The EIB, a Public Bank for Europe’s Strategic Digital Transformation

Emilio García

5 mins - 16 de Enero de 2024, 07:00

In the last ten years the US GDP has grown from around $16 trillion to $26 trillion dollars, according to a recent report by the consulting firm McKinsey. The pace of growth of the US economy has enabled it to outpace European GDP, having moved between 2013 and 2023 from being 14 percentage points behind to 17 percentage points ahead. The differential in digital development in favour of the United States is among the factors that have contributed to reversing Europe’s economic dominance.

As part of the Digital Compass 2030 communication, the European Commission estimated the need for investment in digital technologies and skills to close Europe’s gap with the United States at €125 billion per year. In the first Digital Decade report, the Commission encouraged Member States to increase investment in digital research and innovation, to try to reach the public and private spending target of 3% of GDP and to invest in infrastructure, critical technologies, and strengthen European digital sovereignty.

[Receive the most up-to-date analysis to your email or mobile through our Telegram channel]

Member States have dedicated a large share of the Recovery and Resilience Facility (RRF) funds to boosting digital transformation. National Recovery Plans have far exceeded the recommendation to dedicate 20% of funds to their digitisation, reaching a 29% budget allocation for this purpose, more than €130 billion between them. However, the renewal of the Stability and Growth Pact (SGP), although far from the austerity drive of the previous decade, will limit the fiscal space to continue supporting digitisation from member states. Eyes are turning to the European Investment Bank (EIB) as a public facilitator of the technological investments needed for Europe’s economy and society.

The EIB is already supporting the technology projects of companies ranging from small and emerging to large and well-established, as well as the public sector. In 2022 alone, the EIB earmarked €9.906 billion, 18.3% of its own resources, to finance research, innovation, and digitalisation projects in Europe. According to the data provided by the institution, these projects have served, among other things, to roll out fibre optic coverage to 4 million homes and enable 6.6 million subscriptions to 5G services. During the period 2023-2025, the institution has already declared its intention to continue supporting the innovation necessary for the development of the digital transformation, albeit conditional on intervention at the points of market failure and the co-financing of digitisation projects financed by the RRF in the Member States.

The change of leadership at the institution heralds a renewal of its strategy to support European digitisation. Nadia Calviño, its new president, has already expressed her intention for the EIB to play “a greater role in a just technological, ecological, and digital transition and to protect our strategic autonomy in a context of geopolitical tensions”. This is consistent with the entry into force of the Strategic Technology Platform for Europe (STEP) as the EU’s main financial instrument to be complemented by the EIB, with a more geopolitically and technologically advanced digital focus than the RRF. In this scenario, it is worth asking what changes within it could facilitate, supported by the STEP, a more effective intervention in favour of strategic digitisation in the new post-pandemic era.

Firstly, the EIB’s support for digital transformation must go beyond the limiting framework of public intervention as a mere lever for market correction, an insufficient guiding criterion for judging the technological needs associated with the Sustainable Development Goals or Europe’s strategic autonomy. Investments in areas such as advanced digitisation in the public sector, the deployment of sovereign telecommunications infrastructures or the revitalisation of the microelectronics industry fall into the category of creating assets of the common good to shape a more inclusive and sustainable Europe. The implementation of such interventions within STEP should be subject to new models of governance that are more participatory, redistributive, and transparent, similar to those suggested by Mariana Mazzucato in one of her recent contributions.

Secondly, STEP’s budget envelope is significantly lower than that of the RRF, at around €10 billion, and with a focus on frontier digital technologies (AI, quantum, 6G, ... ). Consequently, the selection of digital projects supported by the EIB will have to have a different approach to the current one. As the Commission’s latest EU Strategic Foresight report points out, the Bank will have to take greater risks and focus on more strategic investments, making use of new instruments such as leasing and prioritising actions in Member States where the SGP gives less scope to use own resources.

Finally, it may be appropriate to strengthen the institutional and human resources expertise in the EIB’s digitisation project structure, currently below its senior level in the organisation chart. Institutionalisation could improve operational agility and efficiency, helping to better assess and understand the risks and opportunities of digital transformation.

In conclusion, the EIB is set to play a key role in European digitisation, playing a greater role and taking strategic risks, in line with the EU’s geopolitical needs. To this end, it needs to make digital transformation a priority that is not strictly subject to market rules, reviewing its governance of project selection and the institutional framework for its implementation.
Se puede leer el artículo original en español

¿Qué te ha parecido el artículo?