Shaping the digital transformation in Europe.
Date: 2020-09-22
Institutions: Directorate-General for Communications Networks, Content and Technology
Subjects: European undertaking, artificial intelligence, continuing education, digital technology, e-Health, e-procurement, economic consequence, electronic signature, impact of information technology, information security, labour market, personal data, technological change

SHAPING  
THE DIGITAL  
TRANSFORMATION  
IN EUROPE

EUROPEAN COMMISSION DG
Communications Networks,  
Content & Technology

September 2020

FINAL REPORT 
A study prepared for the European Commission
DG Communications Networks, Content and Technology

TABLE OF CONTENTS

Executive summary 

Résumé en Français 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Introduction 

Emerging technologies shaping Europe’s economy and society 

The potential of digital technologies in Europe 

The starting point for digitisation in Europe 

Capturing the value and promoting values – four principles to guide Europe in the digital age 

Investment to fuel the transformation 

Nine signature initiatives to lead the way 

A call to action 

Technical appendix 

10.  End notes 

3

5

7

9

12

16

18

20

22

41

42

44

This study was carried out for the European  
Commission by McKinsey & Company

Internal identification
Contract number: LC-00829081    

the Commission. The Commission does not guarantee the accuracy 

of the data included in this study. Neither the Commission nor any 

person  acting  on  the  Commission’s  behalf  may  be  held  responsi-

ble for the use which may be made of the information contained 

therein. Neither does this report represent EU policy or constitute 

advice on policy

SMART number 2017/0094

ISBN 978-92-76-19509-2

Disclaimer
By the European Commission, Directorate-General of Communica-

DOI: 10.2759/294260

tions Networks, Content and Technology. 

©  European  Union,  2020.  All  rights  reserved.  Certain  parts  are 

The information and views set out in this publication are those of 

the author(s) and do not necessarily reflect the official opinion of 

Reproduction is authorised provided the source is acknowledged. 

licensed under conditions to the EU. 

2

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE 
EXECUTIVE SUMMARY

The  digital  transformation  of  Europe’s  economies  and  societies 

is  accelerating.  It  is  entering  a  next  phase,  fuelled  by  a  fusion  of 

technologies  that  gradually  blur  the  lines  between  the  physi-

cal,  digital,  and  biological  spheres  and  push  the  frontier  of  what 

computers  are  capable  of  doing.  These  new  technologies  –  and 

the new business models they create, building on the use of data – 

are progressively coming to maturity for at-scale deployment, and 

will increasingly impact all sectors of the economy. In section 2 of 

this report, we discuss a set of such high-impact technologies and 

As discussed in section 6 below, European institutions and govern-
ments may need to contribute approximately €75 billion per year 
for ICT investment in the coming decade to close the digital gap in 
Europe compared to the most digitally advanced Member States, 

and  to  keep  up  a  high  ambition  level  for  capturing  the  value  of 
high-impact  technologies.  Additionally,  education,  upskilling  and 
reskilling of the labour force to manage the digital transition, may 
require total investments of €42 billion per year. 

applications, for example, artificial intelligence, high-performance 

Without  public  intervention,  both  economic  and  labour  effects 

computing, advanced robotics, virtual and augmented reality, and 

are  likely  to  impact  countries  and  regions  unevenly,  favouring  the 

their  potential  impact  on  Europe’s  economy,  the  labour  market, 

economies  that  are  already  most  advanced,  and  hence  risking  to 

and wider society. 

exacerbate existing inequalities. On the other hand, measures that 

effectively  promote  the  development,  adoption,  and  diffusion  of 

The potential value of these technologies is substantial, as described 

new technologies can help capture digital’s potential to the benefit 

in section 3. Following macroeconomic simulations conducted for 
this report, by 2030, the cumulative additional GDP contribution of 
new  digital  technologies  could  amount  to  €2.2  trillion  in  the  EU, 
a 14.1 per cent increase from 2017. This figure offsets all techno-

of all citizens, in an inclusive and sustainable manner. This, howev-

er,  requires  pro-actively  managing  the  challenges  that  arise  in  the 

transition, including distribution effects within and between regions.

logical investment needed and is a direct positive return to the EU 

economy. In the simulation of labour market effects, the average 

employment effect of technology by 2030 is -2.9 per cent; however, 

In this context, and building on the European Commission’s strat-
egy  Shaping  Europe’s  Digital  Future  of  February  2020,  section  5 
discusses how this transformation can be guided by four objectives 

this effect may be offset by a decline in the European labour force 

for a human-centric digital path for Europe: 

projected  for  the  same  period,  due  to  demographic  effects.  This 

results in a need for higher labour productivity, which digitalisation 

•   building  and  deploying  digital  solutions  for  societal  challenges 

can provide. 

and climate; 

Raising  the  investment  level  in  digital  technologies  and  digital 

•  reinvigorating democracy, trust and diversity; 

skills  is  essential.  This  investment  need  is  unlikely  to  be  covered 

by  the  private  sector  alone,  either  because  the  business  case  is 

•   securing Europe’s digital technological sovereignty and cyberse-

lacking (e.g. connectivity investments in rural areas), because there 

curity; and

are  information  barriers  or  risks  to  be  mitigated  (e.g.  in  industri-

al  transformation)  or  because  the  scale  is  such  that  investments 

•  boosting the economy and competitiveness. 

exceed the capacity of any individual company or sector (e.g. HPC, 

quantum,  data  spaces).  Public  funding  is  needed  to  leverage  the 

capital required for the digital transformation.

3

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEA holistic perspective is needed at a pivotal moment for European 

decision making, as the Member States are struggling to manage, 

and  eventually  fully  recover  from  the  devastating  COVID-19 

pandemic; and as the European institutions and Member States are 

reaching  a  final  agreement  on  the  Multiannual  Financial  Frame-

work for 2021-2027, as well as the Next Generation EU economic 

recovery instrument. The European Commission’s proposals includ-

ed  initiatives  and  investments  to  promote  the  green  and  digital 

transition  –  two  closely  linked  priority  areas,  and  where  invest-

ments are much needed. 

Strategic  initiatives  and  investments  are  needed  on  all  levels.  As 

discussed  in  section  4,  Europe  is  lagging  behind  other  leading 

regions  in  some  areas  of  digital  technology  development  and 

adoption,  pertaining  to  both  basic  digital  technologies  and  the 

emerging  high-impact  technologies  highlighted  in  this  report. 

Large  differences  remain  within  and  between  EU  Member  States, 

and fragmentation itself is a barrier for development and adoption 

at scale of European digital solutions, which often require a large 

critical  mass  –  of  data,  users  or  connected  nodes  –  to  be  viable. 

Therefore,  some  digital  investments  and  interventions  are  likely 

most  effective  on  the  European  level,  where  the  world’s  largest 

single market can achieve a value larger than the sum of its parts. 

This report outlines nine potential signature initiatives for Europe 
(summarized  on  next  page):  bold  actions  that  set  a  high  bar  and 

that directly address the four objectives for Europe’s digital trans-

formation, discussed above. Briefly summarized below, the options 

and  opportunities  for  launching  these  initiatives  are  discussed  in 

section 7.

This  report  summarises  the  outcome  of  the  study  Shaping  the 
digital  transformation  in  Europe  performed  by  McKinsey  for  the 
Directorate-General  of  Communications  Networks,  Content  and 

Technology (DG CONNECT).

4

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPERÉSUMÉ EN FRANÇAIS 

Les  technologies  digitales  ont  un  impact  profond  sur  les  écono-

mies  et  les  sociétés  européennes.  Dans  ce  rapport,  nous  discutons 

comment cette transformation peut être guidée par quatre principes 

pour un futur numérique européen centré sur l’humain : économie 

et compétitivité ; défis sociétaux et climat ; démocratie, confiance et 

diversité ; et souveraineté et sécurité. L’Europe peut se préparer pour 

bénéficier de cette transformation numérique, de manière inclusive 

et durable, au profit de tous les Européens. D’ici 2030, la contribution 

supplémentaire cumulée des nouvelles technologies digitales au PIB 

pourrait  s’élever  à  2,2  mille  milliards  d’euros  dans  l’UE,  soit  14,1% 

plus par rapport à 2017. Cependant, sans une gestion proactive, la 

valeur sera répartie de manière inégale et pourrait avoir un impact 

négatif net sur l’emploi et l’égalité. 

Dans  certains  domaines,  l’Europe  reste  en  retrait  par  rapport  à 

d’autres  régions,  et  de  grandes  différences  subsistent  au  sein  des 

États membres et entre ceux-ci. Des actions proactives seront néces-

saires pour stimuler le développement et l’adoption de ces technolo-

gies, tout en gérant prudemment la transition et ses risques. 

rapport  présente  neuf 

Ce 
initiatives  potentielles  d’action 
européenne  :  développer  les  écosystèmes  technologiques  de 
l’UE  pour  en  tant  que  leader  mondiaux  ;  créer  un  instrument  de 

leadership digital ; créer des plateformes de données européennes 

pour les secteurs stratégiques interentreprises ; montrer la voie vers 

une IA fiable dans le monde entier ; dynamiser les villes et commu-

nautés en Europe ; lever un bouclier de cybersécurité pour l’Europe ; 

améliorer le contrôle des citoyens sur leurs données personnelles ; 

promouvoir  des  solutions  digitales  durables;  soutenir  l’apprentis-
sage tout au long de la vie pour l’avenir du travail. Ensemble, ces 
actions  peuvent  améliorer  la  position  de  l’Europe  pour  adopter 

de nouvelles technologies digitales avancées au profit de tous les 

Européens. 

Ce  rapport  résume  les  résultats  de  l’étude  “Shaping  the  digital 
transformation in Europe” réalisée par McKinsey & Company pour 
la  direction  générale  des  réseaux  de  communication,  contenu  et 

technologies (DG CONNECT).

5

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPENINE SIGNATURE INITIATIVES TO LEAD THE WAY

1. Developing and scaling EU tech 
ecosystems to match the global best
and position Europe as a leader in key 
new frontier digital technologies around 
Centres of Excellence enabled by the 
collaboration between Super-
Universities, Public Authorities, 
established Industries and vibrant
Start-ups

4. Leading the way towards trustworthy 
AI worldwide by both promoting AI-
based innovation to fuel economic 
growth and social innovations while 
ensuring transparency and a positive 
social impact, which can include social 
measures to counter potential adverse 
effects. This would differentiate 
European AI solution as ethical
and trustworthy

5. Empowering cities and communities 
across Europe by promoting and 
enabling development and equal access 
to citizen-centric smart city technologies 
for better public and private services 
across transport, health, energy, social 
and community services for the EU’s 
~100.000 municipalities

8. Promoting digital solutions for climate 
risks by both promoting the positive 
potential of digital technologies to 
reduce CO2 emissions and resource use 
in other industries as well as reducing the 
growing contribution of ICT to CO2 
emissions and material use (particularly 
rare metals) due to both infrastructure 
(e.g. data centres) 
and ICT devices

Dimensions addressed by the initiative

Economy and competitiveness

Societal challenges and climate

Democracy, trust and diversity 

Sovereignty and security

6

2. Creating a Digital leadership 
instrument for innovation 
procurement of digital 
technologies of European strategic 
importance, combining innovation 
funding and public procurement

3. Building EU data platforms
for strategic B2B sectors, enabling 
as an example, the Europe-wide 
sharing of health data (or similarly 
utilities or transport data) to 
improve healthcare outcomes, 
research and fuel innovation
while respecting privacy
and citizen trust

6. Raising a cybersecurity shield
for Europe to protect EU citizens, 
businesses and Member States 
from attacks on their data and 
data systems. This entails 
protecting end-to-end technology 
supply chains including foreign 
technology and increasing 
strategic autonomy for key 
technologies

7. Advancing citizen control of 
their personal data, building on 
the General Data Protection 
Regulation, to improve 
understanding, user-centricity, 
control and effective enforcement 
of citizens’ data rights and enable 
innovation and new business 
models based on data portability

9. Supporting lifelong learning
for the future of work, to enable 
at-scale reskilling of citizens 
(particularly populations at risk
of unemployment) and equip all 
citizens with the digital and 
cognitive skills they need to 
succeed in a future of work context 

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE1

INTRODUCTION

Digital  technologies  are  profoundly  impacting  our  economies 

and  societies.  While  the  previous  three  industrial  revolutions 

were fostered by water and steam power, electric power, and more 

research and innovation are prioritized cornerstones4. The Invest-

EU programme aims at triggering €650 billion in additional invest-

ment,  targeting  areas  that  include  digitalisation,  skills  and  SMEs. 

recently  electronics  and  information  technologies,  the  coming 

Moreover, in light of the COVID-19 crisis, the European Commission 

wave  of  high-impact,  digital  technologies  (e.g.  AI  and  quantum 

has  put  forward  the  Next  Generation  EU  instrument,  a  proposed 

computing) are characterised by use of data in a fusion of technol-

€750  billion  fund  to  support  the  resilience  and  recovery  of  the 

ogies blurring the lines between the physical, digital, and biologi-
cal spheres, and by their general purpose1. They are impacting all 
sectors,  and  pushing  the  frontier  of  what  computers  are  capable 
of  doing  in  all  facets  of  business  and  the  economy2.  We  are  only 
seeing  the  beginning  of  this  transformation.  As  technologies  are 

Union  –  with  a  large  emphasis  on  green  and  digital  infrastruc-

ture  investments5.  Together,  these  funds  and  programmes  target 

all stages of digital development and will raise the digital  stand-

ard of the Union’s Member States, closing digital gaps within and 

between Member States, and preparing Europe for the next wave 

increasingly  maturing,  their  impact  is  accelerating,  carrying  a 

of digital transformation. Funding at the European level, combined 

promise of increased prosperity and solutions to some of our most 

with national funding, can act as a catalyst for the private sector, 

pressing  societal  problems,  but  also  the  risk  of  social  disruptions 

showing that investing in digital is worthwhile. Leveraging multiple 

and increased inequality. 

sources of public funding and blending it with private investment 

could  provide  the  necessary  capital  required  for  the  successful 

Europe is well-positioned to capture the value of the next wave of 

deployment of large scale, European-wide digital projects.

digital  transformation,  inclusively  and  sustainably,  to  the  benefit 

for all Europeans. But proactive actions will be needed on all levels 

As  reflected  in  the  proposed  MFF  and  the  Next  Generation  EU 

to boost the development and adoption of high-potential technol-

instrument,  the  digital  transformation  is  one  of  two  large-scale 

ogies,  while  prudentially  managing  the  transition  and  its  risks. 

challenges of our times for Europe along with the green transfor-

The  European  Commission  laid  the  groundwork  for  shaping  the 

mation. The two are linked: digital solutions have a critical role to 

digital transformation through the Digital Single Market strategy of 

play in helping Europe transition to a more sustainable economy 

2015-2019 and its broad array of policies and funds to build a solid 

and society. At the same time, the green transformation can boost 

foundation for a digital economy and society, a level playing field 

the  future  of  digital  technologies,  with  reduced  resource  usage, 

for digital enterprises and innovations and better access to digital 

waste, and greenhouse gas emissions. 

goods and services for all Europeans. 

This  report  builds  on  a  study6  carried  out  by  McKinsey  on  behalf 

Europe now stands at a pivotal moment, with large strategic and 

of  the  Commission,  Directorate-General  of  Communications 

investment  decisions  setting  the  direction  for  the  coming  years. 
In  the  new  strategy  Shaping  Europe’s  Digital  Future,  launched  in 
February 2020, the Commission once again voiced its commitment 

Networks, Content and Technology. It builds on a broad review of 

literature and policy documents; on the McKinsey Global Institute’s 

(MGI) methodology for macroeconomic simulations; and on exten-

to  taking  an  active  role  in  the  digital  transformation3.  As  the  EU 

sive  input  from  a  wide  range  of  academics,  technology  experts, 

enters into a new Multiannual Financial Framework (MFF) period 

policy experts, and business leaders, in interviews, workshops and 

in  2021,  the  European  Commission  has  made  investments  that 

in  an  executive  (CxO)  survey  (see  section  7).  The  report  analyses 

promote  the  digital  transformation  a  top  priority.  The  proposed 

the  potential  impact  of  new  high-impact,  digital  technologies  for 

new Digital Europe programme, with a proposed allocation of €9.2 

Europe, assesses the position of the EU in digital and reviews the 

billion  for  the  2021-2017  MFF  period,  aims  at  boosting  high-per-

past  and  ongoing  actions  of  the  Commission,  mainly  related  to 

formance computing and data, artificial intelligence, cybersecurity 

the Digital Single Market strategy. It then discusses nine potential 

and advanced digital skills; the Connecting Europe Facility would 

signature initiatives for European action that together can proac-

add another €3 billion for digital infrastructure; and in the proposed 

tively  improve  Europe’s  readiness  to  embrace  new  high-impact 

€100  billion  Horizon  Europe  programme,  advanced  digital 

technologies for the benefit of all Europeans.

7

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE1.1 The COVID-19 pandemic’s effect on digital 
transformation
The  global  COVID-19  pandemic  and  the  ensuing  economic  crisis 

have put digital technologies into the spotlight and highlighted the 

need for action. The need for social distancing has accelerated the 

development  and  uptake  of  digital  services  at  an  unprecedented 

pace. According to one analysis, digital adoption for consumers and 

businesses vaulted five years forward in a matter of weeks at the 

height of the crisis7; a large share of the workforce across Europe 

shifted to working remotely, e-commerce and use of delivery apps 

skyrocketed, millions of pupils and students continued their studies 

through  online  education,  and  governments  rapidly  developed 

new digital services to be able to serve citizens in times of social 

distancing. Much of this change, and many of these new services, 

experiences and digital skills will stay in place after the pandemic. 

Digital  solutions  have  also  played  an  essential  role  in  the  public 

health  response.  High-performance  computing  and  innovative 

data  sharing  approaches  are  already  being  used  for  researching 

treatments and the development of vaccines at record pace8 and AI 

solutions are used for lung scan analyses9 

At  the  same  time,  the  pandemic  is  responsible  for  the  deepest 

economic crisis in post-war times, as businesses had to temporarily 

pause or slow their operations and private consumption as well as 

investment  experienced  a  sharp  drop.  Millions  of  workers  lost  or 

are at risk of losing their jobs and Member States are forced into 

large  budget  deficits10.  At  a  time  when  the  need  for  digital  trans-

formation is larger than ever, without interventions, funds for the 

necessary investment may run short. 

Policies and interventions that boost the digital transformation can 

hence also be an engine for recovery, growth and increased global 

competitiveness:  while  in  all  cases,  social  and  economic  conse-

quences  of  the  crisis  will  need  to  be  alleviated,  the  regions  that 

will take action sooner may recover faster and better by establish-

ing leadership in digital value chains. This can help Europe spring 

back  to  prosperity,  but  could  also  lead  to  further  divide  between 

Member  States.  Hence,  prudent  action  coordinated  at  European 

level is relevant.

8

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE2

EMERGING 
TECHNOLOGIES 
SHAPING EUROPE’S 
ECONOMY AND 
SOCIETY

The digital transformation is fuelled by a broad set of technologies, 

ranging from everyday products such as mobile phones, person-

al computers, the infrastructure and connectivity that support them, 

Key technologies in these clusters have a high 
potential for social and economic impact
Most  of  these  technologies  share  advanced  data  processing  and 

to cutting-edge solutions that blur the borders between technology 

applications  as  a  common  theme,  while  others  represent  new 

areas  and  open  up  previously  unimaginable  possibilities  for  what 

business models and reinvent value chains through digital applica-

machines and humans can do together. This new set of technologies 

tions. They will impact all aspects of the economy and society, they 

is  progressively  coming  to  maturity  for  at-scale  deployment  in  the 

will  change  and  improve  the  way  we  do  business  in  many  fields, 

coming years and decades. Taken together, they have the potential 

and they can contribute to solving some of the most pressing issues 

to profoundly reshape our daily lives.

that Europe and the world are facing by managing epidemic diseas-

es, improving medical diagnostics, reducing traffic and workplace 

While  not  disregarding  the  importance  of  basic  information  and 

accidents and increasing system-wide energy efficiency11. But their 

communication  technologies  (ICT)  and  applications  –  without 

impact  can  also  be  negative,  especially  on  the  social  dimension 

them, the next levels of advanced digitisation are impossible – this 

and with regard to equality and cohesion. For example:

report has a forward-looking focus on a set of high-impact technol-

ogies, applications and solutions of specific relevance for Europe’s 

digital transformation grouped in two clusters: enabling technolo-

AI  and  AI  applications,  such  as  autonomous  vehicles  both  have 
a  high  potential  for  social  and  economic  impact.  AI  systems  are 

gies and infrastructure, and high-impact, applied technologies

designed  to  be  able  to  perform  tasks  in  complex  environments 

•   Enabling  technologies  and  infrastructure  are  the  underlying 
technology groups, structures or models that enable transformative 

without  constant  human  guidance  (autonomy),  while  also  being 

able to improve performance by learning from experience (adaptiv-

ity)  in  those  environments.  As  AI  systems  could  play  a  significant 

digital  applications.  They  can  include  general-purpose  technolo-

role  in  society,  it  is  important  that  those  systems  are  trustworthy. 

gies such as AI, big data analytics or high-performance computing, 

Trustworthy AI should be lawful, ethical and robust (from a techni-

and  support  a  wide  range  of  applications  across  most  sectors  of 

cal perspective while taking into account its social environment)12.

the economy and society by providing the digital infrastructure for 

other high-impact applications, e.g. platforms and cloud.

•   High-impact, applied technologies are applications of technolo-
gies that could have a transformative impact on a specific sector, 

Advanced  robotics,  3D  printing  and  advanced  materials  will  very 
concretely  change  industrial  processes,  supply  chains  and  value 

chains,  unlocking  the  potential  for  growth  in  industrial  sectors 

area or function. They make use of one or a set of technologies 

where  the  EU  has  been  traditionally  strong.  They  can  reshuf-

to  create  concrete  value,  and  can  partly  overlap  with  enabling 

fle  traditional  value  chains  and  supply  chains  by  making  many 

technologies and each other (e.g. smart cities is a combination of 

manufacturing  processes  more  available,  and  further  accelerate 

IoT and AI applied to urban systems; autonomous mobility is an 

the transformation of labour markets within and between regions. 

application of combined AI, IoT and other technologies).

New  industrial  processes  and  materials  also  hold  a  promise  of 

9

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPETHE NEW DIGITAL REVOLUTION:
High-impact technologies that will 
shape the European economy and society

Enabling technologies
and infrastructure

High-impact
applied technologies

Artificial intelligence 

Advanced robotics

Intelligent machines that work and react in a similar 
fashion to humans (incl. machine learning, natural 
language processing, computer vision, virtual assistants, 
AI robotics)

Big data analytics

Use of large and varied data sets to uncover information 
incl. hidden patterns, unknown correlations, market 
trends and customer preferences

Quantum & high-performance computing

Supercomputers with capacity to solve large scale, 
complex analytical tasks; use of quantum mechanics
(via qbits) to increase computing power

IoT (incl. edge computing)

Multi-layer technology that enables
management, and automation of connected devices 

NextGen internet & infrastructure 

Infrastructure enabling next generation of technology:
e.g. 5G and beyond, digital twin, highspeed WLAN

Cloud computing

On-demand computing resources ran on distant 
computers, connected to users via the internet 

Digital platforms

Digital platforms on which outside firms can develop 
their own activity or develop their own technologies

Advanced robots capable of complex,
previously non-automatable, tasks

Autonomous mobility (CAVs)

Autonomous and near-autonomous vehicles,
incl. UAVs (drones)

Smart cities

Cities which incorporate ICT to enhance 
efficiency, quality of life, the economy and 
other performance metrics

Additive manufacturing 

Creating 3D, solid objects from a digital file
by adding layer-upon-layer of material

Virtual & augmented reality

Software-created, fully artificial 
environments/technology that superimposes a computer-
generated image on a user's view of the real world

Digital energy innovation & sustainability

New digital technologies enabling innovative energy 
applications: storage, smart grids, renewables

Digitally enabled biotechnologies

Group of technologies enabling new applications
of biological innovation
(e.g. biohacking, next-gen genomics)

Distributed ledger technology

Advanced materials

Peer-to-peer network with unique member digital 
signatures: all transactions are recorded by the entire 
network, notifying the network of a breach 

New materials developed to obtain superior
performance (e.g. graphene) power

10

more sustainable products and important contributions to Europe’s 

such areas, joint investments or actions at the European level – and 

green transformation.

a truly integrated digital market – can create this critical mass, and 

help Europe capture the potential of high-impact technologies.         

High-performance  computing  (HPC),  and  emerging  quantum 
computing have both a high economic impact as enablers of other 
disruptive  technology  application  and  a  social  impact,  by  provid-

ing  unprecedented  computing  power  to  solve  complex  problems. 

But  they  also  come  with  challenges:  quantum  computing  –  still 

early in its development – would render all current cybersecurity 

obsolete, with potentially far-reaching implications on sovereignty 

and security.

Cloud  computing,  digital  platforms  and  related  infrastructure 
technologies have already disrupted technology business models. 

They are characterised by a global ‘winner takes all dynamic’13 and 

are  currently  dominated  by  foreign  businesses.  As  such  technolo-

gies mature and continue disrupting existing industries, establish-

ing local leadership in those would have a significant economic and 

strategic and security impact, e.g. to avoid EU sensitive data being 

hosted abroad or by foreign-owned entities.

Smart cities technologies translate digital technologies into better 
public services for citizens, better use of resources and less impact 

on the environment. Smart cities technologies have the potential 

for  broad  improvement  in  citizens’  quality  of  life  through  better 

healthcare, better mobility, reduced crime, reduced emissions and 
lower water consumption, among other improvements14. However, 
left unchecked, the misuse of certain technologies could also lead 

to the invasion of citizens’ privacy and neglect for their rights (e.g. 

mass surveillance).

These  technologies  are  at  varying  stages  of  maturity.  Many  still 

require  substantial  research  and  innovation  investments  to  be 

widely  adopted  and  generate  most  of  their  economic  or  social 

values. Moreover, economies of scale are an inherent characteristic 

of digital technologies and business models – favouring or requiring 

large amounts of data, users or connected nodes – making any kind 

of market fragmentation an import barrier for such technologies. 

As discussed in section 4 below, few companies, or even European 

Member States, are large enough to alone achieve the critical mass 

needed  for  effective  development  and  diffusion  of,  for  example, 

high performance (or quantum) computing, advanced AI applica-

tions or globally competitive digital platform or cloud services. In 

11

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE3

THE POTENTIAL 
OF DIGITAL 
TECHNOLOGIES IN 
EUROPE 

3.1. Digital high-impact technologies – a powerful 
growth engine

Managed well, these technologies hold the promise for a more 

prosperous future Europe: a macroeconomic simulation devel-

oped by the McKinsey Global Institute, refined and adapted for this 

gies, and to supply it domestically. The most advanced economies 
(‘digital front runners’17) would capture a larger share of the value, 
with an annual average GDP growth effect of 1.4 per cent, or 18.5 

per cent in 2030 compared to 2017. The less advanced (‘catch-up’) 

countries are only projected to see a 4.8 per cent total GDP impact 

study shows, in its base scenario, that digital and new high-impact 

in the same period, or 0.4 per cent per year on average. The middle 

technologies could contribute 1.1 per cent additional annual growth 

group lies close to the EU-28 total growth impact at 1.1 per cent per 

compared  to  baseline  growth  projections  in  the  coming  ten  years. 

year, or 13.5 per cent over the entire simulation period.  

By 2030, the cumulative additional GDP contribution of new digital 

technologies could amount to €2.2 trillion in the EU-28 (EU-27 and 

Furthermore,  the  expected  growth  effect  in  the  simulation  is  not 

the United Kingdom), or 14.1 per cent growth compared to 2017, the 
base year of our model15. This potential is bigger than what has been 
achieved by early technology diffusion, including early ICT16.

By 2030, the cumulative additional GDP 
contribution of new digital technologies could 
amount to €2.2 trillion in the EU, or 14.1  
per cent growth compared to 2017.

linear over time: until 2023, the effect is somewhat negative, driven 

by investment and transition costs that initially exceed the benefits. 

After that, the net value is captured at an accelerating pace.  The 

simulations  do  not  account  for  the  COVID-19  pandemic,  and  a 

severe  economic  crisis  may  delay  some  of  the  investment  neces-

sary to capture the value. However, the crisis has also accelerated 

digitisation in many areas and may indeed serve as an impetus to 

also pursue emerging technologies at a more ambitious pace.

This  calculated  value  is  the  net  effect,  including  investment  and 
accounting for both positive and negative growth effects of disrup-

tive  digital  technologies.  In  the  base  scenario  simulation,  the 

positive economic impact of productivity improvements, increased 

economic activity and spill-over effects outweigh implementation 

The  simulation  also  shows  that  early,  effective  efforts  to  increase 

the  technological  maturity  of  a  region  or  state  can  result  in  signifi-

cant economic pay-offs. For example, in a simulated scenario where 

the  EU-28  Member  States  achieve  a  10  per  cent  improvement  to 
their technology readiness18 by 2023 compared to base scenario, the 
cumulative additional growth effect by 2030 is 3.3 percentage points 

costs and negative externalities such as higher unemployment cost.

(an additional 17.4 per cent GDP by 2030, versus 14.1 per cent in the 

Importantly, the simulation shows a positive growth effect for all 

more and less technologically advanced Member States and regions.

Member States, regardless of the starting point. However, without 

proactive convergence measures, the effects of digital innovation 

would likely be distributed unevenly between Member States, due 

3.2. Social impact and inequality risks 
Similar  to  previous  technology  revolutions,  this  wave  of  digiti-

to their industries’ varying readiness to adopt disruptive technolo-

sation  is  set  to  pose  significant  challenges,  on  top  of  current 

base scenario). Likewise, early actions can help close the gap between 

12

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEExhibit 1: Estimated GDP impact of technology per country archetype, 2017-2013

Cumulative GDP growth – weighted archetypes, % of 2017 GDP

20

15

10

5

0

Avg simple 
annual 
growth, %

1,4%

1,1%
1,0%

0,4%

2016 ’17 

’18 

’19 

’20 

’21 

’22 

’23 

’24 

’25 

’26 

’27 

’28 

’29 

’30

-5

Front-Runner

Middle

Catch-up

EU28 weighted avg

Source: macro-economic simulation

issues surrounding data privacy and control, security or access to 

generates  new  jobs  in  traditional  sectors,  offsetting  part  of  the 

digital service. Unless inclusion and cohesion aspects are actively 

displacement effect. The degree to which the net effect on employ-

managed, technology may contribute to higher inequality between 

ment is positive or negative depends on the local economy’s overall 

citizens,  companies  and  regions.  As  shown  above,  without  specif-

ability  to  capture  the  value  of  technology,  but  also  specifically 

ic  interventions,  Member  States  and  regions  that  are  the  most 

on  the  workforce’s  education  and  skill  level,  and  workers’  abili-

advanced  already  today  could  also  enjoy  the  highest  levels  of 

ty  to  transition  to  new,  digitally  advanced  jobs.  McKinsey  Global 

technology-driven  growth  going  forward,  widening  the  gap  with 

Institute projects that 22 per cent of European jobs are at risk of 

less-advanced regions.

becoming  automated.  While  a  large  share  of  potential  job  losses 

(if  not  all)  would  be  compensated  by  job  creation  and  a  shrink-

A  similar  pattern  can  be  expected  regarding  labour  markets. 

ing workforce (due to ageing populations), this job creation could 

Automation and replacement of jobs have been an ongoing process 

be  concentrated  geographically,  leading  to  local  labour  market 

since the advent of the industrial revolution, but faster adoption of 

disruptions. Additionally, 94 million workers are expected to need 

digital technology is accelerating these trends. All workers will be 

digital  upskilling  as  technology  becomes  a  growing  part  of  their 

impacted as tasks are taken over or supplemented by technology. 

There will be demand for new skills and new jobs will be created, 

likely    requiring  large-scale  education  and  reskilling  efforts  on  a 

occupation,  while  an  estimated  21  million  workers  may  need  to 
completely change occupation19.

scale  previously  unseen.  Moreover,  as  productivity  increases  and 

In our model’s base scenario, illustrated in Exhibit 2, the net employ-

generates new wealth, consumption also increases in the non-dig-

ment effect of disruptive technologies is negative throughout the 

ital economy, notably in local service sectors; this spill-over effect 

simulation period in all country archetype groups – although some 

13

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEExhibit 2: Estimated employment impact of technology per country archetype, 2017-2013

Cumulative changes in jobs, % of 2017 Jobs

Cumulative 
change until 
2030, %

2016 ’17 

’18 

’19 

’20 

’21 

’22 

’23 

’24 

’25 

’26 

’27 

’28 

’29 

’30

0

-1

-2

-3

-4

-5

-6

1,3%

2,5%

2,9%

5,4%

Front-Runner

Middle

Catch-up

EU28 weighted avg

Source: macro-economic simulation

individual Member States may experience increased employment. 
In the catch-up states with less digitally advanced economies, the 

205020. This might in itself compensate part or all of the estimated 
impact of digital technologies on the employment rate of the active 

overall  employment  effect  of  technology  is  projected  to  -5.4  per 

population.

cent by 2030. This compares to -2.5 per cent in the middle group and 

-1.3 per cent in front-runner economies, which are best prepared to 

The  social  and  economic  disruptions  following  the  COVID-19 

generate new digital jobs - including as suppliers of technology - 

pandemic  further  complicate  these  issues.  Depending  on  the 

and  which  will  experience  larger  spill-over  effects.  The  weighted 

scenarios,  European  GDP  could  only  reach  pre-pandemic  levels 

average  employment  effect  on  EU-28  by  2030  is  -2.9  per  cent  in 
the base case scenario. Importantly, these effects only refer to the 
contribution  of  the  technology  to  employment  and  do  not  repre-

by  2021  to  2023,  resulting  in  negative  social  effects  and  putting 

increased  financial  pressure  on  citizens,  businesses  and  Member 

States. McKinsey Global Institute projects that 59 million European 

sent a forecast of future employment levels. Similarly, these effects 

jobs  are  at  risk  in  the  short  term  through  reductions  in  hours  or 

are simulated in the scenario where no measures to stimulate the 
labour market are taken. Rather, as Europe’s population is ageing, 
and  the  working  age  share  of  the  population  is  steadily  decreas-

pay,  temporary  furloughs,  or  permanent  lay-offs.  The  impact  will 

be unevenly distributed, with significant differences among sectors 

and  occupations  and,  as  a  consequence,  among  demographic 

ing, productivity enhancing technology will be needed to sustain a 

groups and local labour markets.

high standard of living for all Europeans: Eurostat projects that the 

old-age dependency ratio – the relative size of the older (non-work-

Three  occupational  groups  account  for  about  half  of  all  jobs  at 

ing) population compared with the working age population – will  

risk in Europe: customer service and sales, food services, and build-

increase  from  30%  in  2020  to  ~40%  in  2030;  and  around  50%  in 

ing  occupations.  The  jobs  most  at  risk  from  pandemic  job  losses 

14

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEoverlap to some extent with those most vulnerable to displacement 

competitiveness  and  employment  in  sectors  where  it  has  been 

through automation. Around 24 million jobs, almost 50 per cent of 

traditionally  strong.  Embracing  and  supporting  the  diffusion  of 

the  number  of  jobs  displaced  through  automation,  are  at  risk  of 
displacement though both COVID-19 and automation21 (Exhibit 3).

technology  should  thus  be  a  priority  for  Europe,  with  the  risk  of 

seeing fewer benefits while fully experiencing adverse effect if no 

3.3. A need for decisive action to manage the 
transition
These  challenges,  however,  do  not  mean  that  Europe  should  not 

action is taken. The COVID-19 impact on jobs and GDP in Europe 
in the short term only increases the urgency for European action23.

Successfully navigating this challenge will therefore be a balancing 

pursue digitisation or try to delay it. On the contrary, denying the 

act for Europe and its Member States: capturing the full potential 

forces  of  transition  rather  than  actively  managing  them  carries 

of  new  digital  technologies  will  not  only  require  specific  policies 

much larger risks for Europe: with potential economic stagnation, 
rising  inequality,  and  growth  in  welfare  costs22.  As  other  regions 
in the world are advancing, inaction would pose risks to Europe’s 

to stimulate their diffusion and adoption, but also proactive action 

to  tackle  transition  costs  affecting  citizen  welfare,  cohesion  and 

inequality on all levels. 

Exhibit 3: There is a large overlap between jobs at risk due to COVID-19 in the short term and jobs 
displaced by automation in the longer term

Breakdown 
of European 
employment

230 million
Total jobs
in 2018
100%

51 million jobs at risk 
from automation 22%

24 million jobs 
at risk of 
displacement 
from both 
automation and 
COVID-19 10%

59 million jobs at risk 
from COVID-19 26%

Note: includes EU-27 countries plus United Kingdom; jobs displaced are based on midpoint automation scenario. Analysis of long-term labor market trends and implact of automation 
was conducted before COVID-19 pandemic; we deﬁne “jobs at risk due to COVID-19”as a reduction in hours or pay, temporary furloughs, or permanent layoffs; analysis determines 
jobs at risk as related to physical-distancing policies and their short-term knock-on economic consequences.
Source: David Chinn, Julia Kier, Sebastian Stern, and Sahil Tesfu, Safeguarding lives and livelihoods: Mitigating the employment impact of COVID-19, McKinsey & Company, April 2020; 
Eurostat; Oxford Economicsl US Bureau of Labor Statistics, McKinsey Global Institute analysis

15

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE4

THE STARTING POINT 
FOR DIGITISATION IN 
EUROPE

In  order  to  harness  these  technologies  and  reap  their  economic 

and social benefits, Europe can leverage its strengths as a large, 

well-educated industrial block. However, in some areas, Europe is 

roll-out,  while  the  funds  attracted  could  be  insufficient.  Further-

more, a skills gap is widening across Europe: between the emerging 

demands of the future, digital labour market and the present skills 

still  lagging  behind  other  leading  regions,  and  large  differences 

remain  within  and  between  EU  Member  States.  The  Commission 

of  workers,  but  also  between  workers  with  and  without  the  right 
education and skill set25.

started addressing this with the Digital Single Market initiative, and 

is well positioned to build on the foundation it has created to take 

the important next steps into the digital age.

4.1. Underlying structural strengths and weak-
nesses 
Europe  has  many  strengths  to  build  on  to  succeed.  It  has  a  large 

4.2. Europe’s global position in digital innovation
Digital solutions are inherently borderless, the market is global and 

the competition is intense. Even more than traditional goods and 

services, many digital business models, such as platforms or cloud 

services, benefit from, or require a critical mass of users and operat-

ing  at  a  large  scale  –  they  are  global  ‘winner-takes-all’  business 

set of strong incumbent industries; many companies and SMEs are 

models. Capturing the full value of the digital transformation hence 

leaders  in  their  field  and  Europe  enjoys  an  increasingly  vibrant 
start-up scene. Its economy is innovation and knowledge-based24, 
with  high-quality  education  and  research,  strong  public  services, 

the  world’s  largest  single  market  area  and  an  overall  predictable 

does not only require adopting and implementing digital solutions, 

but also establishing a strong international position in the digital 

value chain through world-leading digital research and companies.

framework of rules. In many industries – including in several digital 

Europe has a strong starting point in many areas, but is also lagging 

sector  niches  –  European  companies  and  researchers  are  world 

behind  other  regions,  notably  the  world’s  two  largest  national 

leading. The EU remains the largest single market in the world and 

economies,  the  US  and  China,  which  both  heavily  invest  in  their 

the  biggest  trader  of  manufactured  goods  and  services.  Coupled 

digital future. The two economies appear to have a head start in 

with  its  capacity  to  deliver  innovative  pieces  of  legislation,  this 

has allowed the EU to promote new global standards, for instance 

through the General Data Protection Regulation (GDPR). 

However,  challenges  persist.  In  spite  of  the  single  market  and  a 

historically  unprecedented  success  story  of  market  integration, 

fragmentation within Europe remains in many areas, not least due 

to language barriers, but also due different regulatory and taxation 

digital uptake as well as investment. Europe only attracted 13 per 
cent  of  global  venture  capital  and  corporate  funding  in  201926. 
China  is  now  attracting  almost  half  of  the  global  venture  capital 
investment  into  AI  start-ups,  ahead  of  the  United  States,27.  Both 
regions  are  expected  to  significantly  increase  overall  private  and 

public  spending  for  digital  technologies  and  AI  in  the  near  term, 
well beyond similar targets for Europe28,29,30.

regimes.  Cross-border  businesses  are  still  in  a  minority,  including 

There  are  also  substantial  differences  between  countries’  readi-

in  the  physically  borderless  digital  sector.  For  technologies  that 

ness to absorb digital technologies, and these differences are best 

require  large  scale  investments  –  either  for  the  technology  to 

shown through the case of AI, with the US and China emerging as 

mature, or for adoption at the company level to be worthwhile – 

acting at Member State level could be detrimental to cross-border 

active  global  leaders.  Currently,  corporate  AI  market  adoption  in 
the EU is 16 per cent lower than in the US31. Over time, these differ-

16

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEences in AI and digital absorption will translate into differences in 

new rules remains a priority for the EU. The proposed MFF and Next 

economic gains. 

Generation Europe instrument will add additional investments and 

actions to what has already been done. 

EU companies, researchers and inventors in the last five years filed 

about  79,000  ICT-related  patents  under  the  international  Patent 

Cooperation  Treaty  –  fewer  than  Japan  alone  (97,000),  and  only 

half the number of ICT patents filed by US and Chinese applicants 
(160,000 and 158,000, respectively) 32.

4.3. The work so far: Europe’s digital policy
Recognising the crucial importance of the digital economy, and of 

4.4. Identified gaps in the Digital Single Market
Despite  its  achievements,  if  the  EU  is  to  achieve  its  ambitious 

targets for the digital economy and society, several gaps remain to 

be addressed, as identified in a comprehensive review of the Digital 
Single Market strategy performed within the scope of this study 35. It 
will remain a priority to accelerate market integration and harmo-

nisation, continuing with a strong focus on creating a level playing 

need  for  action  at  the  European  level  to  strengthen  the  position 

field  and  building  a  true  single  market  for  digital  products  and 

of  the  Union  on  a  wide  range  of  digital  dimensions,  the  Commis-

services, and building on existing policies.

sion has, as of 2015, put forward an ambitious digital policy aimed 

at  breaking  down  digital  barriers  within  Europe  and  establishing 

In our analysis, four areas emerge as requiring additional attention. 

Europe  as  a  world  leader  in  the  digital  economy.  The  2015  Digital 

Firstly, there is a lack of common standards for data and interop-

Single  Market  strategy  was  structured  around  three  objectives:  (1) 

erability, as well as a lag in next-generation digital infrastructure. 

better  access  for  consumers  and  business  to  online  goods;  (2)  the 

Secondly,  regulation  pertaining  to  the  digital  sector  is  not  fully 

right environment for digital networks and services to flourish; and 

harmonised  across  the  Member  States  (especially  for  emerging, 

(3)  maximising  the  growth  potential  of  the  digital  economy.  The 
2020 Shaping Europe’s Digital Future strategy’s vision further states 
that (1) people must have the opportunity to develop personally, to 

high-impact technologies), which risks hindering the Digital Single 

Market in the EU. Some pieces of regulation can risk stifling early 

innovation if not adapted to the specific technology context. Third-

choose freely and safely, to engage in society, regardless of their age, 

ly,  the  EU  is  facing  a  skills  gap,  particularly  in  digital  skills,  both 

gender or professional background; (2) businesses need a framework 

for citizens (basic skills for the general population and workforce) 

that allows them to start up, scale up, pool and use data, to innovate 

and for advanced digital practitioners. Fourthly and finally, Europe 

and  compete  or  cooperate  on  fair  terms;  and  (3)  Europe  needs  to 

is behind on innovation for new high-impact technologies, both in 

have the choice to pursue the digital transformation in its own way.

terms of funding and in terms of worldwide centres of excellence 

To  achieve  these  overarching  goals,  the  Commission  put  forward 

over  60  initiatives,  half  of  which  consist  of  legislative  proposals 

Specifically,  and  as  a  first  step,  decision-makers  could  consider 

adopted by the co-legislators.

what the most critical to  scale or expand, to address some of the 

(CoEs) around specific technologies.

noted remaining gaps:

The  Digital  Single  Market  Strategy  has  targeted  a  reduction  in 
market fragmentation33, increased data flows34 and updated exist-
ing rules to the digital age. It has sought to improve consumer access 

•   operationalisation  of  the  European  cloud  initiative  (scale  and 

implement); 

through the ban on unjustified geo-blocking, portability of content, 

•   putting  in  place  the  right  policy  framework  for  AI,  including 

the  end  of  roaming,  and  WiFi4EU.  Market  framework  conditions 

through the implementation of the ethics guidelines (develop and 

have  been  targeted  through  the  new  telecom  code,  the  Directive 

operationalise building on the Ethics Guidelines for Trustworthy 

on Audio-visual and Media Services, the updated copyright regime 

AI of April 2019); 

and  the  regulation  on  platforms.  Actions  addressing  digital  skills 

•   adequate funding, combined with the timely spectrum allocation 

and  digitising  industry  and  the  public  sector,  combined  with  the 

and  assignment  of  forthcoming  broader-band  infrastructures 

future Digital Europe Programme, may also contribute significantly 

(e.g.  5G  –  scale  the  technology  diffusion  as  fast  as  possible  and 

to the digitisation of the economy. The implementation of the rules 

maintain);

adopted over the last five years is still under way and enforcing the 

•   further  scaling  up  the  funding  allocated  to  building  the  digital 

skills in Europe.

17

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE5

CAPTURING THE 
VALUE AND 
PROMOTING VALUES – 
FOUR PRINCIPLES TO 
GUIDE EUROPE IN THE 
DIGITAL AGE 

Successfully  tackling  the  digital  challenge  for  the  benefit  of 

and accelerate the deployment of these solutions at a global scale. 

European  citizens  will  require  more  than  regulation  and  invest-

ment. Europe’s digital transformation must also be guided by a set 

At the same time, the ICT sector itself must recognise its own role in 

of European values that will serve as a compass and guardrails for 

societal challenges and contribute to addressing them. For example, 

the Fourth Industrial Revolution.

the ICT sector should act in order to reduce its footprint in terms of 

the resources it consumes, whether energy or rare materials. 

Building on the achievements of the DSM, the EU could strive for 

a European way of doing digital policy that is human-centric and 

founded  on  respect  for  fundamental  rights  and  European  values, 

Reinvigorating democracy, trust and cultural diversity
Technology has reduced the distance between people and decision 

one  that  constitutes  a  “third  way”,  balances  between  state-led 

makers and given everyone the tools to share their opinions instant-

development and laissez faire. This set of defining principles would 

ly. However, left unchecked it can weaken the fabric of society, for 

enhance  trust  and  privacy  while  promoting  an  inclusive  digital 

example by allowing the rapid spread of disinformation, interfering 

society  and  sustainable  economy  as  a  basis  to  build  the  next 

in election processes or leading to cultural uniformity. 

competitive advantage for European companies acting worldwide 

in the digital age. 

The  EU  can  respond  to  this  trend  by  promoting  a  human-centric 

approach to  digital, for example by encouraging transparency of 

European initiatives could build on four societal objectives that can 

and trust in public institutions through easily accessible and intui-

benefit from digital technologies and guide their development and 

tive digital public services, offering citizens equal access to digital 

adoption.

Building and deploying digital solutions for societal challenges
Digital technology can be a key lever to improve European quality 

of life and tackle some of our most pressing societal challenges. For 

example, connectivity will be a key enabler for many, if not most, 

technology  and  credible  information,  promoting  high-quality  EU 

digital media content or digital tools and services that enable EU 

citizens to participate in politics.

Securing digital technological sovereignty and cybersecurity
Digital  technologies  and  data  are  becoming  strategic  societal 

climate  solutions,  by  creating  new  and  sustainable  value  chains 

assets whose control could become a condition for both prosper-

and reducing the amount of natural resources used in the produc-

ity and sovereignty. Europe is currently dependent on foreign-de-

tion  process.  Many  solutions  already  exist  in  energy,  buildings, 

veloped  and  owned  technology  assets  for  a  significant  part  of  its 

transport, security, agriculture and food. Europe can now promote 

digital  economy.  As  all  sectors  are  on  the  point  of  being  radical-

18

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEly  reshaped  by  the  combination  of  connectivity  and  data,  and  as 

digital  technology  is  at  the  heart  of  this  transformation,  Europe 

may want to reduce its dependency on foreign technology.

To reverse the trend, the EU can take immediate steps to increase 

its support for key enablers of the digital economy (e.g. connectivity, 

semiconductors, hardware, data access and sharing, AI, cybersecuri-

ty), particularly where its place in the supply chain is weak or fragile.

Boosting Europe’s competitiveness
Digitisation  is  a  unique  opportunity  for  European  industries  to 

create  the  next  generation  of  innovative  products  and  services, 

retain jobs and create new ones. 

To capture this potential, the overall objective should be to create 

a  strong  digital  ecosystem  in  Europe  that  starts  with  high-quality 

education, world-class research facilities, an innovative legislative 

framework  that  encourages  entrepreneurship,  experimentation 

and  innovation,  start-up  and  scale-up  support  across  the  entire 

EU,  and  financing  and  promoting  industrial  clusters  for  growth. 

Fuelling  this  competitiveness  is  data,  with  much  of  the  econom-

ic  potential  for  innovation  and  the  development  of  new  business 

services depending on the availability of large amounts of quality 

data and the necessary infrastructure and know-how to curate and 

process it.

19

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE6

INVESTMENT 
TO FUEL THE 
TRANSFORMATION

Ensuring Europe’s leadership in the new high-impact, digital technol-

COVID-19 crisis – invested €875 billion per year in ICT equipment 

ogies will require bold and comprehensive actions – and ambitious 

investment  on  all  levels.  Building  the  digital  infrastructure  needed 

for the Gigabit society, whose objective is to make Europe the best 

and  intellectual  property  (IP),  including  software,  licences  and 
patent acquisition36. Over the last five years, this investment already 
grew at 5 per cent per year, a testament to the rapidly increasing 

connected continent in the world, is a priority, and large investments 

importance  of  digital  technology  and  innovation.  The  Member 

are  needed  to  achieve  the  European  Commission’s  connectivity 

States  that  invested  most  are  also  those  that  are  most  digitally 

objectives for 2025, including 100 Mbps connectivity for all Europe-

advanced;  indeed,  leading  EU  Member  States  such  as  the  Nordic 

an households uninterrupted 5G coverage in all urban areas and all 

countries,  Benelux,  Estonia  and  Ireland  –  Europe’s  eight  ‘digital 

major terrestrial transport paths. Investments are also necessary to 

front  runners’  or  ‘DF8’  –  are  globally  competitive  and  leading  in 

fund the research, development and commercialisation of Europe-

many  areas  of  digital  technologies,  and  they  already  capture  a 

an-led  next-generation  digital  technologies  (including  for  support 

large  share  of  the  digital  value  .  These  Member  States  invest  on 

to EU initiatives such as cloud federation, the pan-European Block-

average 6.9 per cent of GDP in ICT and IP every year, compared to 

chain  Services  Infrastructure,  EuroHPC,  the  Quantum  Communica-

5.0 per cent in the other Member States. If Europe raises the level 

tion Infrastructure), to build the digital skills and capabilities of the 

of ambition to invest as much in digital innovation as these most 

labour force, and to implement existing and new digital solutions in 

companies, authorities and in society on all levels.

Public and private actors in EU Member States in 2019 – before the 

digitally advanced countries do, and keeps up the pace of invest-
ment  growth  of  previous  years38,  then  an  additional  €350  to  400 
billion (depending on annual growth rate) would be needed every 
year over the coming ten years, as illustrated below. 

Exhibit 4: Investment gap and DESI1 scores of EU digital frontrunners vs. EU average 

Investment on ICT and IP as % of GDP, 20192 

Projected evolution of annual investment gap, bn€

bn€  189 
6,9%

684 

873

6-8% p.a.

460-560

5,0%

5,3%

259bn € 

350-390

259

Gap to reach 
frontrunner’s 
funding level

2019

2030
(projected)

Average 
funding gap 
per year

Frontrunners
64.8

Others
49.2

EU28
53.7

Average DESI 2020 Score

1 
2 

 Digital Economy and Society Index, compiled by the European Commission
 Eurostat, nama_10_an6 dataset, Gross ﬁxed capital formation

20

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEClosing  today’s  investment  gap  and  lifting  the  entire  Union  to  the 

physical and digital infrastructure and cybersecurity - all necessary 

level of its front runners will not happen without significant actions 

enablers to capture the potential in all parts of Europe. Such invest-

and  contributions  through  public  funds  –  on  all  levels.  But  public 

ment needs to be accurate and accompanied by other actions. As 

funding also attracts private investment, and under the right condi-

these are large-scale projects, some of the digital investments are 

tions, a minor public investment can act as a catalyst to fill the full 

likely most effective if executed or coordinated at EU level, as no 

gap  from  other  sources.  It  is  likely  that  the  best  results  could  be 

Member  State  acting  alone  could  achieve  the  necessary  critical 

achieved via a blending of European, national and private resources. 

mass. However, there is no a direct causal link between spending 

The  public  funding  multiplier  effect  varies  depending  on  the  risk 

may be needed in the Member States to enable effective use and 

more money and achieving the full value. Since structural reforms 

value capture of investments, including simplification of adminis-

trative  processes  and  permits,  education  system  modernisation, 

training of civil servants and strengthening of government institu-
tions. As a reminder, The potential of €2.2 trillion value of technol-
ogy by 2030, discussed above is section 3.1, is a net benefit to the 
economy after offsetting investment and other costs.

The nine signature initiatives discussed below provide examples of 

some areas where this investment could be made with promising 

potential for Europe.

and type of investment: leverage ratios of 2-10+ times are common-
ly  discussed  in  the  literature39,  by  comparison,  the  InvestEU  fund 
aims for a co-funding ratio of 13.7 times its investment, though this 
can include other public funding40. As a calculation example based 
on  these  typical  ranges,  a  private  co-funding  rate  of  five  times 

could be assumed. In this calculation example, and based on a total 

investment gap of €370 billion (mid-point of €350 to 390 billion), 

European  governments  would  need  to  contribute  approximately 
€75  billion  per  year  for  ICT  investment  in  the  coming  years.  This 
figure may still be at the lower end as frontrunner countries might 

also  need  to  step  up  their  investments  to  accelerate  the  digital 

transformation. European Funds from the MFF 2021-2027 and the 

Recovery  and  Resilience  Facility  could  be  mobilized  to  increase 

further  public  investments  in  digital,  in  areas  that  are  character-

ized by the presence of services of general public interest or a more 

pronounced  need  for  public  support  due  to  market  failures  (e.g. 

for  digital  infrastructures,  skills,  digitalisation  of  companies,  joint 

technology capacities).

On  top  of  that,  investment  in  education,  re-  and  upskilling  stand 
out  as  the  largest  and  most  prioritised  investment  for  Europe:  as 

discussed and under the assumptions used in section 7.9. below, the 

needs  stand  at  €350  to  490  billion  over  the  next  ten  years  or,  in 
a mid-point cost calculation, €42 billion per year in Europe. Some 
parts of these costs could be covered by existing national educa-

tion budgets, but new funding will likely be needed from employers 

and employees, and public sources on all levels.

Closing  the  digital  investment  gap  to  bring  the  entire  Union  to 

the level of its front runners, and investing in skills and education 
to  manage  the  transition,  would  hence  cost  approximately  €117 
billion per year for European governments in the coming years. This 
encompasses investments in research and innovation, connectivity, 

21

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE 
7

NINE SIGNATURE 
INITIATIVES TO LEAD 
THE WAY 

Capturing  the  value  of  high-impact,  digital  technologies  and  then 

of the most important aspects of each signature initiative. It includes:

managing the digital transition and its effects on society will require 

a broad set of actions and policies on all levels. Within the framework 

•   A summary description of each initiative and the strategic objec-

of its digital strategy, and previously under the Digital Single Market, 

tives it addresses. 

the  Commission  is  attempting  to  deliver  a  broad  set  of  ambitious 

•   A rationale for why European action is needed, based on Europe’s 

policies to create the right market conditions for the digital economy 

and  society,  supporting  innovation  and  infrastructure  investments 

while protecting the rights of consumers. The Commission believes it 

starting point or the potential impact the initiative could have.
•   A summary of what stakeholders say about the initiative or area 
it  addresses:  in  the  process  of  developing  these  initiatives,  247 

will be critical to continue the course of these policies with renewed 

energy  going  forward,  not  least  in  the  area  of  continued  market 

integration and removal of barriers – whether specifically digital or 

CEOs and senior business executives representing a wide range of 
industries in all parts of Europe were surveyed41. Relevant results 
are presented for each initiative.

not – to Europe-wide digital business.

•   A  discussion  on  potential  options  for  implementation  at  the 
European  level,  and  the  different  components  these  options 

On  top  of  renewed  commitment  to  a  strong  digital  policy  and 

could entail. These options are high level and exploratory, and do 

further reinforcement of its previous actions, the Commission could 

not constitute specific policy recommendations.

take new, bold action to support the principles and four objectives 
of a human-centric digital path for Europe: economy and compet-
itiveness;  societal  challenges  and  climate;  democracy,  trust  and 
diversity; and sovereignty and security.

•   Examination  of  these  options,  opportunities  and  risks  they  may 
carry, feasibility or challenges to implementation, and how differ-

ent  stakeholders  may  by  impacted  economically  and  socially, 

including with a view to inclusion and cohesion. Where relevant, 
potential implementation investment needs are also analysed. 

Nine  signature  initiatives  are  presented  and  discussed  below.  They 

outline  ambitious  actions  in  different  priority  areas  that  directly 

address the four objectives mentioned above. These areas and actions 

were selected and gradually developed over the course of this study: 

7.1. Developing and scaling EU technology ecosys-
tems to match the global best 
European institutions can strengthen European technology ecosys-

they represent views and needs uncovered by research and expressed 

tems  by  helping  to  create  leading,  technology-specific  Centres  of 

by stakeholders from across the digital spectrum in surveys and expert 

Excellence (CoEs) that aim to spur innovation and commercialisa-

workshops; they complement existing policies and to some extent fill 

tion, attract talent and investment, and build on close cooperation 

gaps therein; they require collaboration or joint action at the European 

between research and industry. This could entail creating European 

level to be most effective; and they individually show large economic 

science,  technology,  engineering,  and  mathematics  (STEM)  ‘super 

and social potential. While insufficient to manage the digital transition 

universities’,  focused  R&D  funding  efforts  and  specific  regulatory 

in Europe alone, together these signature initiatives would set a high 

regimes for CoEs. 

bar and could act as catalysts for change.

This report contains a high-level summary of the nine initiatives and 

Potential rationale for European action
Technology  ecosystems  tend  to  flourish  in  regional  clusters  with 

as  such  should  not  be  understood  as  final  or  as  offering  detailed 

cross-sector collaboration between corporates, start-ups, academ-

policy recommendations. The following section provides the outlines 

ia  and  government  agencies,  including  regulators.  Such  clusters, 

22

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPENINE SIGNATURE INITIATIVES TO LEAD THE WAY

1. Developing and scaling EU tech 
ecosystems to match the global best
and position Europe as a leader in key 
new frontier digital technologies around 
Centres of Excellence enabled by the 
collaboration between Super-
Universities, Public Authorities, 
established Industries and vibrant
Start-ups

4. Leading the way towards trustworthy 
AI worldwide by both promoting AI-
based innovation to fuel economic 
growth and social innovations while 
ensuring transparency and a positive 
social impact, which can include social 
measures to counter potential adverse 
effects. This would differentiate 
European AI solution as ethical
and trustworthy

5. Empowering cities and communities 
across Europe by promoting and 
enabling development and equal access 
to citizen-centric smart city technologies 
for better public and private services 
across transport, health, energy, social 
and community services for the EU’s 
~100.000 municipalities

8. Promoting digital solutions for climate 
risks by both promoting the positive 
potential of digital technologies to 
reduce CO2 emissions and resource use 
in other industries as well as reducing the 
growing contribution of ICT to CO2 
emissions and material use (particularly 
rare metals) due to both infrastructure 
(e.g. data centres) 
and ICT devices

Dimensions addressed by the initiative

Economy and competitiveness

Societal challenges and climate

Democracy, trust and diversity 

Sovereignty and security

23

2. Creating a Digital leadership 
instrument for innovation 
procurement of digital 
technologies of European strategic 
importance, combining innovation 
funding and public procurement

3. Building EU data platforms
for strategic B2B sectors, enabling 
as an example, the Europe-wide 
sharing of health data (or similarly 
utilities or transport data) to 
improve healthcare outcomes, 
research and fuel innovation
while respecting privacy
and citizen trust

6. Raising a cybersecurity shield
for Europe to protect EU citizens, 
businesses and Member States 
from attacks on their data and 
data systems. This entails 
protecting end-to-end technology 
supply chains including foreign 
technology and increasing 
strategic autonomy for key 
technologies

7. Advancing citizen control of 
their personal data, building on 
the General Data Protection 
Regulation, to improve 
understanding, user-centricity, 
control and effective enforcement 
of citizens’ data rights and enable 
innovation and new business 
models based on data portability

9. Supporting lifelong learning
for the future of work, to enable 
at-scale reskilling of citizens 
(particularly populations at risk
of unemployment) and equip all 
citizens with the digital and 
cognitive skills they need to 
succeed in a future of work context 

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEand most famously Silicon Valley, account for an outsized propor-
tion of R&I, new company creation and economic growth42. In spite 
of its strengths in research and technology, most leading technolo-

gy clusters are found outside of Europe, as are many of the leading 
technical  universities  that  ecosystems  often  form  around43,44. 
Venture capital levels are also lower in Europe than in, e.g. the US 

and China, regions that attract and retain more foreign research-
ers and entrepreneurs – including from Europe45. Europe, however, 
shows continued growth in venture capital invested (approximately 
€30 billion in 2019 versus €14 billion in 2016)46. European institu-
tions could play an important role in accelerating, developing and 

Attracting and retaining top talent in the EU – The EU could coordinate 
Member State action to attract and retain top talent in the EU by:

•   further breaking down barriers to talent mobility within and into 

the EU (e.g. work permit after studying in the EU, ‘EU Einstein visa’, 

giving working rights to spouses, easing the transfer of working 

rights between EU countries, adapt pension systems);

•   adapting taxation (e.g. on stock options for start-ups to attract founders);

•   increasing grants for EU/non-EU students with a potential obliga-

tion or incentive to work in the EU for a period of time.

scaling  European  technology  ecosystems,  and  strengthening  the 

strategic  talent  pool  through  investment  and  actions  targeted  at 

Developing  and  promoting  EU  super  universities  –  The  EU  could 
enable  the  development  of  EU  super  universities  that  aim  to  be 

strategic technology clusters. 

world-leading, in particular in STEM subjects, by:

In the executive  survey (see section outline above and Section 7.10. 

•   funding  targeted  institutions  for  cutting-edge  research  and 

for a  summary of the survey) 50 per cent of respondents said ‘better 

best-in-class teaching (e.g. by attracting superstar professors);

cooperation  between  universities,  research  institutions,  start-ups, 

•   coordinating  those  institutions  to  foster  entrepreneurship  and 

corporates,  regulators  and  other  government  entities’  would  be  the 

technology  commercialisation  (e.g.  venture  capital  funding, 

most important enabler for a leading technology ecosystem in Europe. 

coaching, ease of spinning off);

37  per  cent  believed  that  ‘coordination  of  public,  private,  academic 

•   creating  EU-wide  venture  capital  competitions  that  increases 

actors  to  collaborate  more  and  promote  innovation  and  commer-

visibility  of  innovative  technologies  and  business  models,  and 

cialisation’ would most effectively support the digital transformation 

promotes funding of commercialisation and scaling.

in Europe, and 30 per cent pointed to the lack of world-class (STEM) 

universities in Europe.

Each of these themes come with advantages and challenges. Focus-

ing resources and investment on targeted sectors and areas makes 

Potential options for European action*
This  objective  can  be  promoted  through  a  broad  set  of  concrete 

additional  demands  on  decision-making  processes  and  govern-

ance,  and  risks  undesired  redistribution  effects  if  concentrating 

initiatives,  many  of  which  would  build  on  existing  European 

resources  in  areas,  which  are  already  best  off.  All  of  the  themes 

programmes and policies. Three potential thematic options include:

affect domains that are partly within the competencies of the EU 

Building  and  scaling  up  EU  CoEs  –  The  EU  could  coordinate  the 
construction of a number of designated, localised European CoEs 

focused on technology commercialisation by:

•   focusing topical R&D funding in CoE locations, including high-risk 

R&D, strategic R&D and incentives to private R&D;

(such as research funding) and partly within the competencies of 

the Member States (such as taxation and education policy).

Likewise,  investment  needs  for  these  themes  would  vary.  Building 
out  existing  institutions  to  establish  super  universities  with  10,000 
students graduating per year could cost €2 billion annually47; a wider 
and broader reach would require proportionally higher investment. 

•   fostering cooperation between governments, universities, corpo-

The distribution and size of investment in innovation and commer-

rations  and  SMEs  (e.g.  funding  of  joint  facilities  for  important 

cialisation is a political and commercial choice; a ‘right’ level cannot 

infrastructure);

•   creating  regulatory  sandboxes  (e.g.  tax,  data  rules)  to  foster 

commercialisation;

•  using and scaling Digital Innovation Hubs for tech dissemination.

be  calculated.  However,  by  way  of  illustration,  bringing  European 

technology venture capital investment levels to the same level as in 
the US would require an additional €85 billion48. A significant part of 
these funds would likely be directed to technology clusters or CoEs. 

* indicative and non-exhaustive

24

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEProjected evolution of annual investment gap, bn€

The case for digital transformation in two European ecosystems
The case for concerted action on a European level can be illus-

the result of technology development, the external pressures of 

changing  user  demands  and  the  global  imperative  to  create  a 

trated by two essential and complex ecosystems: automotive and 

sustainable – emission free – transport system. 

health. While both are critical to Europe’s economy, sustainabili-

ty and welfare, the challenges that they are facing, which include 

These trends and technology areas are the focus of most innova-

intense  pressure  to  reform,  are  different.  Fierce  global  compe-

tion in the ecosystem and generate large investment – but only 

tition, regulatory pressure and accelerated technology develop-

a  small  part  of  it  is  in  Europe.  Out  of  more  than  €270  billion 

ment are all putting the automotive industry under considerable 

disclosed  venture  capital  and  financing  of  companies  develop-

external  pressure  to  transform,  while  the  health  sector  faces  a 

long-term fiscal sustainability challenge as (public) costs consist-
ently increase more than GDP49 – at the same time that under-
lying needs and the expectations of citizens are increasing. The 

ing ACES technology in the last ten years, only approximately 5 
per cent is in Europe51. Moreover, while the European automotive 
industry has world-leading expertise in many traditional technol-

ogy  areas,  it  risks  falling  behind  in  the  race  for  digital  talent  – 

health ecosystem has been under increased pressure during the 

especially as pure technology players, such as Google, or digitally 

COVID-19  pandemic.  Different  digital  technologies  are  crucial 

native challengers such as Tesla, have begun to compete on the 

parts of the solution for these sectors, yet there are barriers to 

global automotive market. Indeed, an analysis of approximately 

large-scale adoption at speed.

Automotive and mobility
Automotive  and  mobility  is  one  of  the  most  important  sectors 

of European competitiveness, representing approximately 5 per 
cent of EU GDP and approximately 12.6 million jobs50. Four trends 
are shaping the industry in the long term: autonomous, connect-

ed, electric, smart and shared mobility (ACES). These trends are 

300,000  profiles  at  European  car  manufacturers  and  suppliers 

and US tech companies (illustrated below) showed that many EU 

car manufacturers had access to similar digital skill depth as the 

technology players, but lagged behind in breadth and availabil-

ity of such talent. European car parts suppliers, who are crucial 

players in the ecosystem, to a large extent lacked both depth and 

breadth of digital knowledge among their workforce.

Exhibit 5: Analysis of the depth and availability of digital talent in the European automotive ecosystem

High

Skill depth 
of digital 
talent2

EU car 
equipment 
manufacturers

EU car 
manufacturers

Pure 
technology 
players

Low

Low

Skill availability of digital talent1 

High

Note:  Sample size ~300,000 anonymized LinkedIn profiles
1 
2 

 Average availability across 6 DnA capabilities. Availability measured as proportion of employees with at least one relevant skill on their LinkedIn profile.
 Average depth across 6 digital capabilities. Depth measured as average number of relevant skills on their LinkedIn profile.

25

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEDefending its world-leading position in automotive and achieving 

The pharmaceutical sector could also vastly benefit from digital 

a leadership position across emerging technology areas requires 

technology,  not  least  through  better  use  of  data  in  drug  and 

large  investment  and  scalability  for  European  automotive  and 

technology players in all parts of the ecosystem. To achieve this 

treatment research and development, which could increase the 
probability of success for new treatments by 10 to 20 per cent55.

scale  and  help  accelerate  the  transformation,  European  institu-

tions could play an important role, together with Member States 

In  spite  of  the  considerable  potential  that  could  be  released 

and the industry, by: fostering and fuelling industry collaboration; 

improving  data  access  and  cross-industry  data  sharing;  building 

out connectivity and charging infrastructure; and further acceler-

by  embracing  digital  capabilities,  health  and  pharmaceuti-
cals  remain  among  the  least  digitised  sectors56.  Large  barriers 
to digital adoption persist, including a lack of unified data and 

ating research in high-impact technology areas, in particular for 

digital  infrastructure,  lack  of  skills  and  funds,  and  regulatory 

autonomous  and  electric  vehicles.  While  such  initiatives  would 

barriers related to health and patient data. To overcome these 

require reform and investment, the pay-offs for European indus-

barriers  and  capture  the  value  of  digital,  European  institutions 

try’s global competitiveness could be huge, if a truly collaborative 

could, in close collaboration with national and regional author-

automotive ecosystem was achieved. For example, in a calculation 

ities  and  the  ecosystem,  foster  the  adoption  of  shared  stand-

example involving five European manufacturers, effective collab-

ards for EHR systems to ensure interoperability of unified EHR/

oration on some of the most costly autonomous vehicle technol-

exchange  (and  e-prescribing),  and  fund  the  necessary  adapta-

ogy development could render efficiency gains of approximately 
€25 billion by sharing R&D costs and innovation outcomes52. 

tion of physical/digital infrastructure. This would not only unlock 

efficiencies  potentially  exceeding  €30  billion  in  Europe  (based 

Health
The health sector, including pharmaceutical and medical device 

on  the  example  of  France  and  Germany)  but  also  be  a  crucial 

enabler  for  many  other  digital  health  applications.  Moreover, 

patient outcomes would directly improve due to health profes-

development  and  manufacturing,  is  a  critical  ecosystem  for 

sionals’ access to complete and accurate health information.

the  well-being  of  all  Europeans  as  well  as  for  the  economy  (it 

represents 11 per cent of employment and approximately 6 per 
cent of value added in the economy)53. While many of Europe’s 
health  systems  count  among  the  best  in  the  world,  they  are 

facing  challenges  because  public  health  spending  is  steadily 
increasing faster than GDP54. This is driven by the development 
of new – effective but costly – drugs and treatments, demograph-

Furthermore, European institutions could accelerate the creation of 

a common European health data space, as already initiated by the 

Commission, by setting up a partnership to develop and deploy both 

digital  and  physical  confidential  computing  infrastructure  to  be 

used for health research and development. This would enable both 

effective scaling of a long list of health solutions reliant on access 

ic  change,  and  increasing  citizen  demands.  In  the  long  term, 

to secure, standardised and high quality data and the development 

without  productivity  increases  cost  development  in  Europe  is 

of new digital health innovations. A move towards a dedicated EU 

bound to become unsustainable.

approval process for smart health products (e.g. with a specialised 

approval authority similar to British NIA, German DVG) or mutual 

Digital solutions can address this emerging productivity gap. An 

recognition of national approvals would also boost the ecosystem, 

analysis of France and Germany, which account for 47 per cent 

as would a built out physical infrastructure to support digital health 

of  the  EU-27  public  healthcare  spend,  shows  that  five  digital 

services, including access to the European HPC network, to support 

technology groups could achieve efficiencies of up to €55 billion 

digital use cases in pharmaceuticals and precision medicine.

(€120 billion if extrapolated for the entire EU-27). The five groups 

(online  interactions  and  monitoring,  paperless  data,  workflow 

For both sectors, forming truly integrated European ecosystems, 

automation, decision support, and appropriate patient self-care) 

with  collaboration  across  industry  borders  as  well  as  nation-

encompass 25 specific, high-impact digital use cases. The three 

al  borders,  would  help  to  accelerate  the  digital  transforma-

most important, teleconsultation, remote monitoring of chronic 

tion.  No  company,  institution  or  organisation  alone  can  solve 

diseases and unified electronic health records (EHR), account for 

the  complexities  of  large-scale  digital  adoption,  but  by  acting 

€21 billion, or 40 per cent of the total potential.

together they can all capture the benefits.

26

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEExhibit 6: In France and Germany alone, digital health solutions could 
generate a value of €55 billion to society, with three use cases accounting 
for 40% of the value

Benefit potential2 of digital health solutions by use case, EUR bn, 2017/18, sum for FR and DE3

Directly patient facing services (Digital health)

Non-patient facing back-ground services (e-Health)

German & French perspective

e-Referrals   <1

Virtual reality for
pain treatment
<1

Genetic testing
<1

Digital diagnostic
tools  <1

Vital parameter
tracking (eICU) 
1

Advanced payor
analytics
2

Patient support
networks 
1

Process/logistics
automation 
through robotics
1

Barcoding
medication
administration
2

RFID-tracking
2

Clinical decision
support
2

Patient flow
management
3

Disease
prevention tools
1

Medical
chatbots
2

Chronic
disease 
management 
tools
4

100

e-Booking  1

e-Triage 
3

Intra-hospital staff
communication  1

Clinician's virtual
assistants (AI)
1

e-Prescribing
1

Remote monitoring of 
chronic disease patients 
6

Top 3 use cases 
account for 40% 
of the potential 
efficiencies

95

90

85

80

75

70

65

60

55

50

45

40

35

30

25

20

15

10

5

0

Teleconsultation
6

Unified electronic 
health record/
exchange
10

Nurse mobile
connectivity
3

Performance
dashboards
3

Online 
interaction

Paperless data

Workflow/
automation

Outcomes 
transparency

Patient
self-care

15 EUR bn (27%)

13 EUR bn (24%)

9 EUR bn (17%)

10 EUR bn (18%)

8 EUR bn 
(14%)

1. Unified electronic health record/exchange | 2. Benefit potential for 26 use cases across 5 digital domains; benefit potential captures 
reductions in the cost of delivery and/or direct decreases in activity | 3. Note: Figures may not add up due to rounding; benefit potential 
captures reductions in the cost of delivery and/or direct decreases in activity (compared to combined German and French 2018 baseline)

Source: German Federal Ministry of the Interior, German Federal Statistical Bureau,French Ministry of Social Affairs and Health (based on 
2017 data)

27

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE7.2. Creating a digital leadership instrument 
European institutions could accelerate technology innovation and 

In  the  executive  survey,  approximately  63  per  cent  of  executives 

stated that they would invest more in R&D for new products/servic-

the development and commercialisation of strategic new products 

es if they were ensured a public buyer for those products/¬servic-

by  creating  a  mechanism  that  links  research  funding  to  public 

es, and approximately 60 per cent stated that they believe pooling 

procurement.  One  potential  option  is  to  establish  a  European 

resources at an EU level would increase the effectiveness of large-

strategic funding agency, an instrument where Member States can 

scale innovation.

join efforts to jointly fund and procure large-scale, high-risk devel-

opment  projects  tied  to  critical  global  challenges  –  e.g.  climate 

change, security or health – and coordinate Europe-wide procure-

ment  of  innovation  to  support  commercialisation  and  strengthen 

European value chains.

Potential options for European action*
Extending  and  expanding  the  mandate  of  an  existing  instrument 
for  all/participating  Member  States  –  The  Commission  could  tie 
funding to public procurement for strategic, large-scale EU innova-

tion projects by: 

Potential rationale for European action
Enhancing  the  capacity  to  research,  develop  and  commercial-

•   creating  a  standing  body  for  the  EuroHPC  Joint  Undertaking  to 

ise  new  technology  is  key  for  Europe  to  remain  competitive  and 

tackle other strategic innovation topics on behalf of all Member 

reduce dependence on foreign imports for key hardware and infra-

States and the Commission;

structure  components.  Despite  Europe’s  ambitious  joint  research 

•   expanding the Important Projects of Common European Interest 

programme,  Horizon  2020,  efforts  remain  fragmented  in  many 

(IPCEI) to include a public procurement instrument in the frame-

strategic research areas, and most companies or Member States do 

work  and  create  a  governance  body  for  sub-groups  of  Member 

not have the scale to develop the most costly technology innova-

States  or  the  Commission  to  mobilise  for  strategic  innovation 

tions. One of the issues hindering the commercialisation of strate-

topics.

gic  research  is  the  lack  of  connection  between  breakthrough  but 

high-risk research and the market. European governments procure 

goods and services worth approximately €2 trillion every year, with 
10 to 15 per cent of these being digital-related57. Together, Europe-
an  governments  have  the  purchasing  power  to  commission  new 

Creating  a  new  instrument  for  all/participating  Member  States  – 
The Commission could tie funding to public procurement for strate-

gic, large-scale EU innovation projects by: 

products that do not yet exist – and also have the opportunity to 

•   creating  a  new  body  or  framework  for  large-scale  strategic 

share  development  risks.  There  are  promising  efforts  to  address 

innovation  procurement,  thereby  allowing  the  Commission  to 

this topic under the European Innovation Council and the European 

mobilise and pool Member States’ resources for strategic innova-

Research Council. These mark important steps from the Commis-
sion on the innovation side58, albeit at this point without a large-
scale, joint strategic procurement element.

tion  projects  of  various  sizes.  This  would  include  joint  procure-

ment and grants. Alternatively, this framework could be used for 

Member States to voluntarily pool resources for common strate-

gic innovation projects.

In the US, the Defence Advanced Research Projects Agency (DARPA) 

has helped bridge this gap for high-tech defence products, which in 

Pooling  resources  would  drive  the  commercialisation  at  scale  of 

turn have been instrumental to the development and commerciali-

strategic  technologies,  whose  development  or  procurement  costs 

sation of silicon chips, the internet, voice recognition, touch screen 
and GPS, as examples59. The EuroHPC Joint Undertaking demonstrat-
ed how the pooling of EU and Member States’ resources can steer 

are  still  prohibitively  high  for  individual  actors.  The  main  differ-

ence between a voluntary and an EU-wide scheme is that a volun-

tary scheme could leave some Member States behind, potentially 

innovation  and  support  the  research  and  deployment  of  next-gen-

widening gaps. While it is beyond the current competencies of the 

eration  technologies.  European  institutions  could  build  on  this 

European  Commission  to  establish  a  EU-wide  joint  procurement 

experience  and  extend  it  to  other  areas,  e.g.  blockchain,  quantum 

body,  the  example  of  the  EuroHPC  joint  undertaking  shows  that 

technology, low-power microprocessors, or AI applications.

Member  States  can  be  widely  willing  to  participate  in  strategic 

* indicative and non-exhaustive

28

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEdevelopment programs under the right conditions. However, R&D 

investment inherently bear the risk of not being fruitful, and that 

as  different  Member  States’  interpretations  of  GDPR  rules  when 
personal data is used (e.g. health)62.

large-scale  strategic  procurements  could  concentrate  funding 

on  the  companies  or  institutions  that  are  already  best  resourced, 

There  is  untapped  potential  to  strengthen  Europe’s  leadership  in 

risking  the  exacerbation  of  existing  resources  imbalances  unless 

its  core  industries  through  data  sharing.  To  rise  to  this  challenge, 

specific attention is given to the matter.

Europe  will  need  to  help  its  key  industries  build  the  core  infra-

The necessary investment level is a function of the ambition level 
and  scope  of  technologies  that  will  be  developed  –  but  large-

scale innovations need to be supported by significant funds. As an 

structure and know-how in data science, as well as put in place the 

necessary regulatory frameworks to enable and promote B2B data 

sharing while maintaining data security and privacy. 

example, setting aside 1 per cent of Europe’s total digital procure-
ment60 funds would give the leadership instrument €2 to 3 billion 
every year for joint investment in future technologies: similar levels 

The Commission is well placed to play a coordinating role, as it did 
when launching the COVID-19 data-sharing platform for research63. 
While the structural challenges mentioned above remain relevant, 

to DARPA (approximately €3 billion annual budget). In comparison, 
the EuroHPC budget was approximately €1 billion over 8 years61.

7.3. Building EU data platforms for strategic B2B 
sectors 
European  institutions  could  promote  secure  access  to  high-quali-

ty data for business and government use and strengthen Europe’s 

position  in  the  digital  value  chain.  One  important  component 

could  be  supporting  the  development  of  B2B  data  platforms  in 

key sectors, for example healthcare and energy. This could entail 

COVID-19  has  brought  an  increased  will  to  collaborate  between 
health  players  (e.g.  pharmaceutical  companies64)  that  could  be 
leveraged to lay the foundation of an EU approach to health data 

sharing.  The  COVID-19  pandemic  has  also  highlighted  the  impor-

tance of EU health data sharing and presented a window of oppor-
tunity to address gaps exposed by the crisis65. In Shaping Europe’s 
Digital  Future,  the  Commission  recognises  the  need  for  shared 
European data spaces, notably in health, and important first steps 
have been taken in the European Data Strategy66.

regulatory, funding and coordinating actions. 

93  per  cent  of  the  EU  executives  surveyed  believe  that  better 

Potential rationale for European action
Although Europe is the most trusted territory for collecting, storing 

access to sector-specific data would be important to their organisa-

tion (with approximately 40 per cent designating this as very impor-

tant). More than 50 per cent would be willing to share their data if 

and accessing data, the fragmentation of European data sets across 

value chains, with diverse rights and incentives to access to them, 

is  an  obstacle  for  enabling  technological  innovation,  adoption 

they either (1) received access to similar data from competitors in 
return or (2) were paid for the data. In the Eurobarometer67, 43 per 
cent of citizens expressed that they would be willing to share data 

and  scaling.  Data  sharing  for  innovation  in  public  goods  services 

for improvement in medical research and care.

can  have  a  significant  social  and  equality  impact  by  improving, 

e.g.  healthcare  or  energy  systems  throughout  Europe  and  reduc-

ing  gaps  between  geographies.  Additionally,  the  healthcare  and 

energy  sectors  are  largely  public  and  produce  large  amounts  of 

data,  which  means  that  they  are  in  a  good  position  to  be  piloted 

Potential options for European action*
Standardising B2B sectorial data sharing – The Commission could play 
a standardising role to enable sectorial data sharing in the EU by:

before rolling out benefits to other sectors.

•  first, co-developing standards with industry;

•   then,  promoting  data  standards  and  laying  out  regulations  for 

Since  data  is  an  essential  raw  material  for  most  high-impact 

data exchange (for selected and suitable sectors, imposing stand-

technologies,  data  availability  is  at  the  heart  of  reaping  the 

benefits of digital innovation. Notably, data availability is a critical 

ards could be a viable option, applying methodologies similar to 
those in the PSD2 directive68);

enabler for the adoption of AI and related technologies based on 

•   reviewing  potential  regulatory  barriers  to  cross-industry  data 

big data. Additionally, access to data supports a level playing field 

sharing related to competition law, whereby the common good of 

for competition by allowing market players of all sizes to innovate. 

innovation is weighed against the risk of anticompetitive practic-

However,  this  data  often  resides  in  different  stakeholder  groups, 

es related to data sharing.

with diverse rights and incentives on how to use the data as well 

* indicative and non-exhaustive

29

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEOrganising the exchange of B2B sectorial data – Going even further, 
the Commission could play an active role in organising or operating 

development of AI, European Institutions could coordinate public 

and  private  funding  in  Europe  to  ensure  internationally  competi-

data exchange platforms by:

tive levels. This could be accompanied by a regulatory framework 

setting  ethical  and  legal  standards,  creating  the  legal  certainty 

•   funding  or  operating  the 

infrastructure  for  sector-specific 

necessary for the development of human-centric AI. For example, 

platforms for data sharing where the EU can potentially play the 

a pan-European certification scheme could be developed based on 

role  of  a  trusted  third  party  to  facilitate  and  control  use  of  the 

the guidelines for trustworthy AI put forward by an expert group, 

platform, as well as setting up a framework to safeguard IP rights 

and a supervisory body for critical, data-driven applications could 

while sharing data;

be established.

•   requiring data sharing on the platform (this could be limited to 

some strategic sectors and to companies above a certain size).

Currently,  companies  hold  on  to  their  data  because  it  is  a  valua-

ble  asset.  Indeed,  in  some  circumstances,  data  sharing  between 

competing  companies  may  be  considered  an  anticompetitive 

Potential rationale for European action
AI  and  related  high-impact  technologies  play  a  key  role  in  the 

development  of  our  future  industry  and  society,  and  thus  have 
become an area of strategic importance for the Commission69. As a 
general-purpose technology, like steam or electricity, AI can serve 

practice.  To  function  on  a  large  scale,  data  may  be  seen  as  a 

and  revolutionise  numerous  sectors,  and  be  a  main  contributor 

pre-commercial,  precompetitive  common  asset,  whose  value  is 

to  the  digital  transformation  of  Europe.  In  addition,  the  use  of  AI 

greater for all when scaled up and widely available. This requires a 

promises contributions to many societal challenges, from treating 

larger shift than the simple provision of data-sharing infrastructure.

complicated diseases to predicting extreme weather events. 

Standardisation  is  the  first  step  towards  any  large-scale  data 

There are already substantial differences between countries’ readi-

sharing that the Commission can carry out in a short time frame, 

ness to absorb AI, with the US and China emerging as active global 

with limited investment. The Commission’s ability to co-create and 

enforce  standards  has  been  shown  with  the  PSD2  regulation  for 

the  banking  sector.  However,  while  standards  are  a  requirement, 

leaders.  Currently,  corporate  AI  market  adoption  in  the  EU  is  16 
per cent lower than in the US70. To ensure Europe captures its fair 
share of the value generated from such solutions, Europe will need 

they might not suffice to ensure effective data sharing. The sector 

to  supply  –  not  just  consume  –  AI  technologies.  For  example,  the 

must see the value, and be willing to organise data exchanges. On 

US has seen approximately €60 billion of annual investment in AI/

the  other  hand,  organising  and  directly  providing  the  infrastruc-

ture data sharing is more costly and complex than regulatory and 

coordination measures, but could have a more immediate impact 

for sectors. 

big data companies in 2018-2019, compared to approximately €5 
billion spent in Europe and approximately €17 billion in China71. 

However, for AI to be a positive force in European societies, it should 

be  used  ethically  and  machine  decision  making  should  be  trans-

The willingness of industry to cooperate and share data is a precon-

parent.  Most  Member  States  are,  or  will  be,  grappling  with  these 

dition  for  data  sharing  even  in  the  case  of  EU  infrastructure,  and 

questions and risk producing fragmented regulatory approaches. A 

especially  in  competitive  markets.  However,  for  public  goods 

common framework on European AI ethics and transparency would 

sectors the Commission could incentivise or mandate the sharing 

create a true single market for trusted AI applications

of important data. For instance in healthcare, starting with targeted 

pilots could be a first step to tackling the complexity of data and 

58 per cent of EU executives surveyed see ‘support[ing] universities 

underlying healthcare systems that could be significant barriers to 

and research institutions to build leading AI knowledge’ as part of 

standardisation and sharing. EU action could also ensure that data 

the most important policy to promote AI to the benefit of Europe. 

shared  can  be  used  by  all  relevant  actors  in  the  market  and  not 

45  per  cent  also  see  ‘support[ing]  European  industry  broadly  to 

incumbent players alone.

7.4. Leading the way towards trustworthy AI 
worldwide
Europe  can  assume  global  leadership  in  supplying  ethical  and 

ensure  adoption  of  existing  AI  technologies’  and  42  per  cent  see 

‘guidelines or regulations to safeguard ethical and transparent use 

of AI’ as part of such policy. Additionally, 75 per cent of EU execu-

tives  surveyed  do  not  consider  that  AI  transparency  regulation 

would affect their business negatively, with 36 per cent believing 

human-centric technology, especially AI. To foster the supply and 

that it would have a positive impact.

30

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPECOVID-19  has  pushed  many  businesses  and  consumers  towards 

by the Commission to ensure a fair repartition of the benefits of AI 

online  and  remote  services,  which  has  the  effect  of  creating  new 

across the EU. As an example, by 2030, front-runner companies are 

and  more  diversified  data  sets  in  specific  areas  (online  shopping, 

remote working, and collaboration) that could be used as a basis 

for new AI applications.

predicted to gain about 122 per cent in economic value (econom-
ic  output  minus  AI-related  investment  and  transition  costs)73.  In 
contrast, laggard companies could lose around 23 per cent of cash 
flow compared with today74.

Potential options for European action*
Investing  to  build  European  AI  capabilities  –  The  Commission 
could build on and expand its Coordinated Plan on Artificial Intel-
ligence72, and ensure sufficient investment in building European AI 
capabilities by:

Venture capital and other financing (public and private) of AI compa-
nies are at relatively low levels in Europe. To close this financing gap 

between the EU and the US, additional investment of approximately 

€55 billion annually would be needed, whereas closing the financing 
gap with China would require approximately €12 billion75.

•   funding  (1)  research  and  innovation  into  and,  (2)  teaching  and 

building  AI  talent  and  (3)  common  infrastructure  and  facilities 

(see section 7.1 above);

•   creating an EU strategic innovation procurement instrument for 

AI (see section 7.2 above);

7.5. Empowering cities and communities across 
Europe 
To empower European cities and communities through the use of 

digital technology, European institutions can support the develop-

•   incentivising  private  R&D,  fostering  commercialisation  (e.g.  AI 

ment of interoperable and scalable smart city technology platforms 

venture capital) and funding the dissemination of AI tech through 

through the coordination of technology standards and architecture. 

Digital Innovation Hubs.

Regulating and creating trust in AI – The Commission could regulate 
AI  to  avoid  misuse  and  create  trust  while  avoiding  any  stifling  of 

innovation by:

Furthermore, the EU could accelerate the funding of pilots and lead 

innovation procurement of such platforms, which are developed on 

the free market but are applicable across European cities. 

Potential rationale for European action
Smart cities translate digital technologies into better public servic-

•   establishing a multi-level certification scheme, with certification 

es  for  citizens,  better  use  of  resources  and  less  impact  on  the 

depending  on  the  risk  level  of  applications  and  being  tied  to 

environment.  This  means,  among  others,  smarter  urban  transport 

liability of the manufacturer, to protect both users and certified 

networks,  upgraded  water  supply  and  waste  disposal  facilities, 

manufacturers;

more energy-efficient buildings, safer public spaces, and meeting 

•   working to improve the perception of AI by creating transparency 

the  needs  of  an  ageing  population.  Smart  city  technologies  have 

and awareness of the benefits;

been  found  to  have  potential  for  15  to  20  per  cent  less  time  in 

•   promoting the roll-out of AI for government by building a centre 

traffic; up to 40 per cent less crime; 10 to 15 per cent lower carbon 

of competence to provide guidance on AI ethics and peer learn-

ing on AI for government.

dioxide  emissions;  and  20  per  cent  lower  water  consumption, 
among other improvements76. 

The  options  presented  above  are  complementary  and  both  need  to 

happen  to  capture  AI  benefits  by  addressing  both  AI  uptake  and  AI 

trust. A certification scheme has the advantage of addressing the trust-

worthiness and transparency of AI systematically, but there is an inher-

There  has  been  significant  investment  to  date.  In  Europe,  an 
estimated  €17  billion  related  to  smart  cities  was  spent  in  201877. 
However, funding alone is insufficient to scale up the market.

ent difficulty in controlling and certifying a product that is, by design, 

While  the  core  technologies  are  sufficiently  mature,  the  first 

constantly changing. There is an added risk of hampering innovation, 

challenge for smart city solutions to reach broad adoption at scale 

especially for small players, with certification costs and bureaucracy. 

across Europe, is to orchestrate city ecosystems to align on stand-

In addition, AI is expected to widen inequalities between Member 

both  the  supply  and  demand  sides:  developers  bear  a  significant 

States and companies, which could be subject to coordinated action 

risk that solutions developed will not comply with future standards, 

ards and concepts for scalability. Lack of standards leads to risk on 

* indicative and non-exhaustive

31

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEwhile cities run the risk of vendor lock-in if solutions are not inter-

operable. Additionally, there is little clarity for procurement officers 

around Europe, e.g. on what services and solutions are available on 

Boosting  the  demand  side  of  EU  standard-compliant  smart  city 
technologies – The Commission could put in place the right condi-
tions for the adoption of sustainable smart city solution at scale in 

the market, what has worked, what has failed, and which vendors 

the EU by:

offer the best service. 

The  top  three  elements,  crucial  for  benefitting  from  advanced 

buying side and avoid vendor lock-in;

digital services at a city/local level, cited by EU executives, are (1) 

•  co-funding the launch of smart city technology locally (e.g. match 

more investment by locality in digital services (cited by 50 per cent), 

funding up to a certain amount per locality);

(2) more technological capability building inside their own business 

•  offering  training  and  experience  sharing  of  local  procurement 

(cited by 35 per cent), and (3) more engagement from public author-

staff in smart city applications to build trust.

•  creating  a  certified  vendor  marketplace,  to  build  trust  on  the 

ities with private actors (cited by 34 per cent). In the Eurobarome-
ter78, 60 per cent of citizens declared themselves willing to share 
data for improved public services.

For any effective action to promote the development and at-scale 

adoption  of  smart  city  technologies  as  a  means  to  empowering 

cities and communities, a prerequisite is to establish and promote 

COVID-19  has  leapfrogged  digital  adoption  by  both  citizens  and 

standards (e.g. interoperability) for smart city technologies.

public  authorities  to  provide  services  to  their  community  during 

the pandemic; this could be a window of opportunity for increasing 

The  standardisation  approach  unlocks  great  potential  value 

connectivity in municipalities. This could also have the additional 

at-scale for all citizens if it succeeds, but would have to focus on 

benefit of building more resilient communities and services, as the 

a narrow scope of application that can be common to all cities or 

long-term progression of the pandemic (e.g. for senior citizens) and 

municipalities. There would be inherent difficulties in the standard-

possible resurgences or other crises are unknown.

isation of Europe-wide solutions for solutions that are intrinsically 

local and often application-specific.

Potential options for European action*
Boosting  the  supply  side  of  EU  standard-compliant  smart  city 
technologies  –  The  Commission  could  foster  the  development  of 
interoperable, sustainable, citizen-centric smart city solutions on a 

large scale by:

•   promoting interoperability and standards for scalable smart city 

From an investment perspective, platform standards development 
can build on previous action (e.g. the SynchroniCity programme79) 
and  public  procurement  tied  to  these  standards  will  incentivise 

development.  Additionally,  to  foster  uptake,  a  budget  of  €1  to  5 
billion80 could serve to co-fund platforms (following Minimal Inter-
operability Mechanism principles (MIMS), developed by the Open & 

platforms, e.g. through EU guidance, to incentivise the develop-

Agile Smart Cities (OASC) network) and co-fund local investment in 

ment of a scalable standard-compliant solution offering;

standard-compliant smart city technologies.

•   developing  an  EU  data  platform  for  cross-border/cross-city 

services,  on  which  companies  can  build  services  at  reduced 

marginal cost;

•   building knowledge and R&D for citizen centricity into smart city 

technology.

* indicative and non-exhaustive

32

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEDigitising the European construction ecosystem
Developing Europe’s cities and built environment is tightly linked 

up standardised solutions. In many parts of Europe, poor network 

connection at construction sites makes digital tools difficult to 

to developing the construction sector. One of the largest sectors 

use for those who have access to them, creating further barriers 

in the economy, construction employs 7 per cent of the Europe-
an workforce81 and has a direct impact on our daily lives – and 
on those of future generations: directly and indirectly, the build-

ings and construction sector accounted for 39 per cent of global 
energy and process-related carbon dioxide emissions in 201882. 

to the large-scale adoption of technology.

In  this  setting,  European  Institutions,  Member  States  and  the 

construction  ecosystem  can  work  together  to  create  the  right 

market  conditions  and  capabilities  in  all  parts  of  the  sector  and 

increase the pace of technology adoption. Companies and public 

The  construction  sector  struggles  with  low  productivity,  in 

buyers  can  be  supported  with  training  and  financing  to  invest  in 

Europe  and  elsewhere.  No  other  major  sector  has  had  lower 
productivity development in the last 20 years83, and as a result 
construction activities are becoming more and more expensive 

relative to other goods and services, at a time when upgrading 

systems and connectivity, and public procurement can be used as 

a  tool  to  either  promote  or  make  modern,  effective  construction 
techniques  a  requirement.  Following  Helsinki’s  example87  and 
digitally mapping the built environment of Europe’s cities would put 

infrastructure and housing at scale is more critical than ever to 

in place an important piece of digital infrastructure to use for other 

meet sustainability and social objectives. 

applications  in  the  sector  and  could  further  boost  development. 

The sector takes these challenges seriously: in a 2020 survey of 

to continue building a truly integrated single European market for 

400  construction  executives,  90  per  cent  said  that  the  industry 

construction  services,  and  addressing  fragmentation  –  regulato-

needs to change now, and that the need is more acute than five 

ry  and  technological  –  remain  important  levers  for  capturing  the 

years ago. In the same survey, the vast majority of respondents 

potential of digital in the construction sector. 

Finally,  working  with  the  ecosystem  and  regulators  on  all  levels 

–  about  70  per  cent  –  pointed  at  new  production  technologies 

and digitisation as the disruptions that would make the change 
happen84.  Digital  technologies  have  the  potential  to  boost  the 
productivity, sustainability and effectiveness of the sector in all 

parts  of  the  value  chain  and  across  the  life  cycle  of  the  assets 

it  builds.  Numerous  use  cases,  ranging  from  analytics-support-

ed  procurement,  5D  building  information  modelling  (BIM)  and 

project  level  data  sharing  to  advanced  construction  robotics, 

new  materials  and  modular  prefabrication  techniques  could 

together directly render, or indirectly enable, productivity gains 
of up to 50 per cent in the industry85.

Most  high-impact  digital  use  cases  in  the  sector  rely  on  basic 

and  readily  available  software  and  systems  rather  than  highly 

advanced technology. Yet construction remains one of the least 
digitised  sectors  in  Europe86.  In  a  highly  fragmented  industry, 
consisting  mainly  of  SMEs  with  small  financial  margins  and 

relatively low skill levels, most companies cannot – or lack the 

interest  to  –  build  a  business  case  for  investing  even  in  basic 

digital  technology;  moreover,  the  technology  landscape  is 

equally fragmented, with few joint industry standards to ensure 

interoperability  of  different  systems  even  within  one  construc-

tion  project.  Furthermore,  building  regulations  can  differ  even 

between neighbouring municipalities, making it difficult to scale 

33

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPETable 1: Basic and advanced digital applications can play an important role across all steps of the 
cosntruction value chain

Non-exhaustive

Value chain elements

Concept & 

Design & 

Pre- 

Construction  

Operation  

Overarching

feasibility

engineering

construction

& commissioning

& maintenance

Portfolio 
planning & 
management

Process 
simulation 
software

Estimating

Project sched-
uling 

Design  
management 

Quality control 

Risk  
management 
Capital 
financing

Design 
software 3D 
modelling

Productivity  
management 

Value 
engineering 
Safety software

Resource 
planning 

CRM 

On-site scheduling 

Contract manage-
ment 

Equipment 
market place 

Document  
management 

Materials market 
place 

Labour & profes-
sionals market 
place 

Bidding process

Predictive asset  
performance

Design 
simulation 

BIM 

Bluetooth 
connectivity 

Design/ 
construc-
tion quality 
control

Most high impact 
use cases build on 
basic hardware, 
software and 
connectivity which 
are readily availa-
ble in the market

Real-time facility 
management  
AR3 inspection 
and management

Virtual  
learning 

Machine 
learning 

Deep learning 

Robotics/ 
automation 

3D printing 

AI4 design 
optimisation

Advanced technol-
ogies could drive 
high impact 

Pursuing such 
use cases require 
long-term R&D 
investments, e.g. 
AI, robotics, 3D 
printing, AR 

Scalable only in 
longer term

Compliance 
Remote equipment  
management

Off-site fabrication 

Manpower optimi-
zation 

Progress tracking 
& performance 
dashboards 

System testing and 
training 

As-built documen-
tion (incl. insurance)  

Immersive digital 
twins

Drone-enabled yard 
inspection 

Remote materials 
management 

VR/AR3 on site

Laser scanning Supply chain 

tracker

1
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s
a
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B

i

2
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a
c
e
s
u
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i
t
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o
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A

i

1. Defined as digital use cases that are already available today at competitive performance and cost structure, and do not require specific technological advancement 
2. Defined as digital use cases that are not available today at expected performance and with sustainable cost structure due to technological limitations   
3. Augmented Reality 
4. Artificial intelligence
Note: Contains additional use cases identified through expert interviews.
Source: ‘Seizing opportunity in today’s construction technology ecosystems’ (McKinsey, 2018); McKinsey Construction Technology Ecosystem Mapping; expert interviews 

34

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE 
 
 
 
 
 
 
 
 
7.6. Raising a cybersecurity shield for Europe
European  institutions  could,  building  on  the  agreement  of  the 

Cybersecurity  Act,  strengthen  the  cybersecurity  of  critical  infra-

Potential options for European action*
Protecting technology supply chains – the Commission could regulate 
or provide guidelines to protect technology supply chains by:

structure,  hardware  and  software.  This  could  entail  regulation  of 

mandatory EU security standards for both hardware and software 

•   enhancing  the  sovereignty  of  critical  infrastructure  by  building 

imported  into  the  EU.  Mandatory  insurance  coverage  for  critical 

on the NIS and, e.g. expanding it to rule on ownership of service 

infrastructure sectors could be part of such a scheme. ENISA or a 

providers for critical infrastructure;

new agency could obtain a broader mandate to audit compliance. 

•   creating  an  EU  certification  scheme  that  would  limit  liability 

for the manufacturer in case of cybersecurity failure, or enforce 

Furthermore,  European  institutions  could  address  the  advent  of 

a  set  of  minimal  cybersecurity  requirements  for  all  connected 

quantum  by  developing  a  secure  quantum  communication  infra-

products/services;

structure. 

Potential rationale for European action
Cybersecurity is a high priority for European citizens and two out 

of three do not believe that current policies in data protection are 
sufficiently effective88. It is estimated that IPR (Intellectual Property 
Rights)  theft  in  the  United  States  alone  accounts  for  about  $400 
billion in losses each year89. Personal data safety is no different, with 
numerous examples of customer data breaches at consumer-facing 
institutions  in  recent  years90,91,92.  As  the  frequency  of  cyberattacks 
increases93, cybersecurity is likely to become an essential element 
in attracting and maintaining investment.

•   promoting  or  mandating  installation  of  a  middleware/library 

encryption  layer  via  security  APIs  on  certain  strategic  imported 

digital technologies that are exposed to enhanced cybersecurity 

risks, or that are part of vulnerable or critical infrastructure.

Organising  EU  cyber  defence  –  The  Commission  could  mobilise 
common resources to increase capabilities for cyber defence by: 

•  strengthening  the  mandate  of  ENISA  by  adding  a  EU  Cyber 

Defence rapid response unit to support Member States in real time 

in  case  of  attack  and  for  forensics  after  an  attack.  This  support 

could  take  the  form  of  technical  support  or  more  holistic  cyber 

defence support against foreign threats;

In  addition  to  economic  and  privacy  concerns,  cybersecurity  is  a 

•  creating  a  forum  and  legal  framework  for  critical  infrastructure 

domain  with  strong  strategic  autonomy  rationale  that  is  already 
recognised by the Commission94. With a significant portion of ICT 
technology  imported  into  Europe,  the  challenge  is  twofold  for 

providers to share threat intelligence across borders (currently this 

could be blocked by national security rules).

critical technologies : (1) establish and build on what can be done 

locally in Europe and (2) limit vulnerabilities related to what must 

Preparing for post-quantum cybersecurity – The Commission could 
sponsor the development of EU-led, quantum-resistant algorithms 

be imported as the need to import critical technologies securely is 

to strengthen Europe’s technological sovereignty.

likely to endure. Moreover, as quantum technologies mature, they 

could potentially render most current encryption systems obsolete, 

Actions on supply chains and on cyber defence are complementa-

posing  new  cybersecurity  challenges  calling  for  public  action  to 

ry  but  have  different  targets.  Acting  on  technology  supply  chains 

support the development of new secure solutions.

through regulation and certification directly addresses risks related 

to digital hardware and could become a security imperative for the 

71 per cent of EU executives surveyed believe mandatory software 

EU. This can, however, be complex, expensive and have significant 

and  hardware  cybersecurity  standards  on  imported  technology 

implications for the global trade of digital goods (including consum-

would positively affect the long-term security of their business.

er  devices).  Enforcing  certification  will  come  at  a  cost,  either  for 

the Commission or for manufacturers. One way to mitigate this cost 

The  COVID-19  pandemic  has  precipitated  digital  adoption  by 

and ensure it does not become a hurdle for smaller players could 

citizens  and  businesses  resulting  in  a  wave  of  new  users  could 

be to leverage EU universities and research institutes to establish 

be  less  educated  about  cybersecurity  and  could  therefore  make 

certification centres throughout the EU.

systems weaker. Additionally, businesses moving online during the 

pandemic  may  have  accelerated  reliance  on  foreign-designed/

Cyber defence is a Member State competence; however, the Commis-

operated  infrastructures,  thereby  posing  a  risk  to  the  stability  of 

sion could build joint capabilities to support Member States in case 

European business operations. 

of  attack.  Alternatively,  Member  States  could  join  forces  on  cyber-

security  and  establish  a  joint  corps  to  defend  EU  Member  States 

The  Commission  has  acknowledged  the  need  to  adopt  procure-

against  foreign  threats.  This  would  have  the  advantage  of  central-

ment  standards  to  provide  such  protection.  Despite  this  call  to 

ising top EU cybersecurity capabilities while maintaining effective-

action, many businesses are not actively pursuing cybersecurity as 
a top priority95. A greater focus on cybersecurity is required in the 
coming years.

ness, due to the remote nature of cyber defence operations.

* indicative and non-exhaustive

35

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE7.7. Advancing citizen control of their own  
personal data
European  institutions  can  take  the  next  step  in  reinforcing  citizens’ 

•   co-developing, by sector, interoperability data standards for the 

most common/relevant types of data, then enforcing these;

•   extending PSD2-style legislation for additional types of personal 

rights to, and control of, their own personal data, making it easier for 

data or services beyond financial services97.

them to access new services and providers, while promoting innovation 

in data-driven business models and more competition in the platform 

economy.  Such  a  policy  could  entail  the  establishment  and  effective 

Extending transparency and control over personal data use – The 
EU could ensure the use of citizen data can be transparently under-

enforcement of data interoperability and portability standards. 

stood and controlled in a user-friendly way by:

Potential rationale for European action
GDPR  has  placed  the  EU  at  the  forefront  of  data  regulation  with 

•   labelling types of data collection and uses on websites and ICT 

services (e.g. with standardised icons);

global  ramifications.  It  introduced  a  common  set  of  rules  across 

•   offering  or  promoting  awareness  education  on  the  value  of 

Member  States  on  the  treatment  and  protection  of  personal  data, 

personal data;

modernised  fundamental  principles  and  reinforced  individuals’ 

•   creating a personal data dashboard containing central reporting 

rights to control their data and made it easier to access it. Specifi-

for each citizen, where they can see who has their data, what type 

cally, on access to data, the right to data portability (as introduced 

of data they have and what they use it for, and remove consent.

in Article 20 of the GDPR) gives individuals a general claim to move 

personal data between data controllers, e.g. to a competing compa-

The main difference between the options (which are complemen-

ny  the  individual  wants  to  use.  This  right  not  only  strengthens  the 

tary)  is  the  level  of  involvement  that  the  Commission  could  have 

individual’s control over their own data, it could also simplify service 

on  the  next  layer  of  GDPR.  The  advantage  of  the  standardisation 

delivery  for  individuals.  This  could  create  opportunities  for  new 

approach  is  that  it  leaves  businesses  the  freedom  to  implement 

business  models  and  increase  competition  between  digital  service 

standards  in  the  way  that  best  suits  them,  but  limits  control  over 

providers, which today follows a strict winner-takes-all logic and has 

the  end  product  and  how  citizens  would  interact  with  their  data 

a highly asymmetric relationship between providers and consumers. 

between services. 

However,  barriers  to  implementation  remain.  True  portability  of 

The  option  to  increase  transparency  would  see  the  Commission 

data not only requires a legal claim but also the ‘technical feasibil-

take  a  more  active  role  in  educating  and  informing  citizens  (e.g. 

ity’ to do so. In practice, this means that the current data controller 

where  the  Commission  could  design  user-friendly  icons  to  label 

and  recipient  need  to  use  the  same  data  formats,  which  is  often 

data  uses  on  digital  services).  The  advantage  of  a  personal  data 

not the case. In addition, the trade of personal data between data 

dashboard for all EU citizens is guaranteed unprecedented control 

brokers and solution providers is opaque: increasing the transpar-

over their data, but this would require more Commission resources 

ency for individuals’ data transactions would be a core element to 

for design and operations (e.g. to avoid data breaches). 

allowing meaningful control of data. 

46  per  cent  of  surveyed  European  citizens96  want  to  take  a  more 
active  role  in  controlling  their  personal  data,  while  12  per  cent 

declared that they do not want to share any personal data. Addition-

A key consideration must be to weigh the potential value of such a 

service (for citizens, trust, fair competition) against the added cost 

and bureaucracy for European digital companies.

ally, according to surveyed executives, the two main obstacles for 

citizens  to  move  personal  data  between  service  providers  are  (1) 

7.8. Promoting digital solutions for climate risks 
European  institutions  can  adopt  ambitious  policies  that  ensure  that 

lack  of  standards/interoperability  for  transferring  data  between 

the digital transformation in Europe is climate neutral and sustainable. 

service providers (cited by 62 per cent) and (2) lack of knowledge 

about the right to data portability (cited by 42 per cent). Further-

The  Commission  could  take  action  to  promote  the  reduction  of 

more, the COVID 19 pandemic has put a spotlight on key data priva-

emission  and  material  waste  from  ICT.  For  products  and  services, 

cy issues relating to contact tracing apps and patient personal data 

this could include labelling and standards on longevity or repair-

sharing with the authorities, which might require a special regime 

ability.  For  data  centre  infrastructure,  the  Commission  could  put 

for limited use for the public good in times of crisis while ensuring 

forward  an  Emission-Free  Data  Centres  policy,  which  ensures 

that citizens trust that the systems will not be abused.

that  the  expansion  of  data  centres  is  carbon  neutral.  This  policy 

Potential options for European action*
Enforcing effective portability of personal data – The Commission 
could  extend  GDPR  to  effectively  enforce  one-click,  user-friendly 

could mandate gradually increasing energy efficiency and share of 

renewable power sources for data centres. Supporting information 

infrastructure  could  create  Europe-wide  transparency  on  energy 

consumption, greenhouse gas (GHG) emissions and prices.

data portability by:

* indicative and non-exhaustive

36

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEPotential rationale for European action
There  is  little  doubt  that  climate  change  is  the  most  pressing 

and devices with renewable energy. 54 per cent of EU executives 

would also consider changing to a greener ICT provider, even if the 

challenge the world as a whole is facing, and that ambitious and 

cost was higher, providing that these have certification or a signifi-

immediate  action  is  needed.  Its  adverse  effects  are  increasingly 

cantly higher environmental performance. 

evident  already  today,  with  disproportionately  many  and  severe 

heat  waves,  droughts,  floods,  wildfires  and  other  extreme  weath-

Additionally,  the  COVID-19  crisis  increases  both  the  opportuni-

er  events.  If  the  trend  is  not  dramatically  reversed  in  the  coming 

ty  and  the  urgency  of  climate  action  through  and  within  ICT.  As 

decade, the long-term ecological, economic and social damage to 

digital  adoption  has  rapidly  increased  during  the  crisis,  the  ICT 

Europe and the world will be catastrophic.

sector’s  impact,  through  the  use  of  consumer  hardware  and  data 

Digital  technologies  can  make  important  contributions  to  reduc-

ments across the world are devising ambitious economic support 

ing GHG (Greenhouse Gas) emissions across sectors, e.g. by making 

programmes,  many  see  an  opportunity  to  make  green  transition 

industrial processes more effective and efficient, reducing the need 

investment an integral part of these. 

centres, threatens to spike and needs to be addressed. As govern-

for  transportation,  monitoring  data  on  waste  and  emissions,  and 

sharing  data  that  is  useful  for  reducing  environmental  footprints. 

According to some estimates, digital solutions can help in cutting 

20 per cent of global GHG by 2030, mainly in transport, agriculture, 
manufacturing and energy98. 

Potential options for European action*
Creating transparency on the impact of ICT – The EU could ensure 

visibility over the impact of ICT devices on the environment by:

•   extending  the  labelling  of  ICT  devices  to  services  for  resource/

However,  the  negative  climate  and  environmental  effects  of  the 

energy/emission efficiency;

ICT sector itself are rapidly growing, and risk partly offsetting the 

•   ensuring  transparency  over  the  environmental  impact  of  goods 

positive  effects  of  digital  innovation.  A  recent  study  found  that 

and  services  for  purchase/procurement  in  B2C,  B2B  and  B2G 

the  ICT  sector’s  GHG  emissions  could  grow  from  roughly  1  to  2 

transactions (e.g. ratings, procurement guidelines).

per cent in 2007 to exceeding 14 per cent of the 2016-level world-

wide  GHG  by  2040,  accounting  for  more  than  half  of  the  current 
relative contribution of the whole transportation sector99. In terms 
of material waste, with more than 12 million tonnes of waste gener-

Building on the above, scaling up the adoption of clean ICT – The 
EU could ensure scaling up and adoption of clean ICT by:

ated in 2019, Europe ranks first worldwide for electronic waste per 

•   developing  and  promoting  (or,  in  specific  cases,  imposing) 

capita.  Beyond  this,  only  about  42.5  per  cent  of  electronic  waste 

hardware standards (modularity, durability, repairability, recycla-

is  recycled  in  the  EU,  despite  the  total  raw  material  value  in  it 
being estimated at approximately €13 billion100. Circular economy 
actions  have  the  potential  to  address  this  through  recycling  and 

increasing the longevity of ICT products. As an example, according 

to the European Environmental Bureau, a one-year lifetime exten-

bility, etc.);

•   imposing data centre targets in terms of emissions or efficiency 
while  protecting  competitivity,  as  outlined  in  Shaping  Europe’s 
Digital Future.

sion for EU smartphones could reduce carbon dioxide emissions by 
2.1 megatonnes per year (roughly equivalent to 1 million cars)101.

Both  options  have  advantages  and  build  on  one  another.  Trans-

parency  measures  such  as  labelling  better  informs  consumers/

purchasers about the impact on the environment of their choices. 

A European digital strategy that promotes the growth of the ICT indus-

With approximately 70 per cent of consumers declaring themselves 

try and large-scale adoption of digital technologies should therefore 

include comprehensive policies that address these downsides.

64 per cent of EU citizens surveyed in the Eurobarometer102 want 
to  keep  using  their  current  digital  devices  for  at  least  five  years, 

and 80 per cent think manufacturers should be required to make 

willing  to  pay  roughly  5  per  cent  extra  for  a  green  product  or 
service103, this has potential to impact the green offering. Howev-
er, a labelling scheme with broad coverage comes with costs and 

complications  for  manufacturers  and  importers,  and  needs  to  be 

carefully designed to be effective.

it  easier  to  repair  these  devices.  24  per  cent  would  be  willing  to 

Going beyond this, developing and promoting ambitious standards 

pay  more  for  this.  EU  executives  cite  a  reduction  of  both  energy 

for both material waste and energy efficiency/emissions truly has 

consumption (cited by 67 per cent) and material waste (cited by 50 

the power to fast-track systemic changes in the industry. As speed 

per cent) of ICT devices and infrastructure as the two most impact-

matters for the environment, this is an important consideration. For 

ful measures to address the ICT sector’s effect on the environment. 

data centres, a policy could mandate gradually increasing energy 

Other  impactful  measures  would  be  to  increase  the  lifespan  and 

efficiency and share of renewable power sources for data centres. 

repairability  of  devices  as  well  as  supplying  all  ICT  infrastructure 

* indicative and non-exhaustive

37

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE7.9. Supporting lifelong learning for the future of work 
European institutions can play a larger role in supporting the crucial 

transformation of the labour market, building the skills that under-

Potential options for European action*
At-scale  digital  education  /  reskilling  –  The  Commission  could 
coordinate or sponsor the provision of digital upskilling programmes 

pin a more knowledge-intensive economy and supporting workers 

for EU citizens by:

to adapt to new requirements. This could be done for example by 

coordinating and co-funding a ‘at scale’ reskilling across countries 

•   launching an EU online reskilling platform that would serve as a 

and employers. The digital platform to coordinate such an account 

one-stop shop for all online reskilling resources in the EU, including 

could open opportunities to offer additional services, for example, 

career guidance;

AI-enabled  career  counselling,  data  aggregation  and  access,  and 

•   enabling  the  breaking  up  of  a  university/professional  curriculum 

direct access to Massive Open Online Courses (MOOC). 

into a lifelong learning model by supporting pioneering education-

al institutions as well as ensuring societies can accommodate the 

With new technologies, three issues will be compounded. Firstly, the 

lifelong learning model (e.g. tax, pension, temporary income);

digital skills gap is bound to increase in 2030 unless drastic measures 
are  taken,  as  nine  out  of  ten  new  jobs  will  require  digital  skills104. 
Already  today,  30  per  cent  of  companies  say  that  candidates’  lack 
of  digital  skills  prevents  them  from  filling  entry-level  positions105. 
Secondly,  a  new  skill  set,  emphasising  highly  cognitive  and  social 

•   ensuring  the  necessary  skills  are  developed  throughout  initial 

education  to  thrive  in  a  Future  of  Work  context.  Such  a  learning 

journey would span from a reinvention of early childhood educa-

tion (to learn flexibility, tolerance for uncertainty, a growth mindset, 

etc.) all the way to the continuous teaching of basic digital skills as 

skills,  will  increasingly  be  needed  in  Europe  to  fit  the  new  type  of 

part of all primary, secondary and tertiary education.

production function and workflow attached to new technologies.

Thirdly, AI and automation will inevitably accelerate the displace-

Career transition guidance – The Commission could fund regional 
Future of Work centres for proactive career counselling, re-/upskill-

ment of manual workers and change the nature of most professions. 

ing, and employment services at Member State/regional level for 

McKinsey Global Institute scenarios suggest that by 2030, 94 million 

at-risk populations

European workers might need to upskill to handle a growing share 

of digital activities in their daily work, and an additional 21 million 
may need to switch occupational categories106. People are aware of 
this shift. 40 per cent of Europeans believe that the company they 

Funding  at-scale  reskilling  –  The  Commission  could  explore  new 
financing  mechanisms  for  at-scale  investment  in  education  and 

reskilling  (e.g.  social  impact  bonds  or  other  innovative  financial 

work for will disappear from the market in 10 years if it does not 
come up with a quick and decisive response to these changes107.

instruments).

As executives cite in the survey, online learning will be an important part 

Additionally,  this  transition  might  be  accelerated  by  the  COVID-19 

of the solution, providing the opportunity for mass access to reskilling 

pandemic, with companies possibly accelerating automation to react 

content. However, it is cited as only part of the solution and both in- 

to  the  difficult  economic  environment  and  to  make  their  business 

person training and on-the job learning are at least as important. 

more  resilient  in  a  post-COVID-19  world  (e.g.  social  distancing 

between employees). Regarding reskilling, the pandemic has forced 

Education  is  primarily  a  Member  State  competence.  However,  in 

educational institutions worldwide online for a significant period of 

light  of  the  pressure  on  government  budgets,  an  apparent  gap 

time, and these capabilities for online education might be reused to 

between and within Member States, and the critical priority of the 

reach a broader audience for reskilling purposes.

question, there is a role for the European level to support educa-

tion innovation, contribute necessary funds and infrastructure, and 

The transformation of the labour market may require broad social 

coordinate  Member  States  to  ensure  the  right  conditions  are  in 

and  economic  action  to  manage  the  transition  and  alleviate 

place for citizens to embrace lifelong learning. 

negative effects. One of these elements is reskilling and supporting 

lifelong learning at greater scale and speed than those of previous 

Significant  funding  will  be  needed  over  the  coming  ten  years  to 

technological  revolutions,  as  already  emphasised  in  2016  in  the 
Digitising European Industry Report108.

meet the demands of the future labour market in Europe. Reskilling 

21 million workers and upskilling 94 million could represent a cost 

of €350 to 490 billion, a significant portion of which would likely 

73 per cent of EU executives surveyed as part of this study cite on-the-

require new funds beyond existing education and training budgets. 

job training as the most effective way to re/upskill their workforce, 

followed by in-person/online training (42 per cent). 61 per cent think 

The cost would likely be shared between employer, employees and 
public funds109.

a  mandatory  personal  training  account,  co-funded  by  employers, 

employees and governments, would positively impact their business.

* indicative and non-exhaustive

38

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE7.10 Executive Survey Summary
Executive Survey Summary 

Survey demographics

Other Sr. Mgmt

10%

SVP

15%

247

total1

11%

Board 
Director

Number of 
respondents

Higher

Countries represented 
in the survey

CEO

41%

Lower

16%

7%

CxO

CIO/CDO/CTO

Other

52% of respondents say that technology is an 
important or core part of their responsibilities

Responses2

Most important enabler(s) for a leading technology ecosystem in Europe

Top 5 answers in a multiple choice list, % of respondents

A more risk-willing investment climate

Better cooperation between universities, research institutions,
start-ups, corporates, regulators and other government entities

Better access to research and innovation funding (public/private)

Better access to skilled workforce

One or several world-class universities in Europe

63

50

35

35

30

Willingness to invest in strategic technologies and view on resource-pooling

% of respondents - aggregated

% of respondents - aggregated

Would invest more in new R&D 
if ensured public buyer

Pooling resources at an EU 
level would make large-scale 
innovation more effective

37

63

40

60

Importance of data access and willingness to share data

% of respondents - aggregated

Top 2 answers in a multiple choice list, % of respondents

7

93

Better access to sector-
specific data is important 
for my organisation

I’m willing to share my company data…

…if we in return gained access to 
similar data from competitors

…if we were paid/got direct financial 
compensation for the data

55

52

1 The response rate to the survey was ~5%
2 Selected questions

39

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPEMost important policy elements to promote AI to benefit Europe and view of AI regulation

Top 4 answers in a multiple choice list, % of respondents

% of respondents - aggregated

Support universities and research institutions 
to build leading AI knowledge

58

Support European industry broadly to ensure 
adoption of existing AI technologies

Support to the European technology industry to 
better compete internationally

Guidelines or regulations to safeguard 
ethical and transparent use of AI

45

44

42

25

Would not see AI 
regulation affecting 
their business 
negatively

75

Elements needed for companies to benefit from advanced digital services at local level

Top 4 answers in a multiple choice list, % of respondents

The city/local level should invest more in digital services
My own business/organisation needs to build more
technology capabilities
Public authorities should engage more with private actors

50

35

34

View of mandatory cybersecurity standards

% of respondents - aggregated

29

71

Mandatory software and 
hardware cybersecurity 
requirements would 
benefit my business

Hurdles for citizens to move data between services

Top 2 answers in a multiple choice list, % of respondents

Lack of standards/interoperability for 
transferring data between service providers

Lack of knowledge about the right 
to data portability

62

42

Levers to reduce ICT environmental impact and price elasticity for green services

Top 3 answers in a multiple choice list, % of respondents

% of respondents - aggregated

Reduce energy consumption of ICT 
devices and infrastructure

67

Reduce material waste and increase 
recycling of ICT hardware

Increase lifespan and repairability 
of ICT devices

50

46

Would be willing to 
pay more for a green 
service if either would
get other benefit (e.g.
certificate) or environ-
mental impact 
was significant

46

54

Most effective reskilling methods and view on a co-funded mandatory learning account

Top 3 answers in a multiple choice list, % of respondents

% of respondents - aggregated

On-the-job training

73

In-person training courses

Online courses

42

41

40

39

61

Think a mandatory 
personal training 
account, co-funded by 
employers, employees 
and governments 
would positively 
impact their business

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE8

A CALL TO ACTION  

The identified signature initiatives will require actions, reforms and 

with  fundamental  discoveries  like  that  of  electromagnetism,  and 

significant investment, across all of Europe. Investment and action 

inventions like the World Wide Web. Standing on the shoulders of 

will be needed at all levels: to a large extent driven by the private 

previous generations of Europeans, decision makers can accelerate 

sector, through individual enterprises and with private investment, 

now to capture the value of digital innovation in line with European 

and  by  the  Member  States.  The  European  level  is,  however,  more 

values. 

important than ever: as digital technologies benefit from scale, the 

value of data can only be captured when it is shared and interoper-

able, as tomorrow’s technologies can only be developed and fairly 

diffused through cooperation and – in light of the COVID-19 crisis 

– as local and national economies are under severe pressure.

Adding to this: speed matters. Several of the high-impact technol-
ogies and business models have early advantages110. Those advan-
tages  not  only  affect  the  ability  to  generate  productivity  growth, 

but also the ability to generate social benefits beyond GDP, such as 
improved  healthy  longevity111.  Therefore,  actions  should  be  taken 
swiftly  into  the  tenure  of  the  next  Commission  to  maximise  their 

impact.

Action  must  also  be  taken  to  lift  the  least  digitally  advanced 

Member  States  while  enabling  the  front  runners  to  pull  the  pack 

along.  At all levels, European decision makers should wholeheart-

edly embrace and promote the potential of the digital while – with 

equal commitment – supporting the groups that risk falling behind 

in the transition. 

The  initiatives  discussed  in  this  report  would  require  innovative 

policy processes and new cooperation models within and between 

European  institutions,  Member  States,  companies,  citizens  and 

civil  society  organisations.  They  would  by  no  means  be  sufficient 

in  themselves,  nor  would  they  alone  address  all  the  challenges 

and objectives of the next European strategy. But they could act as 

flagship projects from which Member States, citizens, business and 

organisations could benefit directly, which would inspire all stake-

holders to step up their own actions and initiatives.

There  are  many  reason  to  be  optimistic  about  the  digital  trans-

formation  potential  of  Europe.  Europe  has  unique  resources  in 

its  diversity  of  skills  and  ideas,  held  together  by  common  values 

and mechanisms for cooperation towards a common goal. Digital 

innovation is a European idea at heart and Europeans are credited 

41

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE9

TECHNICAL APPENDIX

The McKinsey Global Institute (MGI) has done extensive work model-

down the effects of digital adoption into eight channels (e.g. substi-

ling the impacts of disruptive technologies through a series of models 
and articles with the themes Future of Work and AI: The Next Digital 
Frontier. The simulation in this report leverages this work and builds 
upon  it  to  simulate  the  incremental  economic  impact  of  disruptive 

tution,  negative  externalities),  estimating  the  total  impact  potential 

within  these  channels  by  country  and  applying  an  adoption  rate  by 

country to the channels to simulate annual impact through 2030.

technologies  (including  AI  and  related  advanced  analytics  technol-

The net base case assumes a weighted average adoption of approxi-

ogies, 5G and next-generation networks, advanced robotics, IoT, and 

mately 51 per cent for these technologies in Europe by 2030. This was 

industrial platforms) on top of baseline economic performance in the 

derived by assessing the adoption trend of relevant disruptive technol-

EU-28 Member States through 2030.

ogies through 2018 of corporate and SME firms, based on the technol-

ogy adoption surveys referenced above. An average linear adoption 

The specific impact model updated for this work used three propri-

trend was calculated based on the findings and was varied by Member 

etary  surveys  with  approximately  5,000  executive-level  respondents 

States based on scoring of macro-econometric factors. These factors 

globally and in the EU, representing all sectors and regions, interviews 

with leading economists, and an extensive library of proven use cases 

of  technologies  expected  to  reach  more  than  50  per  cent  average 

adoption by 2030 to estimate the potential employment, gross domes-

tic  product  (GDP)  and  wage  effects  of  impending  disruptive,  digital 

technologies on the EU-28 Member States. This was done by breaking 

were derived based on over 20 existing data sources for markers of 
basic (e.g. use of internet and other services112) and advanced digital 
skills  (e.g.  science  research  and  innovation  outputs113),  indicators  of 
ICT supply readiness (e.g. developers per capita and venture capital 
spending by region114), and indicators of adoption readiness (e.g. ICT 
enabling new business models115).

Table 2: Estimated cumulative growth impact of digital innovation by 2030 in the eu-28

Use case channels

Description

Est. GDP impact  
(€ trillions)

2 Substitution

s 1 Augmentation
l
e
n
n
a
h
c
n
o
i
t
c
u
d
o
r
P

3 Innovation

Through emerging new technologies there will be an increased use of capital 
and labour

One major impact of digitisation lies in substitution of current jobs. Theoretically 
half of various tasks could be automated, driving greater productivity

Innovation tends to create new economic value through new products and 
services. However, a part of today’s existing products will be substituted

4 Global data flows and 
connectedness

As earlier MGI studies indicate global data and innovation flows boost the global 
GDP

5 Wealth creation/ 
reinvestment

6 Transition/ imple-
ment-ation costs

7 Negative externalities

The increased output from new technologies can be passed to workers and 
entrepreneurs. This could create spill-over effects in the economy

While transitioning to new technologies, different costs are likely to be incurred

(1.0)

Technological innovations could create additional costs, e.g. when individuals 
need to be retrained

8 Inequality and ICT 
supply 

Inequality: additional concentration of wages reduces average consumption 
supply: estimate of ICT supplied from competing regions, based on supply devel-
opment indicators

TOTAL: 
(numbers do not add up due to rounding)

0.6

2.3

1.2

0.4

0.5

(1.1)

(0.5)

2.2

s
l
e
n
n
a
h
c
y
t
i
l
a
n
r
e
t
x
E

42

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE 
 
The simulation assesses economic impact of technologies through 

into  a  series  of  tasks  for  which  an  automation  potential  is 

eight  mechanisms  (‘channels’),  as  described  in  Table  1  above.  A 

assumed, based on the results of previous case studies. Of note, 

detailed  description  of  the  underlying  methodology  is  provided 
in the 2018 report from the McKinsey Global Institute, Notes from 
the AI frontier: Modeling the impact of AI on the world economy116. 
Note  that  our  results  build  on  this  methodology  and  therefore 

closely relate the findings from this report but do not tie directly to 

the figures presented.

The detailed description and methodology of channel 8 is described 

in detail in the two sections below.

Incremental impact of disruptive technologies on jobs
The  updated  simulation  provides  estimates  on  the  incremental 

this trend considers both the reduction and increase of time spent 

on certain tasks, based on how digital is expected to change the 

nature  of  work.  The  net  impact  of  this  shift  was  applied  to  job 

categories within incumbent industries to estimate the substitu-

tion effect of digital solutions at a country level. For an example 
of this shift, see Exhibit 1.

•   New jobs created: as digital solutions are set to substitute some 
existing jobs, they are also expected to create new job categories 

in  incumbent  and  developing  industries,  such  as  data  scientist 

and translator roles. An estimate of this trend is done by Member 

States  based  on  the  incremental  GDP  calculated  from  the  first 

four channels in the model and applying factors such as predicted 

impact of disruptive technologies on full time equivalent (FTE) in 

capital-to-labour ratio.

the EU-28 Member States by 2030. This estimate leverages findings 
from a recent MGI report117, which provides fundamental assump-
tions  for  the  future  of  work,  such  as  the  share  of  routine  versus 

•   Spill-over jobs: the widespread use of technologies may lead to 
spill-over effects (for example, network effects) that boost global 

productivity, as wealth from wages and capital are captured into 

non-routine  work  by  job  type,  and  compositions  of  job  type  by 

local  economies  and  are  spent  on  local  products  and  services. 

sector.  To  model  this  incremental  effect,  three  distinct  categories 

This effect is expected to spur growth in local industry, growing 

of trends were considered at a country level: substitution, new jobs, 

existing jobs across categories. An ITU study performed in 2018  

and spill-over effects.

estimated  that  a  positive  spill-over  impact  of  1  to  5  per  cent  in 

domestic  economies  could  be  enjoyed  in  the  Member  States, 

•   Substitution: digital solutions can be applied to achieve produc-
tivity  through  substitution  of  labour.  To  estimate  this  effect,  the 

(based on propensity to consume and investment capacity). This 

trend  is  estimated  based  on  the  incremental  GDP  generated  in 

MGI  report  cited  above  broke  down  the  composition  of  labour 

channel 5 and 8, wealth creation and local capture of ICT supply.

Exhibit 7: illustrative example119 Net growth in work will involve more application of expertise,  
interaction, and management: Germany example

Total work hours by activity type, 2016-30 (Midpoint automation, step-up demand) (million)

43

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE10. END NOTES

1  General purpose technologies are technologies capable of affecting the entire economy through their impact on pre-existing econom-
ic and social structures. Past examples include the steam engine and the internet. For more details, see: Richard G. Lipsey, Kenneth I. 

Carlaw, and Clifford T. Bekar, Economic Transformations General Purpose Technologies and Long-Term Economic Growth, 2005.

2  For an overview of AI technologies and use cases, see ‘The age of analytics: Competing in a data-driven world’, December 2016 and 

‘What’s now and next in analytics’, AI, and automation, McKinsey Global Institute, May 2017.

3  Shaping Europe’s Digital Future, European Commission, 2020. https://ec.europa.eu/info/sites/info/files/communication-shaping-eu-

ropes-digital-future-feb2020_en_4.pdf

4  At the time of writing this report, the European Commission had put forward a proposed revised Multi-Annual Financial Framework for 

2021-2027 (COM(2020) 442 final) to be negotiated and adopted by the co-legislators by December 2020

5  Recovery plan for Europe, European Commission, June 2020. https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-re-

sponse/recovery-plan-europe_en 

6  Shaping the digital transformation in Europe, European Commission, DG CONNECT contract SMART 2017/0094,
7  The COVID-19 recovery will be digital: A plan for the first 90 days, McKinsey, 2020 

https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-covid-19-recovery-will-be-digital-a-plan-for-the-first-

90-days

8  Why share scientific data during a pandemic?, UK Research and Innovation, 15 May 2020. https://coronavirusexplained.ukri.org/en/

article/vdt0011/

9  The groundbreaking way to search lungs for signs of Covid-19, BBC, 5 May 2020. 

https://www.bbc.com/news/business-52483082

10  Paying for coronavirus will have to be like war debt – spread over generations, The Conversation, 11 June 2020. https://theconversa-
tion.com/paying-for-coronavirus-will-have-to-be-like-war-debt-spread-over-generations-140406); and France’s budget deficit could 

skyrocket to 7% of GDP in COVID-19 aftermath, Euractiv, 2020 (https://www.euractiv.com/section/economy-jobs/news/frances-budget-

deficit-could-skyrocket-to-7-of-gdp-in-covid-19-aftermath/

11  ‘Tech for Good’: Using technology to smooth disruption and improve well-being, McKinsey Global Institute, 2019. https://www.mckinsey.

com/featured-insights/future-of-work/tech-for-good-using-technology-to-smooth-disruption-and-improve-well-being

12  Ethics guidelines for trustworthy AI, European Commission, 2019.  

https://ec.europa.eu/digital-single-market/en/news/ethics-guidelines-trustworthy-ai

13  Why Some Platforms Thrive and Others Don’t, Harvard Business Review, January-February 2019 issue. https://hbr.org/2019/01/

why-some-platforms-thrive-and-others-dont

14  Smart Cities: Digital Solutions for a More Liveable Future, McKinsey Global Institute, June 2018. https://www.mckinsey.com/~/media/
mckinsey/industries/capital%20projects%20and%20infrastructure/our%20insights/smart%20cities%20digital%20solutions%20for%20

a%20more%20livable%20future/mgi-smart-cities-full-report.ashx

15  The GDP simulation covers the period 2017-2030 and EU-28, including the United Kingdom. It does not take into account the potential 

impact of the COVID-19 crisis.

16  ‘Tech for Good’: Using technology to smooth disruption and improve well-being, McKinsey Global Institute, 2019.  https://www.
mckinsey.com/featured-insights/future-of-work/tech-for-good-using-technology-to-smooth-disruption-and-improve-well-being
17  Countries were separated in 3 archetypes (Front-runners, Middle adopters, and Catch up) based on a composite index calculated in 
2017, the beginning of the simulation, using markers of disruptive technology adoption readiness (e.g. developers per capita, R&D 

expenditure in ICT), skills (e.g. PISA scores, STEM graduates per capita and social indicators (e.g. unemployment benefit % of annual 

wages, periodicity of skill training programs for employees) – Front-runners: FI, SE, DK, NK, UK, EE, DE. Middle adopters: AT, FR, BL, SL, 

MT, LT, ES, PT. Catch-up: LV, CZ, CY, HR, BG, PL, HU, IT, GR, RO

18  The scenario builds on a 10 per cent improvement to a country technology readiness index, developed for the purposes of this study, 

consisting of 19 indicators, including human and social capital, R&D and venture financing, ICT sector size and innovation. 

19  The Future of Work in Europe, MGI, 2020. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/future%20of%20organi-

zations/the%20future%20of%20work%20in%20europe/mgi-the-future-of-work-in-europe-discussion-paper.pdf

20  Ageing Europe - Looking at the lives of older people in the EU, Eurostat, 2019, https://ec.europa.eu/eurostat/en/web/products-statisti-

cal-books/-/KS-02-19-681 

21  The Future of Work in Europe, MGI, 2020. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/future%20of%20organi-

zations/the%20future%20of%20work%20in%20europe/mgi-the-future-of-work-in-europe-discussion-paper.pdf

22  Testing the resilience of Europe’s inclusive growth model, McKinsey Global Institute, 2018
23 Ibid.
24  The state of European tech, Atomico, 2017. https://2017.stateofeuropeantech.com/

44

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE25  For a deeper discussion on the transition of the labour market and emerging skills gap, see: The future of work in Europe: Automation, 

workforce transitions, and the shifting geography of employment, McKinsey Global Institute, 2020 https://www.mckinsey.com/~/media/

mckinsey/featured%20insights/future%20of%20organizations/the%20future%20of%20work%20in%20europe/mgi-the-future-of-work-

in-europe-discussion-paper.pdf

26  Pitchbook Database, 2019. 
27  Artificial Intelligence Trends To Watch In 2018, CB Insights, 2018. https://www.cbinsights.com/research/report/artificial-intelli-

gence-trends-2018/

28  What critics get wrong about the ‘American AI Initiative’, TechCrunch, 4 March 2019. https://techcrunch.com/2019/03/04/what-crit-

ics-get-wrong-about-the-american-ai-initiative/ 

29  Artificial Intelligence (AI) in the United States: $36 Billion Business Opportunities & Outlook, 2025 - AI Spending/Market Size & 

Forecast Across 140+ Application Areas in 18 Industries, Globe Newswire, 27 March 2019. https://www.globenewswire.com/news-re-

lease/2019/03/27/1773947/0/en/Artificial-Intelligence-AI-in-the-United-States-36-Billion-Business-Opportunities-Outlook-2025-AI-

Spending-Market-Size-Forecast-Across-140-Application-Areas-in-18-Industries.html 

30  Factsheet on Artificial Intelligence in Europe, European Commission, 2019. https://ec.europa.eu/digital-single-market/en/news/

factsheet-artificial-intelligence-europe

31  Notes from the AI Frontier: Tackling Europe’s Gap in Digital and AI, McKinsey Global Institute, 2019. 

https://www.mckinsey.com/~/media/mckinsey/featured%20insights/artificial%20intelligence/tackling%20europes%20gap%20in%20

digital%20and%20ai/mgi-tackling-europes-gap-in-digital-and-ai-feb-2019-vf.ashx

32  Patent counts by technology, OECD statistics. Data extracted on 26 June 2020 10:53 UTC (GMT) from https://stats.oecd.org/
33  Communication on the Mid-Term review on the implementation of the Digital Single Market Strategy, European Commission, May 2017. 

https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1496330315823&uri=CELEX:52017DC0228 

34  Free flow of non-personal data, European Commission, 28 May 2019. https://ec.europa.eu/digital-single-market/en/news/

free-flow-non-personal-data

35  The review was performed as part of the project, based on an extensive review of academic literature, reports and previous evaluations, 
and a series of expert workshops with iterative voting, based on the Delphi method, with representatives for academia, government, 

the digital sector and various industries from across Europe.

36  Eurostat, nama_10_an6 dataset, Gross fixed capital formation, Sum of ICT equipment (gross), including computer hardware and 

telecommunications equipment, and Intellectual property products (gross), including computer software and databases. While these 

variables are the most relevant indicators for total public and private investment in digital products captured in official, Europe-wide 

statistics, they are not providing a complete view of such investments. Relevant investments may be classified in other categories, such 

as other machinery, and non-financial digitization efforts such as education or process development is not captured. Reversely, not all 

included investments, e.g. in intellectual property, may be relevant for digitalization.   https://appsso.eurostat.ec.europa.eu/nui/show.

do?dataset=nama_10_an6&lang=en 

37  For an analysis of the value of digital in the most advanced European countries, see: Shaping the future of work in Europe’s digital 

front-runners, McKinsey Global Institute, 2017. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/europe/

shaping%20the%20future%20of%20work%20in%20europes%20nine%20digital%20front%20runner%20countries/shaping-the-future-of-

work-in-europes-digital-front-runners.ashx

38  In the calculation example, an average growth rate for the EU of 6-8 per cent in the 2020-2030 period is assumed, an increase from 5 
per cent the previous 5-year period. Reference values are from before the COVID-19 crisis. Aggregate effects of COVID-19 on digital 

investment levels were not available at the time of writing, and the effect may go in both directions: on the one hand the use of digital 

solutions increased rapidly, as discussed in section 1.1., on the other hand the ensuing financial crisis reduced the financial scope for 

investments for companies across Europe. 

39  See e.g. Leveraging private investment: the role of public sector climate finance, Overseas Development Institute, 2011, for a discussion 

on public instruments to leverage private investment

40  What is the InvestEU programme? European Commission, 2019. https://ec.europa.eu/commission/sites/beta-political/files/what_is_

investeu_mff_032019.pdf

41  Executive survey responses from 247 CEOs and other senior business leaders from 21 European countries – these insights and findings 
are only valid for the respondent group. Whereas a high number of CxOs participated, representing a broad range of sectors, company 

types and regions, the respondents may not be representative of all business leaders in Europe.

42  Global Startup Ecosystem Report 2019, Startup Genome, 2019. https://startupgenome.com/reports/global-startup-ecosystem-report-2019
43  Impact: Stanford University’s Economic Impact via Innovation and Entrepreneurship, Charles E. Eesley and William F. Miller, Founda-

tions and Trends in Entrepreneurship, vol. 14, no. 2, pp. 130–278, 2018.

44  Global Startup Ecosystem Report 2019, Startup Genome, 2019. https://startupgenome.com/reports/global-startup-ecosystem-re-

port-2019

45  The global race for STEM skills, The Observatory on Borderless Higher Education, January 2013. http://www.obhe.ac.uk/newsletters/

borderless_report_january_2013/global_race_for_stem_skills

46  State of European tech, Atomico and dealroom.co, 2019. https://2019.stateofeuropeantech.com/chapter/investments/article/invest-

ment-snapshot/

47  Based on the comparison of 2018 university yearly budget (excluding hospital) divided by the number of students for the Massachusetts 

Institute of Technology and Stanford University, and the Delft University of Technology and the Technical University of Munich.

48  Pitchbook database, 2019.

45

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE49  Health Spending Projections to 2030: New results based on a revised OECD methodology, Lorenzoni, L., et al., 2019; OECD Health 

Working Papers, No. 110, OECD Publishing. https://doi.org/10.1787/5667f23d-en

50  Annual national accounts, detailed breakdowns, Eurostat (namna_10_ a64) using NACE codes C29, C30, G45, H49
51  McKinsey Growth Analytics – Horizon Scan; CapitalIQ; Pitchbook
52  Based on calculation assumptions: cooperation will allow players to not spend €5 to 10 billion on the development of AV per player 

(assumption: five OEMs collaborate and thus save 4x €7 billion); Waymo has so far spend €3.5 billion and is expected to need the same 

amount to complete the project.

53  Annual national accounts, detailed breakdowns, Eurostat (namna_10_ a64) using NACE codes C21, C32.5 and Q.
54  Health Spending Projections to 2030: New results based on a revised OECD methodology, Lorenzoni, L., et al., 2019; OECD Health 

Working Papers, No. 110, OECD Publishing. https://doi.org/10.1787/5667f23d-en

55  How pharma can accelerate business impact from advanced analytics, McKinsey & Company, 2018. https://www.mckinsey.com/indus-
tries/pharmaceuticals-and-medical-products/our-insights/how-pharma-can-accelerate-business-impact-from-advanced-analytics 

56  Metric for the digital/analytical maturity of a company, including strategy, capability, organisation, and culture, McKinsey Digital 

Quotient database, April 2020; proprietary assessment tool developed by McKinsey, based on an in-depth diagnostic survey and bench-

marked against 550 companies around the world (20,000 participants in 18 industry sectors).

57  Based on data from the TED database, estimating the share of digital spending per sector.
58  On artificial Intelligence – A European approach to excellence and trust, European Commission, 2020. https://ec.europa.eu/info/sites/

info/files/commission-white-paper-artificial-intelligence-feb2020_en.pdf

59  How to bring Macron’s vision of a European innovation agency to life, Science Business, 14 December 2017. https://sciencebusiness.

net/framework-programmes/viewpoint/how-bring-macrons-vision-european-innovation-agency-life. 

60  Based on a public procurement market of approximately €2 trillion in the EU and 10 to 15 per cent being digital related.
61  From November 2018 until end of 2026.
62  GDPR Fragmentation May Appear More Significant than Intended, Alston Privacy, 26 June 2018. https://www.alstonprivacy.com/

gdpr-fragmentation-may-appear-more-significant-than-intended/

63  EU Project : COVID-19 Data Portal, European Science Media Hub, European Parliament, 2020. https://sciencemediahub.eu/2020/04/23/

eu-project-covid-19-data-portal/

64  How big pharma firms are quietly collaborating on new coronavirus antivirals, Chemical and Engineering News, 1 May 2020. https://

cen.acs.org/biological-chemistry/infectious-disease/How-big-pharma-firms-quietly-collaborating-on-new-coronavirus-antivirals/98/i18

65  Coronavirus exposes lack of common data approach, EUobserver, 6 April 2020. https://euobserver.com/coronavirus/147982
66  Shaping Europe’s Digital Future, European Commission, 2020. https://ec.europa.eu/info/sites/info/files/communication-shaping-eu-

ropes-digital-future-feb2020_en_4.pdf

67  Special Eurobarometer 503: Attitudes towards the impact of digitalisation on daily lives. https://data.europa.eu/euodp/en/data/

dataset/S2228_92_4_503_ENG

68  Payment services (PSD 2) - Directive (EU) 2015/2366, mandating the sharing of customer data with external parties at the request of the 

customer and defines the standard format of the data sharing.

69  A Union that strives for more - My agenda for Europe, political guidelines for the next European Commission 2019-2024, European 

Commission, 2019. https://ec.europa.eu/commission/sites/beta-political/files/political-guidelines-next-commission_en.pdf

70  Notes from the AI Frontier: Tackling Europe’s Gap in Digital and AI, McKinsey Global Institute, 2019. https://www.mckinsey.com/~/

media/mckinsey/featured%20insights/artificial%20intelligence/tackling%20europes%20gap%20in%20digital%20and%20ai/mgi-tack-

ling-europes-gap-in-digital-and-ai-feb-2019-vf.ashx

71  Pitchbook VC, PE and M&A investments in AI and big data companies.
72  Coordinated Plan on Artificial Intelligence, communication from the Commission to the European Parliament, the European Council, 

the Council, the European Economic and Social Committee and the Committee of the Regions, 2018.

73  Notes from the AI Frontier: Modeling the Impact of AI on the World Economy, McKinsey Global Institute, 2018. https://www.mckinsey.
com/~/media/McKinsey/Featured%20Insights/Artificial%20Intelligence/Notes%20from%20the%20frontier%20Modeling%20the%20

impact%20of%20AI%20on%20the%20world%20economy/MGI-Notes-from-the-AI-frontier-Modeling-the-impact-of-AI-on-the-world-

economy-September-2018.ashx

74  ibid.
75  Pitchbook VC, PE and M&A investments in AI and big data companies.
76  Smart Cities: Digital Solutions for a More Liveable Future, MGI, 2018. https://www.mckinsey.com/~/media/mckinsey/industries/
capital%20projects%20and%20infrastructure/our%20insights/smart%20cities%20digital%20solutions%20for%20a%20more%20

livable%20future/mgi-smart-cities-full-report.ashx

77  Worldwide Smart Cities Spending Guide, IDC, May 2020. https://www.idc.com/getdoc.jsp?containerId=IDC_P37477 
78  Special Eurobarometer 503: Attitudes towards the impact of digitalisation on daily lives. https://data.europa.eu/euodp/en/data/

dataset/S2228_92_4_503_ENG

79  SynchroniCity is a Horizon 2020 project aiming to help cities simplify the adoption of new services that tackle urban challenges using 

IoT and data technologies; see: https://futurecities.catapult.org.uk/project/synchronicity/ 

80  Assuming similar participation to Wifi4EU (6,000 to 8,000 municipalities), 50,000 to 100,000 of co-investment, and 50 per cent adminis-

trative costs on top for communication campaigns, procurement support etc.

81  Annual national accounts, detailed breakdowns, Eurostat, (namna_10_ a64) using NACE codes 41-43, 71.
82  Global Status Report for Buildings and Construction, IEA, 2019. 

https://www.iea.org/reports/global-status-report-for-buildings-and-construction-2019

46

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE83  Reinventing construction: A route to higher productivity, McKinsey Global Institute, 2017. https://www.mckinsey.com/industries/

capital-projects-and-infrastructure/our-insights/reinventing-construction-through-a-productivity-revolution 
84  The next normal in construction: How disruption is reshaping the world’s largest ecosystem, McKinsey, 2020. 

https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/the-next-normal-in-construction-how-disrup-

tion-is-reshaping-the-worlds-largest-ecosystem

85  Reinventing construction: A route to higher productivity, McKinsey Global Institute, 2017. https://www.mckinsey.com/industries/

capital-projects-and-infrastructure/our-insights/reinventing-construction-through-a-productivity-revolution 

86  Digital Europe: pushing the frontier, capturing the benefits, McKinsey Global Institute, 2016.
87  Helsinki’s 3D city models, City of Helsinki, 2019 

https://www.hel.fi/helsinki/en/administration/information/general/3d/3d

88  Special Eurobarometer 487a: The General Data Protection Regulation, https://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/

ResultDoc/download/DocumentKy/86881 

89  The Theft of American Intellectual Property, Office of the US Director of National Intelligence, 2015. http://www.ipcommission.org/

report/IP_Commission_Report_Update_2017.pdf

90  Equifax hack: Visa and Mastercard flag 200k compromised credit cards, FinExtra, 15 September 2017. https://www.finextra.com/newsa-

rticle/31073/equifax-hack-visa-and-mastercard-flag-200k-compromised-credit-cards

91  Bitpoint Exchange Hacked for $32 Million in Cryptocurrency, Coindesk, 12 July 2019. https://www.coindesk.com/japanese-exchange-

bitpoint-hacked-by-32-million-worth-in-cryptocurrencies

92  These Small-Town Hackers Are Making a Living Showing Companies How Insecure Their Sites Really Are, Vice, 15 October 2018.  

https://www.vice.com/en_asia/article/evwkyk/these-small-town-hackers-are-making-a-living-showing-companies-how-insecure-their-

sites-really-are

93  Cyberattacks Skyrocketed in 2018. Are You Ready for 2019? Industry Week, 2019. https://www.industryweek.com/technology-and-iiot/

cyberattacks-skyrocketed-2018-are-you-ready-2019

94  Resilience, Deterrence and Defence: Building strong cybersecurity for the EU, European Commission, 2017. https://eur-lex.europa.eu/

legal-content/EN/TXT/PDF/?uri=CELEX:52017JC0450&from=EN

95  Two in three CEE companies don’t have any cybersecurity strategy, according to “Cyber Threat CEE Region 2018” report, CyberSec Hub, 
2018. https://cybersechub.eu/two-in-three-cee-companies-dont-have-any-cybersecurity-strategy-according-to-cyber-threat-cee-region-

2018-report/

96  Special Eurobarometer 503: Attitudes towards the impact of digitalisation on daily lives. https://data.europa.eu/euodp/en/data/

dataset/S2228_92_4_503_ENG

97 See note 64
98  Digitalisation As Key For A Sustainable Europe, Digital Europe, 2019. https://www.digitaleurope.org/wp/wp-content/uploads/2019/06/

Narrative_Sustainability_0620_WEB.pdf

99  Assessing ICT global emissions footprint: Trends to 2040 & recommendations, Journal of Cleaner Production, 2017.
100  Global E-waste Monitor 2017, ITU, 2017. https://www.itu.int/en/ITU-D/Environment/Pages/Spotlight/Global-Ewaste-Monitor-2020.aspx
101  Coolproducts don’t cost the Earth, European Environmental Bureau, 2019. https://eeb.org/library/coolproducts-report/
102  Special Eurobarometer 503.
103  How much will consumers pay to go green?, McKinsey, 2012 https://www.mckinsey.com/business-functions/sustainability/our-in-

sights/how-much-will-consumers-pay-to-go-green

104  Factsheet – The Digital Skills Gap in Europe, European Commission, 2017. https://ec.europa.eu/digital-single-market/en/news/digital-

skills-gap-europe

105  Education to Employment: Designing a System that Works, McKinsey, 2013. https://www.mckinsey.com/industries/social-sector/our-in-

sights/education-to-employment-designing-a-system-that-works

106  The Future of Work in Europe, McKinsey Global Institute, 2020. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/

future%20of%20organizations/the%20future%20of%20work%20in%20europe/mgi-the-future-of-work-in-europe-discussion-paper.pdf

107  Jobs lost, jobs gained: Workforce transitions in a time of automation, McKinsey Global Institute, 2017. https://www.mckinsey.com/~/
media/mckinsey/featured%20insights/Future%20of%20Organizations/What%20the%20future%20of%20work%20will%20mean%20

for%20jobs%20skills%20and%20wages/MGI-Jobs-Lost-Jobs-Gained-Report-December-6-2017.ashx

108  Communication: Digitising European Industry, European Commission, 2016. https://ec.europa.eu/digital-single-market/news-redi-

rect/30288

109  Assuming approximately five months and a cost of €10,000/person for reskilling; one to two months and a cost of €1,500-3,000/person 

for upskilling

110  Over 2,000 European AI experts join hands to challenge US, China in artificial intelligence, SCMP, 21 September 2018. https://www.

scmp.com/news/china/science/article/2165004/european-artificial-intelligence-experts-unite-bid-challenge-us

111  Artificial intelligence (AI) in healthcare and research, Nuffield Council on Bioethics, 2018. (http://nuffieldbioethics.org/wp-content/

uploads/Artificial-Intelligence-AI-in-healthcare-and-research.pdf)

112  Digital Economy and Society Index (DESI) 2017, European Commission, 2017. https://ec.europa.eu/digital-single-market/en/news/

digital-economy-and-society-index-desi-2017

113  Artificial Intelligence, A European Perspective, Joint Research Centre, 2018. http://publications.jrc.ec.europa.eu/repository/bitstream/

JRC113826/ai-flagship-report-online.pdf

114  The State of European Tech, Atomico, 2017. https://2017.stateofeuropeantech.com/
115  The Global Innovation Index (GII) 2018: Global Innovation Index, 2018. https://www.globalinnovationindex.org/gii-2018-report
116  Notes from the AI frontier: Modeling the impact of AI on the world economy, McKinsey Global Institute, 2017.

47

—   SHAPING THE DIGITAL TRANSFORMATION IN EUROPE117  Jobs lost, jobs gained: Workforce transitions in a time of automation, McKinsey Global Institute, 2017. https://www.mckinsey.com/~/
media/mckinsey/featured%20insights/future%20of%20organizations/what%20the%20future%20of%20work%20will%20mean%20

for%20jobs%20skills%20and%20wages/mgi-jobs-lost-jobs-gained-report-december-6-2017.ashx

118  Assessing the Economic Impact of Artificial Intelligence, ITU, 2018. https://www.itu.int/pub/S-GEN-ISSUEPAPER-2018-1
119  Jobs lost, jobs gained: Workforce transitions in a time of automation, McKinsey Global Institute, 2017. https://www.mckinsey.com/~/
media/mckinsey/featured%20insights/future%20of%20organizations/what%20the%20future%20of%20work%20will%20mean%20

for%20jobs%20skills%20and%20wages/mgi-jobs-lost-jobs-gained-report-december-6-2017.ashx

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