The Eurozone economy contracted by 7.9% in 2020. This has resulted in far deeper recessionary effects than was the case during the financial crisis of 2008/2009.
In fact, it is twice as bad.
In response to this unprecedented situation, EU leaders, the European Commission, and the European Parliament are all supporting a series of key initiatives that will deliver stronger economic recovery in the EU.
At the core of these new EU backed programmes is a very strong financial commitment to develop an innovative digital economy in Europe. The NextGenerationEU initiative is a €750 billion temporary recovery instrument that has been set up to build an economy recovery in Europe. It is an opportunity to both re-boot and reshape Europe’s economy.
EU Recovery and Resilience Facility (RRF)
The EU recovery and resilience facility aims to inject large-scale financial support into a series of public investment and reform measures in order to mitigate the negative socioeconomic effects emanating from COVID-19.
The 27 member states of the EU are now presenting their respective plans for approval to the European Commission to drawdown funding under this EU recovery and resilience facility. All of these national plans must allocate 37% of spending to address EU climate change targets. It is a primary target for the European Union to cut carbon emissions by at least 55% by 2030 compared to 1990 levels. Spending on green research and development will make up a large part of the 37% of the funds that are being allocated towards green transition measures.
Each EU member state plan must allocate at least 20% of total resources for digital transition actions. This 20% figure is a baseline threshold for proposed digital solutions, not an upper limit. In other words, this EU recovery and resilience facility must deliver upon the policy objectives of EU Green Deal and it must be supported in part via an enhanced investment in the science and innovation sectors. Digital transformation must create more economic growth and more jobs. It must support social inclusivity and it must protect the integrity of the financial system in Europe. Digital solutions can and will create a more sustainable, competitive and resilient EU economy.
Each EU member state plan must allocate at least 20% of total resources for digital transition actions. This 20% figure is a baseline threshold for proposed digital solutions, not an upper limit.
It is twin track approach: support digitalization and the use of novel technologies as a driver for positive change but do so in an environmentally friendly way.
7 Priorities for Funding the Digital Sector
The member states of the EU within their proposed recovery and resilience plans are encouraged to include initiatives covering seven primary flagship areas:
1. Power up: accelerate the development of technologies that will build a stronger renewable energy sector and promote a circular economy in Europe.
Today’s Smart Photovoltaic solutions can automatically track the sun
2. Recharge and Refuel: promote technologies to accelerate the use of sustainable, accessible and smart transport including within the public sector.
3. Renovate: improve the energy efficiency of public and private buildings through the use of enhanced ICT.
4. Connect: roll out more fast broadband services across Europe and deploy more fibre to implement this policy priority. An intrinsic element of this strategy must be to successfully and quickly build more 5G infrastructure networks in all regions of Europe. The greater transmission speeds and lower latency levels that 5G will offer will bring a host of new innovative services into the marketplace including an array of high-definition video and IoT products.
5. Modernise: digitalize public administration services including our healthcare systems. SMEs and traditional industries must also fully benefit from innovative technologies.
6. Scale-up: increase European industrial data and cloud expertise by developing the most powerful, cutting edge and sustainable processing and computing systems. Boosting the capabilities of start-ups will play a key role in building a more resilient society. In fact, 25% of all global ICT R&D takes place in Europe. This is a strong foundation for the EU to build upon, so that it becomes a leader in developing the global digital economy.
7. Reskill and upskill: adapt education systems to support digital skills training for all people living in Europe. Combatting the digital divide is a necessary pre-requisite if all urban and rural communities in Europe are to fully benefit from innovative 5G services moving forward. This digital divide exists in all countries in Europe but it is a more challenging problem to address in some regions than in others. Digital upskilling is a central element that will bind the successful implementation of the United Nations Sustainable Development Goals (SDGs). We should not tolerate building a society where there are ‘haves’ and ‘have-nots’ when it comes to access and use of new technologies.
Governance of the EU Recovery and Resilience Facility
Once the 27 member states of the EU submit to Brussels their recovery and resilience facility plans, the European Commission only has two months to approve or amend such plans. The reason for such a short timeframe to carry out this evaluation is to release EU funding quickly and to get Europe’s economy back on track. Proposed investments must also align with the regulatory environment in Europe connected to the building of a more competitive, sustainable and inter-linked economy.
The European Commission recovery and resilience task force (Recover) is advising EU governments on how best they can present their reform plans in line with EU legislative requirements. The European Commission directorate-general for economic and financial affairs (DG ECFIN) is supporting this policy process. The European Commission is ensuring that member state recovery and resilient plans will deliver digital and green solutions – and guarantee that the European Union will reach its digital targets by 2030.