austria0.95
10New Zealand0.93
11Kazakhstan0.92
12Netherlands0.91
13Japan0.91
14China0.91
15Sweden0.90
16United Arab Emirates0.90
17Spain0.89
18France0.88
19Norway0.88
20Cyprus0.87

A majority of Europeans we surveyed were optimistic about the level of digital government:

On average, we saw untapped potential for greater use of digital services. When we asked about specific activities - such as accessing medical records, or renewing a passport - a far greater proportion said they were comfortable performing these activities digitally than had already done so.

The EU has set targets for 100% of EU citizens to have access to their medical records and at least 80% of EU to citizens to use a digital identification (ID) solution. Our polling found that just over a third have accessed their medical records (35%) or been asked to prove their identity (35%), while 55% said they would be comfortable accessing their medical records, and 46% comfortable proving their identity online, suggesting potential for further uptake.

In our polling, we found relatively little evidence of a difference in attitudes across ages. The oldest age demographic (65+) were more likely than the youngest (18-24) to say that they would feel comfortable using a website or app to book a medical appointment, pay taxes or a fine, access medical records or renew a passport or driving licence.35

The vast majority (80%+) of those who had performed different digital activities said that they found them helpful.

You said you had used a government website or app to do the following activities. How helpful or unhelpful did you find it?

Recommendation: European citizens of all ages increasingly expect to be able to access, control and monitor services through their digital devices. While governments need to ensure other channels remain for the digitally excluded, for the majority of citizens our polling suggested that digital public services were seen as helpful and easy to use. EU governments should embrace the opportunity offered by apps, cloud and digital technology to offer more flexible and convenient services to their citizens.

The cloud can help create a more agile and efficient digital government.

Cloud computing plays a crucial role in enabling digital government: collecting data, keeping it secure, and providing cost savings for the taxpayer. We estimate that moving 10% of current IT systems to the cloud has the potential to save European taxpayers over €900 million a year.

So far, nine EU countries have committed to a ‘cloud-first’ policy, in which digital public services should be by default delivered by cloud. In our polling, we saw that citizens of countries that followed a cloud-first policy were more likely to say that they thought their government did a good job at taking advantage of digital technology.

Government and public services do a good job at taking advantage of digital technology

Recommendation: While many have traditionally thought of the public sector as slow moving when it comes to innovation, in recent years many European governments have been at the forefront of demonstrating how digital transformation can work in large, established organisations. Governments should continue to model best practice by introducing digital by default and cloud first policies, standardising and opening up data, automating routine transactions and breaking down organisational silos to better serve its citizens.

Sector Deep Dive: Health

In the next decade, greater use of digital technologies in the health sector will deliver better patient outcomes along with much needed operational efficiencies given Europe’s ageing population.36 The pandemic response highlighted the ways technology can be used in health settings, from telemedicine to cloud-based computing power that supported the development and rollout of COVID-19 vaccines.

Key Statistics

  • 37% of European health businesses are using the cloud
  • 32% of European health businesses are struggling to find people with digital skills
  • The EC has estimated $11 billion in economic value in the next decade from its new “health data space” alone37

How could digital technology improve the sector by 2030?

Interoperability. The EU recognises the importance of health data. The European Commission’s newly proposed Health Data Space is designed to allow citizens to share their health data with health practitioners across the EU, and create a “genuine single market for digital health services.”38 Crucially, it will improve digital infrastructure by ensuring the interoperability of data, which would allow new health services to be delivered across the EU.

Supporting greater ‘health at home’ initiatives. Across the world, 84% of patients using virtual care at the start of the pandemic were doing so for the first time.39 Now, the majority of European doctors believe that telemedicine is here to stay, and will play a greater role in the future, which in turn will increase demand for mobile diagnostic devices.40 

Innovative analytics and machine learning services will provide new insights. Cloud-based companies like Cardiologs41 in France are using AI to support doctors’ analysis and diagnoses so that serious diseases and conditions can be spotted and treated more rapidly and at lower cost.

Rise in wearable devices and health apps. In Europe, healthcare is the fastest growing market for the Internet of Things’42 - devices are being used to prevent conditions, incentivise good behaviour, and to link in with health professionals to support treatment.

Health - Case Study - Auth0 and Headspace

Headspace is an application to improve mindfulness and happiness through guided meditation. The app’s popularity began to boom, so the company sought out a scalable and secure identity solution that would enable it to grow and support its millions of monthly active users.

Headspace turned to Auth0 on AWS for its Customer Identity and Access Management (CIAM) solution. Headspace was able to migrate its 70+ million members across 190 countries with the help of Auth0 Professional Services.

Appendix - Methodology

Our headline estimate of the potential economic impact of achieving the EU’s Digital Decade targets is based on adding together our estimate of the impact of achieving four goals:

  • Increasing business cloud computing uptake to 75%.
  • Small business adoption of three key digital tools (CRM, ERP, and fast broadband) increases to 90%.
  • 80% of EU adults achieving basic digital skills.
  • The potential economic impact from AI and big data.

We chose these four goals as a reasonable proxy for the overall set of targets, while avoiding double counting from goals whose potential economic impact would overlap (e.g. economic potential from AI, and increasing the number of EU unicorns), or that would be hard to quantify (e.g. the economic impact of R&D into quantum computing). While our small business adoption threshold is not a formal EU target, we believe this represents a reasonable proxy for other EU other goals around cloud/big data/AI uptake or business digital intensity, while allowing us to draw on existing well evidenced studies.

Increasing business cloud computing uptake to 75% by 2030

In order to do this, we combine the following estimates:

  • Data from our business poll on current cloud computing uptake per business size per region, and the breakout between IaaS / PaaS / SaaS. For countries, where we did not have direct polling data, we proxied based off the EU’s DESI data on cloud computing uptakes for businesses with more than ten employees.
  • Data on public cloud spending (IaaS / PaaS) taken where possible from polling, and calibrated against third party data from IDC and Statista.
  • The average ROI for cloud computing, taken as the average of the estimates from our previous impact studies for AWS (UK, France, Canada, US).
  • OECD derived GVA effect multipliers for each country.

Small business adoption of three key digital tools (CRM, ERP, and fast broadband) increases to 90%

In order to estimate this, we:

  • Captured existing uptake of each digital tool (high-speed broadband, ERP, CRM) from our business polling for small, medium and large businesses. Where this data does not exist, we instead proxied based on EU DESI date on broadband, ERP and CRM take-up.
  • Assumed that uptake for all business sizes across the three types of tool is levelled up to at least 90%.
  • Utilise the calculated average impact on productivity of each class of tool from OECD (2019).

80% of adults achieving basic digital skills

For this estimate, we combined:

  • EU DESI data from 2021 on the level of adults with lower than basic digital skills per country. (Given our survey data was completed through an online panel, everyone who completed it had to have at least minimal online skills and therefore we did not attempt to use it to benchmark the prevalence of lower than basic digital skills.)
  • An estimated 9% average increase in wages for adults achieving basic digital skills in the UK, drawn from average estimates from this and this paper.
  • Adjusting this estimate for each country based on OECD’s (2017) estimate of the relative impact on wages per country of increased ICT intensity of jobs.

Potential increase in economy wide GVA from AI and big data

We extrapolated from McKinsey’s (2018) estimate of the economic impact of AI by 2030, allocating it to individual countries and modifying it by:

  • Using Tortoise’s AI Index as a proxy to calibrate how well prepared individual European countries are to take advantage of AI / big data.
  • Deducting impact that should have already taken place since 2018, based on a slow S-curve diffusion path for AI.

How confident can we be in estimating the future economic impact of technology?

In order to quantify the potential of digital technology, Public First added together estimates of the economic impact from improved basic digital skills, greater adoption of current software tools, increased use of cloud computing and potential future productivity improvements from AI and big data.

There are many reasons why it is impossible to perfectly predict the future economic impact of digital technology:

  • While some technology metrics (e.g. processor speeds, solar PV costs) demonstrate sustained linear trends over time, it is much harder to take account of the development of completely new product categories.
  • To some extent, the impact of new technologies depends on how quickly they are adopted - which can be affected both by government policy and other unexpected events. For example, no technology prediction made before 2020 could have taken into account the complex consequences of Covid-19, which seems to have sped some trends up while slowing others.
  • The impact of most technologies follows an S-curve: but this means in the first few years, economic impact can be relatively slow, with future acceleration hard to predict ahead of time.
  • In recent years, progress in basic research in fields like machine learning looks to have kept pace, if not exceeded, earlier expectations. At the same time, however, market deployment of technologies such as autonomous vehicles seems to have been slower.

That said, we believe our estimate gives a reasonable central estimate of the potential digital technology if the EU achieves its Digital Decade goals, in line with the average impact of previous computer technologies such as the personal computer or the internet. Even if we took the most conservative assumptions and looked only at the potential impact of deploying existing mature technologies, rather than developing new ones, we estimate that the Digital Decade agenda would still deliver around a €1 trillion increase in the EU economy.

Similarly, other estimates of the potential impact of digital technology give similar orders of magnitude to our central estimate:

  • European Commission / McKinsey (2020) estimates that new digital technologies could increase the GDP of the EU €2.2 trillion by 2030, a 14% increase over its level in 2017.43
  • World Economic Forum (2021) claim that AI could increase the efficiency of organisations 40% by 2035, creating an estimate $14 trillion in new economic value.44
  • PWC (2017) estimates that AI could increase global GDP 14% between 2017 and 2030.45
  • Accenture (2016) estimates that AI could double annual growth rates by 2035, increasing labour productivity by up to 40%.46
  1. https://www.google.com/url?q=https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/europes-digital-decade-digital-targets-2030_en&sa=D&source=docs&ust=1654767330657438&usg=AOvVaw3dreZ22hPe5OcjXJSbe0kX
  2. Measured in Gross Value Added, which is equivalent to the value created by the private sector.
  3. By US levels, we mean making the EU and the US tech sectors the same proportion of their res
  4. Businesses are given 1 point for each of the following: more than 50% of persons employed having access to the internet for business purposes, employment of ICT specialists; fast broadband (30 Mbps or above); providing more than 20% of persons employed with a portable device allowing mobile internet connections; having a website; a website has sophisticated functionalities (at least one of: description of goods or services, price lists; possibility for visitors to customise or design online goods or services; tracking or status of orders placed; personalised content in the website for regular/ recurrent visitors); use of 3D printing; buying medium-high cloud computing services; sending invoices suitable for automated processing; use of industrial or service robots; having e-commerce sales accounting for at least 1% of total turnover; analysing big data internally from any data source or externally. Digital intense businesses are defined as those that scored 6 or above.
  5. Skills for a Digital World, OECD (2016)
  6. Public First calculation based on the Total Economy Database, The Conference Board
  7. Based upon our estimates for the economic impact of cloud infrastructure, digital tools and our estimate of the proportion of the potential economic value of AI and Data that is reliant on cloud computing. We proxy the latter based on the proportion of Big Data users in our poll who said that cloud computing was essential to their business model
  8. This is measured by the business’ use of at least four of 12 selected digital technologies chosen by the EU, with the exact list of technologies varying by year.
  9. https://www.stateofeuropeantech.com/chapter/europe-global-tech-force/
  10. https://news.crunchbase.com/news/european-unicorns-funding-increase-2021-data/
  11. OECD
  12. Businesses are given 1 point for each of the following: more than 50% of persons employed having access to the internet for business purposes, employment of ICT specialists; fast broadband (30 Mbps or above); providing more than 20% of persons employed with a portable device allowing mobile internet connections; having a website; a website has sophisticated functionalities (at least one of: description of goods or services, price lists; possibility for visitors to customise or design online goods or services; tracking or status of orders placed; personalised content in the website for regular/ recurrent visitors); use of 3D printing; buying medium-high cloud computing services; sending invoices suitable for automated processing; use of industrial or service robots; having e-commerce sales accounting for at least 1% of total turnover; analysing big data internally from any data source or externally.
  13. https://www.idc.com/getdoc.jsp?containerId=prUS47685521
  14. https://itif.org/publications/2021/06/01/secrets-cloud-computings-first-stage-action-agenda-government-and-industry
  15. https://www.nrdc.org/sites/default/files/data-center-efficien
  16. https://www2.deloitte.com/content/dam/insights/us/articles/6276_2019-Deloitte-and-MAPI-Smart-Factory-Study/DI_2019-Deloitte-and-MAPI-Smart-Factory-Study.pdf?id=us:2el:3dp:wsjspon:awa:WSJCIO:2022:WSJFY22
  17. https://www2.deloitte.com/us/en/insights/industry/manufacturing/accelerating-smart-manufacturing.html?id=us:2el:3dp:wsjspon:awa:WSJCIO:2022:WSJFY22
  18. https://www.eea.europa.eu/data-and-maps/data/data-viewers/greenhouse-gases-viewer
  19. https://blog-idceurope.com/sustainable-manufacturing-with-it-the-time-is-now/
  20. https://www.enisa.europa.eu/news/enisa-news/understanding-the-increase-in-supply-chain-security-attacks
  21. https://www.europarl.europa.eu/doceo/document/TA-9-2021-0026_EN.html#ref_1_14
  22. https://www.weforum.org/reports/global-gender-gap-report-2021/in-full/gggr2-gender-gaps-in-jobs-of-tomorrow#gggr2-gender-gaps-in-jobs-of-tomorrow
  23. https://www.eca.europa.eu/Lists/ECADocuments/RW21_02/RW_Digital_skills_EN.pdf
  24. https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/rebooting%20retail%20how%20technology%20will%20shape%20the%20future%20of%20retail/rebooting-retail-how-technology-will-shape-the-future-of-retail.pdf
  25. In addition, the EU also set goals for increasing its share of semiconductor production, deploying at least 10,000 climate neutral secure edges, and creating its first quantum computer. Given that these metrics either do not have or are difficult to currently measure, we have not included them here.
  26. https://digital-strategy.ec.europa.eu/en/policies/cloud-computing
  27. https://www.science.org/doi/10.1126/science.aba3758
  28. https://www.aboutamazon.eu/news/aws/eu-businesses-that-move-to-aws-cloud-can-improve-energy-efficiency-and-reduce-carbon-emissions
  29. https://www.europarl.europa.eu/RegData/etudes/STUD/2021/695457/IPOL_STU(2021)695457_EN.pdf
  30. https://trl.co.uk/uploads/trl/documents/Digitisation-of-Transport---Think-Different_v1.pdf
  31. Financial Times, 16 January 2022
  32. https://www.europarl.europa.eu/RegData/etudes/STUD/2021/695457/IPOL
  33. The EU has also set targets for 100% of EU citizens to have access to their medical records and at least 80% of EU to citizens to use a digital identification (ID) solution, but comparable data for these does not yet exist.
  34. DESI - Compare countries progress — Digital Scoreboard - Data & Indicators (digital-agen
  35. One caveat is that our polling was done through an online panel provider, so respondents without the internet altogether or basic digital skills would be unlikely to have taken part.
  36. Eurostat, population structure and ageing
  37. https://www.politico.eu/article/5-things-to-know-about-the-eus-health-data-space/
  38. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_2711
  39. [4] https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/651927/EPRS_BRI(2020)651927_EN.pdf
  40. https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/690548/EPRS_BRI(2021)690548_EN.pdf
  41. https://cardiologs.com/newsandevents/cardiologs-ai-improves-services-for-cardiologists-at-three-european-medical-centers/
  42. ibid.
  43. https://www.standict.eu/sites/default/files/2021-02/McKinsey%20report.pdf
  44. https://www.weforum.org/press/2021/01/world-economic-forum-launches-new-global-initiative-to-advance-the-promise-of-responsible-artificial-intelligence/
  45. https://www.pwc.com/gx/en/issues/analytics/assets/pwc-ai-analysis-sizing-the-prize-report.pdf
  46. https://newsroom.accenture.com/subjects/technology/artificial-intelligence-poised-to-double-annual-economic-growth-rate-in-12-developed-economies-and-boost-labor-productivity-by-up-to-40-percent-by-2035-according-to-new-research-by-accenture.html