19 Jun 2024

The EU's Critical Tech Gap: Rethinking economic security to put Europe back on the map


Diagnosing our weak economic security as solely stemming from an external supply chain crisis is only half true, and leads to the wrong treatment of the illness, relying only on restrictive trade and investment measures.

The irony is that this only adds further burden to those European companies who are leading in their sectors, further weakening Europe’s position in the supply chain.

A defensive strategy won’t win. We must ensure that technology companies, across the whole supply chain, can be born, scale and stay in Europe, supported by partnerships with likeminded countries.

We identify three key challenges the EU must overcome to once again be a technology leader:

  • Lack of scalability in the EU: The EU struggles to scale and consolidate companies due to the fragmentation of the single market and a lack of a unified strategy, limiting EU companies’ ability to scale and compete globally.
  • Investment shortfall: Europe significantly trails the US and China in investments in critical technologies, which tend to be capital intensive. EU has no common capital market; public funding for R&D is nationally fragmented, and inefficient; and innovations are not commercialised enough to maintain Europe’s competitive edge.
  • Tough playing field for European businesses: European companies face a competitive disadvantage because of stringent regulations that have no equivalent in other geographies and keep them from growing and scaling at home.

From risk to opportunity Economic security is not only about risk mitigation, it is a huge opportunity for Europe to get back on the map. Back to the original promise of forming one scalable single market, and to refocus on creating the next wave of world-leading tech companies.

Europe is at the forefront of connectivity and wind energy and competes with leaders on space technologies. It has also been a pioneer in additive manufacturing. This positions us to be in the driving seat of critical technology areas provided that investments are increased and barriers are addressed. Cracking the code on quantum will bring untold scientific breakthroughs and protect our most sensitive data. Biotech will allow for a next generation of tailored medicines. Although the EU underperforms in Artificial Intelligence and Advanced Semiconductors, the battle is not lost if we can leverage our strategic position in key segments of the value chain and continue to partner with our allies.

Our Manifesto aims for Europe to be A Digital Powerhouse by 2030. To get there, Europe must be the creator of, and have access to, the critical technologies that will define our future.

We have everything we need to succeed – we just need a change in mindset.

Cecilia Bonefeld-Dahl, Director General DIGITALEUROPE         

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For further information, please contact
Samia Fitouri
Senior Communications Manager
Marta Pont Guixa
Senior Operations & Executive Manager
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