A major new study on strengthening EU digital competitiveness explains why the EU has been less successful than the United States and China in growing its tech sector, and proposes actionable recommendations to close the widening gap. Solutions proposed by the authors include a temporary pause on new EU digital legislation and changes that would allow European pension and insurance funds to make tens of billions in new funding available to cash-strapped tech startups.
The independent report by the European University Institute’s (EUI) Centre for a Digital Society will be launched this afternoon at the EUI’s State of the Union in Florence, where the authors discuss their findings with Enrico Letta, the former Italian prime minister who recently presented his landmark report on the future of the Single Market to the Council of the EU.
In recent years, the European Union has increasingly struggled with its growing gap in digital competitiveness with global trade partners. The 101-page report examines different steps taken by the EU so far and why they haven’t been effective enough. The authors also propose solutions in six major areas, addressing critical shortcomings such as scale-ups’ lack of access to capital and skills, incomplete integration of the EU Digital Single Market, and creating better tech laws.
According to the report, while the EU produces more tech start-ups than the United States per year, innovative EU firms fail to scale up due to a lack of capital. Pension and insurance funds hold a massive €13 trillion. Europe could unlock this potential by allowing funds to invest in higher-risk, higher-reward ventures – not only helping balance portfolios but also injecting tens of billions into the EU tech scene.
“This one reform alone could potentially be more than adequate to fully solve the serious, long-standing problem of inadequate capital for high-tech start-ups,” underline the authors.
At the same time, Europe faces challenges from a patchwork of new digital rules that hamper its competitiveness. To jumpstart Europe's tech engine, “the next few years should reflect as much as possible a pause in new legislation and a focus on correct implementation of many laws that were just put in place,” according to the authors.
Daniel Friedlaender, Senior Vice President & Head of Office at CCIA Europe stated: “Any industry tends to complain about new EU rules, but this report reveals that regulatory burden on Europe’s tech sector has become truly excessive and self-defeating, hurting the economy.”
“Addressing the EU’s sliding competitiveness should be a top priority for both European Parliament and Commission during their next five-year term starting after June elections. Today’s report puts forward clear actions that should be taken now,” he added.
