The State of the Digital Economy in Europe

The European Union is all about creating a prosperous single market by removing barriers and simplifying rules and regulations within the region. At the heart of the European Union are the four freedoms – the free movement of people, goods, services and capital. Now with virtually everything going digital, the free movement of people, goods, services and capital is not only physical – but is increasingly, and most importantly, through digital channels. This virtual movement is of course being enabled through the digitalisation of the European economies.

Given this background, I thought it would be useful to explore the state of the digital economy in Europe. After all when we consider the key IT trends that are dominating the financial / technology space – payments (mobile and online), the Internet of Things, social networks and the convergence of the digital and real world – they are all dependant on digitalisation. In addition to this the IT trends are enabling the virtual movement of people, goods, services and capital throughout the EU. So with that in mind this post seeks to understand the current state of the digital economy across Europe.

Why is a Digital Economy in Europe Important?

The European Commissioner for the Digital Economy & Society, Günther H. Oettinger, shares the need to improve and develop Europe’s digital society so that the region can:

  • Engage, influence and leverage new (disruptive) businesses and industries that are emerging as a result of the digital revolution
  • Create an environment in Europe that embraces and simplifies operating in the region for companies that provide innovative solutions such as cloud based industries, Internet of Things and big data
  • Enable an inclusive environment for citizens across the EU so that age, location, nationality should not be barriers to online activity
  • Enable connectivity and access across the region that promotes a competitive and prosperous market
  • Facilitate a highly skilled population, that can use digital services to better serve themselves and within industry provide improved services to its customer base
  • Through improved connectivity and digital skills Europe should both thrive as a region, and better compete in the global marketplace

Digital Economy & Society Index (DESI)

With the goal of creating a Digital Single Market – the European Commission has developed a Digital Economy and Society Index (DESI) which aims to categorise and understand the current state of the digital economy in each of the European countries. The data from 2013/2014 was released in a press release in February 2015 and describes the state of the digital economy across Europe

The Digital Economy and Society Index measures 4 key areas:

  • Connectivity – covering broadband, speed and affordability
  • Digital Skills – to understand the level of basic and advanced skillsets
  • Online Activities – ranging from content (music, video, games, television), communication (e.g. video calls, and social networking) and transaction (banking and shopping)
  • Integration of Digital Technology – gauging the level of business digitalisation and eCommerce
  • Digital Public Services – to ascertain the level of government and health service digitalisation

Key Findings from the Digital Economy & Society Index

1. Best & Worst Digital Economies:

The level of digitalisation from each of these areas was measured/collected from each country and in turn the countries were ranked according to their score (out of 1). This is how they measured up – in order:

  • Best digital countries (score > 0.60): Denmark, Sweden, the Netherlands & Finland
  • Mid-tier digital countries (score 0.45 – 0.6): Belgium, UK, Estonia, Luxembourg, Ireland, Germany, Lithuania, Spain, Austria, France, Malta, Portugal & Czech Republic
  • Lower tier digital countries (score: <0.45): Latvia, Slovenia, Hungary, Slovakia, Cyprus, Poland, Croatia, Italy, Greece, Bulgaria and Romania

2. Internet Use:

  •  360 million Europeans the internet weekly
  • 315 millions Europeans use the internet daily
  • 56% of internet users use internet banking
  • 57% of internet users use social media
  • 61% of internet users shop online

3. Digital Opportunities are abundant:

  • 75% of Europeans regularly use the internet (2014) – but the usage varies hugely with just 48% regular use in Romania
  • About half of those that go online, use the internet to play or download games, images, films or music
  • 39% of the households with a TV, use it to watch video on demand
  • 15% of small/ medium sized businesses sell online, and of those less than half sell cross border
  • The digitalisation of health care is a growing phenomenon, for example e-prescriptions are used by 26% of general practitioners across Europe – but the uptake varies hugely across the region
  • 100 million Europeans have never used the internet
  • Online cross border shopping was limited to just 12% of Europeans
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The Digital Agenda for Europe is a really useful way to monitor the digital journey that Europe is embarking upon to help achieve a prosperous single market. Through measures such as the Digital Economy and Society Index we have a way of seeing the extent of the ‘digitalisation of Europe’ and clearly through the latest findings to see the stark divide there is within the region. This pan-European visibility is crucial so that the ‘lagging’ countries can be supported, and within ‘leading’ countries further opportunities can be identified.



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