FIRST REPORT ON THE STATE OF THE DIGITAL PART-1

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22 Jan 2024

Hello everyone,

First report on the State of the Digital Decade calls for collective action to shape the digital transition;

The first report on the State of the Digital Decade, published today, provides a comprehensive look at progress towards achieving the digital transformation to empower a more digitally sovereign, resilient, and competitive EU. It includes an assessment of the EU's performance towards Europe's 2030 objectives and targets focusing on four main pillars: digital skills, digital infrastructure, digitalisation of businesses, including the use of Artificial Intelligence (AI), and digitalisation of public services. It also includes the monitoring of the European Declaration on Digital Rights and Principles, which reflects the EU's commitment to a secure, safe and sustainable digital transformation, putting people at the centre.

The 2023 report, which is the first of a series of annual reports, is a call to Member States for collective action to address the current investment gaps, accelerate digital transformation in Europe and intensify efforts to reach the objectives of the Digital Decade Policy Programme (DDPP). The DDPP was adopted by the European Parliament and the Council and entered into force on 9 January 2023, and includes a system of collaborative governance between the EU and national authorities.

The 2023 report's horizontal recommendations and the country-specific recommendations present a clear and operational way forward. The recommendations will be the basis for discussion and collaboration between the Commission and the Member States on how to achieve our common goals. This work will be supported through the implementation of large-scale multi-country projects, including the newly introduced European Digital Infrastructure Consortia (EDICs).

The following are the key findings in the various areas covered in the report.

Digital infrastructure – secure connectivity

Under the current 2030 target, gigabit coverage should be available for everyone and 5G performant networks in all populated areas.
Currently, fibre networks, which are critical for delivering gigabit connectivity, only reach 56% of households, while 5G coverage stands at 81% of the population, dropping to 51% in rural areas. However, the deployment of 5G stand-alone networks is lagging and 5G is still falling short in quality with regards to end-users' expectations and industry needs. 55% of rural households are still not served by any advanced network and 9% are not yet covered by any fixed network at all.
Additional investment of up to at least €200 billion is needed to ensure full gigabit coverage across the EU as well as 5G coverage in all populated areas. Member States should map their connectivity gaps and explore financing to complement private investment in areas that are not commercially viable, including rural and remote areas, benefitting from the pro-investment EU regulatory framework.

Semiconductors

The current 2030 target is for the EU to double its share in the value of global production of cutting-edge semiconductors, reaching from current 10% to 20% of the global market share in value.
To achieve this target, the European Chips Act, which entered into force on 21 September 2023, aims at developing a thriving semiconductor ecosystem and resilient supply chains. Member States should promote national policies and investments to further stimulate domestic chip design and manufacturing capabilities and to boost local skills in advanced technologies across sectors.

Digitalisation of businesses
The DDPP sets three targets to foster the digitalisation of businesses:

at least 75% of EU enterprises should adopt in their operations cloud computing services, big data, and/or artificial intelligence (AI);
more than 90% of small and medium businesses (SMEs) should reach at least a basic level of digital intensity (measuring the use of different digital technologies at enterprise level);
double the number of unicorns (companies with a valuation over €1 billion).

Without further investment and incentives, the projected baseline trajectory indicates that by 2030 only 66% of businesses will use cloud, 34% big data and 20% AI. Furthermore, based on latest available data only 69% of EU SMEs reach a basic level of digital intensity, with uneven and insufficient progress among Member States. To improve the take-up of technology, Member States should raise awareness about the benefits of digitalising businesses, as well as promote and support the European Digital Innovation Hubs (EDIHs).

The number of EU-based unicorns has increased significantly in the past decade. A continuation of the trend would allow the EU to meet its target before 2030, but is no ground for complacency in volatile markets. Moreover, differences with other advanced economies remain: at the start of 2023 there were 249 unicorns based in the EU, compared to 1,444 in the US and 330 in China.
Digitalisation of public services
The DDPP targets provide for 100% online accessibility of key public services and, where relevant, the possibility for citizens and businesses in the Union to interact online with public administrations, online access to their electronic health records for 100% of Union citizens, and access to secure electronic identification (eID) for 100% of Union citizens.
Many Member States are well positioned to achieve the full digitalisation of public services and health records, as well as the deployment of the eID for their citizens. However, significant investments are needed to improve the cross-border availability and performance of public services. Regarding the European Digital Identity Wallet, its full deployment is under way: it is expected to be completed by 2030 and complemented by the Digital Euro, proposed in June 2023.
Digital skills
The EU is committed to increasing basic digital skills among at least 80% of those aged 16-74, and to reach 20 million ICT specialists by 2030.
However, the report shows that by 2030 and under the current conditions, only 59% of the population will master at least basic digital skills, and the number of ICT specialists may not exceed 12 million. Member States need to prioritise investments in high quality education and skills, and to foster women's participation in STEM (science, technology, engineering and mathematics) from an early age.
Values and principles for the online society
The report highlights the pioneering role of the EU in creating a secure, safe, and human-centred digital transformation as anchored in the European Declaration on Digital Rights and Principles. The EU has introduced relevant policy and legislative measures, such as the Digital Services Act, the AI Act, the European Media Freedom Act, and the Communication on virtual worlds.
A sustainable digital transition
The report tracks the ongoing efforts to make the digital transition greener. Measures such as the Right to Repair initiative, the Eco-design criteria for mobile phones and tablets, and the EU action plan for digitalisation of energy systems will reduce the environmental impact of digital technologies. Further investments via national Recovery and Resilience Plans or joint investments are also crucial to foster the full transition towards net-zero digital solutions, along with improved monitoring mechanisms to measure the environmental footprint of electronic communications services.
International partnerships
The 2030 Digital Decade programme outlines the importance of international cooperation to promote the EU's values with like-minded partners. Progress was made towards this goal through digital partnerships with Japan, the Republic of Korea, and Singapore, as well as Trade and Technology Councils with the United States and India. The EU also stepped up to support the digital transformation of Ukraine, bringing the country into the EU free roaming area.
Next steps
The Report includes recommendations on actions, measures, and policies in areas where progress is insufficient. Member States will outline the actions they intend to take to reach the objectives and targets in their national roadmaps to be published by 9th October.
Within two months after the adoption of the report, the Commission and Member States will discuss preliminary observations, with a focus on the recommendations issued by the Commission in its report.
Background
Proposed in September 2021, the Path to the Digital Decade outlines concrete steps to foster innovation and investment in the areas of digital skills, digital infrastructures, digitalisation of businesses and public services. This was complemented in December 2022 by the European Declaration on Digital Rights and Principles.
To track progress on the digital targets and objectives, the Commission has integrated the Digital Economy and Society Index (DESI), the annual monitoring exercise on Europe's performance in digitalisation, in the report on the state of the Digital Decade.
The Commission's Joint Research Centre (JRC) significantly contributed to this monitoring exercise, as part of its activities to support and shape the digital transition. It published three reports providing methodologies, findings and data to support the delivery of the 2030's objectives, both at European and national level: on a methodology to estimate the EU trajectories towards the 2030 targets, on mapping EU funding instruments to Digital Decade objectives, and on international benchmarking of private investments in several thematic areas.

For More Information
First report on the State of the Digital Decade - Questions & Answers

What is the link between the Digital Economy and Society Index (DESI) and the 2030 Digital Decade?

In the past decade, the Commission has monitored the yearly Member States' performance on digital through the DESI – the Digital Economy and Society Index. The DESI annual reports included country profiles and comparisons that allowed Member States to identify areas of strengths and weaknesses.
The Decision establishing the Digital Decade Policy Programme 2030 assigns DESI a new role. DESI is now integrated into the report on the state of the Digital Decade and complements the monitoring of progress towards the digital targets. This reflects a shift of focus from the assessment of a country's relative performance to a collective effort in bridging the gap to the 2030 Digital Decade targets and objectives.
The DESI 2023 consists of a set of relevant indicators which are presented as a multi-dimensional dashboard and have been better aligned to the agreed EU-level targets for 2030 in the areas of digital infrastructure, digital skills, digitalisation of businesses and of public services. The Commission presents the findings in the annual State of the Digital Decade report, of which the first was published today.
How is the EU propelling forward the digital transformation?
Over the last year, the EU has stepped up action to re-assert its technological leadership and facilitate the digital transformation, while fostering its resilience. Building on the world's largest integrated market area, the EU has boosted action to address strategic dependencies, notably on critical raw materials, semiconductors, cloud and edge computing, and cybersecurity technologies. Reforms and investments have been put in place in the context of Next Generation EU under the Recovery and Resilience Facility. In addition, the EU Chips Act has given the market the right signals and already €100 billion in investments have been announced by the industry. Now, adequate public support must complement these investments.
The successful achievement of the EU's digital transformation based on the ambitious Digital Decade targets will require additional policy measures, actions, and large investments from both the public and the private sector, highlighting the importance of joining forces notably through multi-country projects (MCPs). In addition to the existing implementation mechanisms for large-scale projects, the Digital Decade Policy Programme introduces the European Digital Infrastructure Consortia (EDICs) to facilitate the setup and implementation of multi-country projects.
The report stresses the need for the Commission and the Member States to agree on an integrated and strategic approach on digital policy and to foster investments to reach the 2030 digital targets. Without strong and concrete actions, the full achievement of the digital transition will not be possible by 2030.
Through the established Digital Decade cooperation mechanism, the Commission and the Member States will continue evaluating progress and highlighting the areas where progress needs to be accelerated.
What are the sources of data for the report and the indicators?
The data included in the report were mostly collected by the relevant authorities of the Member States, by the Commission (Directorate-General for Communications Networks, Content and Technology, as well as Eurostat) and from the following studies launched by the Commission:

Main findings of the Digital Decade
Digital skills
Are we on track to reach the targets for digital skills set in the Digital Decade programme?
According to the baseline trajectory, under current conditions, in 2030 approximately 59% of the population will have at least basic digital skills. If the growth continues at current rates, it will be challenging to reach the 80% target by 2030.
Despite the sustained growth over the last 10 years, the number of ICT specialists in employment was 9.37 million across the entire EU in 2022. Under current conditions, the number of ICT specialists in the EU will be close to 12 million by 2030, falling short of around 8 million of the 2030 target (at least 20 million employed ICT specialists). Moreover, in 2022, the gender gap in ICT specialists was still substantial, with only 19% of the total ICT workforce being made up of women.
What measures are the EU and Member States taking to bridge the gap with the targets on digital skills?
To reach the Digital Decade targets by 2030, massive investments and policy interventions are needed to actively promote training and upskilling schemes, as well as fostering the development of digital skills from an early age, with a particular focus on supporting women and girls to enroll in STEM degree courses.
All Member States have been engaging in formal primary education and vocational training, as well as non-formal training initiatives (via public employment services, upskilling initiatives, etc.) on digital skills. Moreover, to further address the shortage of ICT specialists, initiatives at Member State level also include the creation of shorter/more flexible courses to adapt to the varying needs of learners, as well as subsidised courses.
The Commission has considerably stepped up its efforts to boost digital skills, for example through the Digital Education Action Plan 2021-2027, the adopted digital education and skills package or the Cybersecurity Skills Academy.
More so, several EU funding instruments, along with the Recovery and Resilience Facility, aim to strengthen digital capacities and the skills needed for their deployment, such as the Digital Europe Programme, the European Social Fund Plus, Horizon Europe and Erasmus+.
Digital infrastructure – connectivity, semiconductors, edge nodes and quantum
Connectivity
How is the EU performing in ensuring widespread connectivity coverage?
In 2022, fixed very high-capacity networks, which include fibre networks, reached 73% of households in the EU, and 5G networks were available to 81% of households. However, the deployment of 5G stand-alone networks is lagging and 5G is still falling short in quality with regards to end-users' expectations and industry needs.
Major challenges to bridge the connectivity gap in rural areas remain. In rural parts of the EU, 9% of households are not covered by any fixed network, and 55% are not served by any fixed very high-capacity networks. 5G networks reached 51% of populated rural areas, up from 33% in the previous year.
How is the EU supporting the connectivity targets?
Data shows that major investments in connectivity will be needed to reach the 2030 targets. The EU will leverage connectivity investments through the European Regional Development Fund (ERDF, €2.4 billion), the European Agricultural Fund for Rural Development (EAFRD), InvestEU and EIB loans, and through the Connecting Europe Facility (CEF) Digital (€2.1 billion until 2027). More so, investments in digital connectivity have attracted about 13% of the RRF digital expenditure amounting to about €16.4 billion, with €13 billion going specifically toward funding Gigabit network rollout.
In addition, the European Electronic Communications Code facilitates investments and addresses long-term challenges in the electronic communications sector. The recent draft Gigabit Infrastructure Act aims at reducing the cost of rolling out gigabit infrastructure across the EU by streamlining, digitising, and reducing the cost of network rollout procedures.
Semiconductors
How is the EU addressing the challenges in reinforcing semiconductor production in Europe?
To address the challenges in semiconductor production, several measures were undertaken. The EU Chips Act, which came into force on 21 September 2023, will reinforce the semiconductor ecosystem in the EU, ensure the resilience of supply chains and reduce external dependencies.
Moreover, together with the Commission, the Member States launched a first successful Important Project of Common European Interest in Microelectronics and Communication Technologies, which mobilises €21 billion of private and public investments and a second IPCEI on Microelectronics and Communication Technologies which will include 56 companies, small and medium-sized enterprises (‘SMEs') and start-ups.
For the EU to reach its targeted market share of 20% of global value in chips, it will need to quadruple its revenues by 2030. To reach this goal, the EU should further step up investment and stimulate domestic chip design and manufacturing capabilities, as well as strengthen the industry behind microchip design, testing and validation.
Edge nodes
How is the EU performing in deploying edge nodes for decentralised data processing closer to the users?
The Digital Decade target for edge and cloud requires the entry into operation
of 10 000 climate-neutral highly secure edge nodes by 2030.
The European Data Strategy highlighted the need for a change of paradigm in data processing, and it identified edge computing, which brings data processing closer to the user, as the essential technology to cope with the requirement for highly distributed and decentralised data processing.
In Europe, the development of the edge computing ecosystem is still in its early stages with only three total commercial deployments of edge computing in Europe in 2022. Achieving the target of 10 000 edge nodes by 2030 will require a collective focus to set up a whole ecosystem, based on a mix of skills, infrastructure, security, innovation, and public and private cooperation.
During the 2025-2027 period, the investments facilitated by the IPCEI on Next Generation Cloud Infrastructure and Services (CIS) are expected to make edge computing technologies and solutions commercially available to the market.
Quantum computing
How is the EU performing in developing quantum computing and supercomputers?
According to the targets set in the Digital Decade programme, by 2025 the EU plans to have its first computer with quantum acceleration, paving the way for the Union to be at the cutting edge of quantum capabilities by 2030.
In 2022, the European High Performance Computing Joint Undertaking (EuroHPC JU) announced the selection of six sites across the EU to host and operate the first EuroHPC quantum computers, in Czechia, Germany, Spain, France, Italy, and Poland, which will be integrated into high-performance supercomputers.
However, a substantial gap can be observed between the EU and several other major world regions (e.g., the US) as regards private sector investments in quantum, in a context where around 25% of quantum industry participants globally are based in Europe, but less than 5% of global funding.
Digitalisation of businesses
How are European SMEs performing in adopting basic digital intensity?
A basic level of digital intensity means that enterprises are using digital technologies such as online commerce, social media, etc. While languishing at an average rate of around 56% over the last few years, in 2022 the percentage of SMEs recording at least a basic level of digital intensity jumped to 69% This could represent the first sign of a positive impact of the intensified policy efforts at national and EU level that have been made to support the digitalisation of businesses over the past few years. However, this is still far from reaching the desired target of 90% of SMEs with at least a basic digital intensity, so further monitoring and efforts must continue.
Which EU-level initiatives are supporting the digitalisation of businesses?
Significant EU funds have been mobilised to support the achievement of digitalisation of businesses. The Digital Europe programme (DIGITAL) foresees €7.5 billion for projects in 5 key capacity areas, while 19% of the Recovery and Resilience Fund allocated to the digital transformation, i.e., €24 billion, is dedicated to the digitalisation of businesses.
Among the initiatives aimed at the digitalisation of industry and industrial ecosystems are the Key Digital Technologies (KDT) Joint Undertaking, the Made in Europe public-private partnership, as well as several multi-country projects, such as network of European Digital Innovation Hubs (EDIHs) under the Digital Europe Programme and the Important Project of Common European Interest Next Generation Cloud Infrastructure and Services (IPCEI-CIS).
Together with the Member States, the Commission is investing €1.5 billion, over a period of seven years, in a network of European Digital Innovation Hubs (EDIHs) to provide tailor-made digitalisation support to SMEs and public sector organisations.
The pre-notified IPCEI on Next Generation Cloud Infrastructure and Services gathers 13 Member States and more than a hundred enterprises across the European Union.
How are EU enterprises performing in adopting AI, Cloud or Big Data technologies?
When it comes to the Artificial Intelligence (AI) target, the latest data from 2021 shows that only 8%, so not even one in ten enterprises in the EU have adopted an AI technology. Under current trends, and without further investment and incentives, the projected baseline trajectory indicates that by 2030 only 66% of businesses will use cloud, 34% big data and 20% AI, while the target is for at least 75% of EU enterprises taking up cloud computing services, big data and/or AI by 2030.
In 2021, 34%, that is, one in three EU enterprises, purchased sophisticated or intermediate cloud computing services (e.g., software for the purposes of finance or accounting, resource planning, customer relationship management, security, etc.).
As regards to Big Data, the latest available data are from 2020. In 2020, big data analytics tools register the lowest uptake with only 14% of enterprises in the EU using them, the majority of them (34%) being large enterprises, followed by medium (21%) and small sized ones (13%).
How is the EU supporting unicorns and a start-up ecosystem in the EU?
Unicorns present a key source of innovation, new products and services, employment, and economic growth. The number of unicorns is therefore used as an indicator of innovation performance. At the start of 2023, 249 unicorns were based in the EU. The number of unicorns has increased significantly in the past decade. A continuation of the trend would allow the EU to meet its target before 2030, but is no ground for complacency in volatile markets. At EU-level, the EU Start-up Nations Standard (EU SNS) mobilised Member States to agree on best practices for creating a stable, predictable and supportive regulatory environment for start-ups. This ambition is now being operationalised by the Europe Start-up Nations Alliance (ESNA). The EU's Digital Markets Act will open up new opportunities for start-ups from March 2024, when the obligations kick-in for large online marketplaces.
Digitalisation of public services
What is the overall performance in the EU regarding the digitalisation of public services for businesses and citizens and health records?
Many Member States are relatively well positioned to achieve the target of 100% online availability of public services for businesses and citizens. In general, 88% of central government services are completely online, compared to 76% for regional government services and 62% of local government services.
However, despite the EU average increasing from 75 in 2021 to 77 in 2022, 15 countries score below 80 (out of 100) and are therefore still far from the Digital Decade target to be achieved by 2030.
Moreover, investment in public procurement of innovative digital solutions (e.g., based on AI or big data) is insufficient and would need to increase substantially from €118 billion to €295 billion in order to make innovative digital solutions available in public services.
Regarding the access to e-health records, the EU performs well and is on track to meet the EU target of 100% of EU citizens having access to their electronic health records, with an EU average score of 72 in 2022.
What is the overall performance in the EU regarding the deployment of electronic identification (eID) measures?
The achievement of this Digital Decade target is closely linked to a timely provision of the EU Digital Identity Wallet by the Member States. The wallets, which are the main novelty under the proposed revision of the eIDAS Regulation, will be based on common standards and allow EU citizens to prove their identity and other personal attributes for accessing online services.
Digital wallets may become available in the course of 2026 (subject to agreement by the co-legislators).
Meanwhile, by September 2023, a total of 21 EU countries have notified at least one national eID scheme under the current eIDAS Regulation. Four of the remaining countries are currently involved in at least one large-scale pilot project co-funded by the Digital Europe Programme to test the EU Digital Identity Wallet in a number of everyday situations and its integration into national eID infrastructure in 26 Member States and Iceland, Norway and Ukraine.
Digital Rights and principles
What is the role of the European Declaration on Digital Rights and Principles?
This report also includes the monitoring of the European Declaration on Digital Rights and Principles for the Digital Decade, which translates the EU's vision of digital transformation into principles and commitments. The Declaration provides a reference point for citizens on their online rights and freedoms in the digital transformation. It should also serve a guide for policy makers and companies when dealing with new technologies.
Is the Declaration binding?
While it is not binding, the Declaration was signed at the highest level by the European Parliament, the Council, and the Commission. It recalls most relevant online rights and contains commitments for the EU and Member States. The rights in the Declaration are based on existing EU rules and should be enforced on this basis. The monitoring of the Declaration will allow to measure progress in its implementation.

https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4619