Winning the Tech Race. Cut-Simplify-Incentivise: Our three-step gameplan

Foreword

We face a stark reality: our GDP growth has stagnated for the past 20 years, and today we lag the US by a full 30 per cent. In seven of the eight critical technologies defining the future – from AI to quantum computing – we’re falling behind. As Mario Draghi noted, this stems largely from failing to embrace digitalisation effectively. Europe has the potential. We train 20 per cent of the world’s AI talent and have a vast single market of 450 million people. To compete, we must cut the burdens holding us back, act as one team, and close the €800 billion annual investment gap. This step-by-step gameplan shows how we can do it: cut, simplify and incentivise.

1. Cut – No pain, no gain
Regulation is an extra hurdle for European innovators. Nearly 40 new digital regulations in the past five years – many not yet implemented, like the AI Act– have created overlaps. Initiatives like the environmental, social and governance (ESG) reporting omnibus regulation announced recently by President von der Leyen should be delivered swiftly and encouraged in other areas such as cybersecurity, where redundant reporting wastes time and resources. Our plan proposes 80 targeted amendments across 40 laws to simplify reporting, clarify requirements and eliminate overlaps. By trimming regulatory fat, we can create an agile environment where innovation thrives. This won’t always be easy – for example, we propose significant changes to recent laws like the AI Act – but it is necessary.

2. Simplify – Home advantage
Europe’s single market is a unique asset, but gaps hinder businesses from capitalising fully. Only 8 per cent of SMEs trade across borders due to inconsistent rules and red tape. We fully support Enrico Letta’s 28th regime – a unified European Business Code – which could simplify cross-border transactions, giving SMEs a home advantage to scale globally. Europe has an edge in dual-use technologies like AI, drones and connectivity, but only by acting together can we support those companies properly. A pan-European procurement programme will boost innovation and protect key sectors, including much-needed investment in our critical infrastructure. Direct funding for scaleups and corporates will spark a virtuous cycle of investment and growth.

3. Incentivise – Where are the medals?
The EU has promoted itself as a world champion of regulation, but regulation alone won’t solve our competitiveness crisis. Just as athletes need the best gear, businesses need investment in advanced technology and infrastructure. Competing in AI, quantum computing and semiconductors requires billions of extra funding, and a skilled workforce at the top of its game. We propose that at least a quarter of the EU’s budget must go to digitalisation, with simplified funding programmes for easier access. We should also make use of the unspent funds from the COVID recovery. The public and private sectors must collaborate on critical technologies, investing in connectivity, the power grid and cybersecurity. A focus on infrastructure will empower Europe to compete globally, building resilience in sectors like defence, energy and healthcare.

Shifting to a winning mindset

This race requires a shift in mindset. Europe must embrace risk, reward innovation and set ambitious goals. By reshaping regulations, investing strategically and uniting the single market, we can rebuild Europe as a digital powerhouse.

The next five years must begin a new chapter. DIGITALEUROPE’s gameplan offers a clear path. With agility, investment and vision, Europe can kickstart its innovation power, resilience and prosperity.

Cecilia Bonefeld-Dahl, Director General DIGITALEUROPE