The EIB Corporate Digitalisation Index says EU firms are 30% slower to digitalise than their US counterparts.
By 2020, 37% of European firms had still not adopted any advanced digital technology, compared with 27% in the United States. That is one of are the key findings of the new edition of the EIB’s “Digitalisation in Europe 2020-2021: Evidence from the EIB Investment Survey” report. The new report includes the EIB Corporate Digitalisation Index, a cross-country ranking of digital adoption efforts in EU countries and the United States.
The slow adaptation of digital technologies threatens to impede European firms’ competitiveness in the long term, as digital firms tend to perform better than non-digital firms do. Such firms invest more, are more innovative, have better management practices, grow faster and create higher-paying jobs, according to EIB.
The one place where Europe outpaces the US: Green Tech
Digital firms are also more likely to invest in tackling the transition and physical risks of climate change. While EU firms are overall lagging behind US peers in adopting and creating new digital technologies, Europe excels in one area — the intersection of green/digital technologies.
“The pandemic has shown us the advantages of being digital. That is why we need to be concerned about the slow speed of digitalisation by EU firms. The gap with the US not only jeopardises our long-term competitiveness. A weak European digital sector also means that we will lack ownership of our data,” said EIB Vice-President Ricardo Mourinho Félix.
“Increasing digitalisation should therefore be a cornerstone of the recovery,” he added.
Regulatory streamlining could help
EIB Chief Economist Debora Revoltella also commented. “To accelerate the pace of digitalisation, we should focus on three elements,” she said. These are: an enabling ecosystem, including the availability of digital skills, the right kind of financial support for investment and a European vision to counter the digital imbalances that exist across the European Union.
“In addition to more diversified financial instruments, we need to continue working on a well-functioning, competitive and integrated EU market environment that pushes firms to invest more in the most advanced digital technologies. We also need to review regulations that prevent firms from growing and reaching the size needed for the successful adoption of digital technologies within their businesses.”