23 February 2021

On 23 February 2021, EIF organised the virtual debate “EU Industrial Policy for Digital leadership” aimed at discussing the new updated European Commission proposal on the EU industrial strategy expected to be launched in mid-March. As a consequence of the Covid crisis and the considerable investment package foreseen, investments into ‘digital’ have the opportunity to relaunch and transform the European economy. The debate, hosted by MEP and EIF Chair Pilar del Castillo, was moderated by EIF Director-General Maria Rosa Gibellini and featured the following speakers:

  • Maria Teresa Fabregas, Director of the Recovery & Resilience Task Force at the European Commission
  • Christoph Steck, Director of Public Policy & Internet at Telefonica
  • Alain Dedieu, President of Water Waste Water segment at Schneider-Electric and Chair of DIGITALEUROPE’s Digital Manufacturing Executive Council
  • Vera Demary, Head of the Competence Area, Digitalisation, Structural Change and Competition at the German Institute for Economic Research
EU Industrial Policy for Digital leadership

Pilar del Castillo welcomed the initiative of the European Commission to update the EU industrial strategy and put the attention on the considerable investment package available with the Next Generation EU and the Recovery and Resilience Facility with 750bn €, in addition to the MFF. The need to invest in digital is urgent, and the recovery plan has earmarked 20% of its budget for investment into digital and, in addition, identified industry 4.0 as the crucial area for our competitiveness where action needs to be taken.

"Today’s discussion," underlined MEP del Castillo, "will contribute to our ongoing debate in the European Parliament on how we can best utilise the funds through the digitalisation of industry." More specifically, the MEP thinks it is important to shed some light on how to improve the resilience of the value chains, facing the dependency of critical technological resources from countries and to promote the digital maturity of SMEs.

Maria Teresa Fabregas highlighted the potential of the recovery and resilience facility to shape and accelerate the digital transition in Europe and the priorities of the European Commission: (1) to support digital skills at all levels to ensure that everyone can participate in and take advantage of the digital transition, (2) to make the public sector fit for the future, accelerating the reforms that will help digitalising the justice system or the healthcare – the use of data analytics and AI being key – and (3) to assure universal and affordable access to very high-capacity networks; any efforts to shape the digital transition without this improved connectivity will not be successful.

All the Member States need to progress in building up their digital capacity: this is crucial for the competitiveness of the European industry and for the autonomy of Europe. A successful rollout of the recovery and resilience facility does not depend on a good plan alone. "We are working closely with the Member States," stressed Ms. Fabregas, "in order to help them to provide good quality investments and reforms. We are also asking them to engage in broad public consultations at national level, to create this sense of national ownership of the plan; without the engagement of citizens and businesses, it will be very difficult for the Member States to have a successful implementation of the plan."

By the end of the year, added Ms. Fabregas, the European Commission will publish, in accordance with the regulation, a dedicated scoreboard to help display the progress across the six priority pillars of the recovery and resilience facility.

Christoph Steck stressed the importance of creating European leadership in technology and digitalisation, essential to be able to defend the European values in the world. According to Mr. Steck, the pandemic has given to Europeans a great chance, accelerating digitalisation across Europe, and it has been a wake-up call for many – especially smaller – businesses to digitalise and become more efficient in using digital technologies and opportunities. Telefonica has already suggested adopting a joint approach, a “New Digital Deal for Europe” to be able to build back better our societies and economies after the pandemic. A key objective needs to be ultra-high-speed broadband and connectivity networks across Europe, able to decarbonise and create digital innovation.

According to Mr. Steck, the most important thing is to get the right regulatory framework to attract investments. One good example is Spain, the leader of fiber connectivity in Europe – next to Japan and Korea in the world. This was possible not with subsidies and public support, but by changing regulation, opening the crucial bottlenecks and let the competition do the rest. Europe, with its tradition of being a leader in connectivity and in technology for networks, should focus on innovation. Focusing on decentralised infrastructure and on the right policy frameworks, holistic ones, could really unleash a lot of investments in networks across Europe.

Alain Dedieu focused on the main crucial points to improve the digitisation of the industry. First of all, with the support of the new AI system, data can be used to give more insights to be more efficient, sustainable and more resilient. Sustainability is, in fact, a key concern for the industry, and the digital is going to be a key enabler in the combination of competitiveness and sustainability, maximising the impact on the recovery fund. According to Mr. Dedieu, the European Commission must urge the national governments to invest ambitiously and ensure that they deliver the results, as well as provide rules to build a trusted environment. The Digital Manufacturing Executive Council, underlined Dedieu, is already providing concrete examples in order to drive funds towards this dual objective of digitisation and sustainability.

According to Mr. Dedieu, because of a lack of visibility and guidance, the European industry is not engaging that quickly in digitisation. "In order to embrace digital transformation and really leverage both digitisation and sustainability, we have to think about the strategy around the autonomy and resilience of Europe; we support that the EU encourages resilience and competitiveness in critical technology with the objective to make Europe an attractive place to do business and to bring technology in an open economy."

Dr. Vera Demary, a German economist, shared her research insights into the state of digitalisation of German companies, helpful to understand what is at stake also for other EU countries and the overall picture. Her quantitative analysis late last year, lead to three key results: (1) SMEs lag behind the digitalisation, (2) there are large regional disparities in the digitalisation of companies in Germany – metropolitan areas agglomerations outperform low-density rural areas by far – and (3) digital infrastructure is still an issue and for German companies, it is the main problem.

According to Dr. Demary, even if this is a German perspective, it still holds for other EU countries; investments aiming at fostering digitalisation should focus on SMEs, helping them to catch up because digitalisation works as a network. We cannot allow this to be the small companies that carry a lot of the European economies; furthermore, according to Dr. Demary, we need to reduce the regional disparities and this goes hand in hand with digital infrastructure.

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