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Unlocking Europe's AI future

Realising the Digital Decade targets can make considerable contributions to enhancing European global competitiveness. Cloud adoption has the potential to unlock an additional $12 trillion in economic value to the global economy by 2030, including $2.6 trillion in Europe, while it is estimated that cloud-enabled AI could add nearly $434 billion to Europe’s GDP, presenting a significant growth opportunity.[1] Achieving this requires concerted action across three fronts.

Companies spend €40 of every €100 in their tech spend on compliance.png

Companies spend €40 of every €100 in their tech spend on compliance

75% report an increase in their compliance costs since 2022, and 75% expect these costs to

75% report an increase in their compliance costs since 2022, and 75% expect these costs to rise through 2027

Almost seven-in ten (68%) businesses struggle to understand their responsibilities under t

68% don’t understand their roles and responsibilities under the AI Act

Businesses report that regulatory uncertainty can significantly impact their growth:

The Single Market remains essential for European competitiveness[2] and startups agree: 48% of startups that view Europe as competitive cite access to the EU’s consumer market as a key factor driving this competitiveness.

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Nevertheless, European businesses launching new products or services report that they must navigate a complex web of laws. New regulations (such as the AI Act, the Cyber Resilience Act, and the Data Act, all introduced in the previous three years) can create additional complexity and drive increases in compliance costs.

However, over a fifth of businesses have adopted or plan to adopt AI to automate regulatory compliance, creating opportunities to reduce costs and allow authorities to analyse data at scale more easily.

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To foster a pro-growth regulatory environment, Europe should:

Create a pro-growth regulatory environment that incentivises adoption and innovation

Prioritise realising the opportunities of the Single Market, giving startups, scale-ups and innovators access to all 448M Europeans by removing national barriers that contribute to a complex EU regulatory landscape.

Align on common international standards and legal definitions with international partners, driving compliance costs down at a global level, not only in Europe.

Integrate digital compliance tools with EU policies, building on the “once-only” principle, leveraging the efficiencies technologies can deliver and helping regulators gain insight from compliance data[3].

Streamline EU regulations, focusing on unified frameworks, and centralised and harmonised implementation and enforcement, to align regulatory approaches across EU countries and create efficiencies that reduce the cost of compliance.

Accelerating digital adoption among businesses will create a virtuous cycle of investment and growth. Businesses who have invested in AI are seeing the benefits: 76% of AI adopters report productivity gains and 93% report increased revenues.

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Yet barriers to adoption are preventing businesses of all sizes from completing their digital transformation:

Accelerate digital transformation across European industry

40% believe a better understanding of how AI can benefit them would accelerate their transformation.

Almost half say improved access to financing, including private funding or grants supporting AI uptake, will help them adopt.

High regulatory costs.

Skills gap – 82% believe AI skills will be important by 2029, but only 25% have them.

Turn European governments into leading adopters of digital technology

European citizens want  to see investment in digital government services within healthcare (60%) and education (38%) as priority areas.

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While these sectors are often subject to specific national (rather than European) rules that make it challenging to re-use successful solutions pioneered elsewhere, modernising them would both serve public needs and encourage private sector technology adoption:

78% of businesses report that they are more likely to adopt AI following public sector adoption.

35% of startups cite innovation-friendly procurement policies as growth drivers.

To use public adoption and procurement as a lever to support businesses and citizens, European governments must:

01.

 

Invest in digital renewal of public services, overhauling legacy systems and improving the delivery of services and capitalising on the spin-off effects in the private sector.

02.

 

Prioritise innovative procurement policies, creating a dynamic market that attracts and deploys the best technologies into national and local governments across Europe.

03.

 

Create technology test-beds and enable cross-border collaboration, including public-private partnerships specifically designed to  drive small-scale, collaborative innovation between EU countries and thereafter sharing ideas to bring new services to European citizens.

To unlock the full potential of AI for businesses, citizens, and public sector organisations across Europe, this report is urging European governments and policymakers to take the above steps. These recommendations are aimed at tackling key barriers to adoption and scaling, and at ensuring the current pace of innovation is maintained.

To close these gaps Europe must:

Implement supportive economic policies that widen access to needed capital and act to encourage investment in R&D, incentivising adoption and development of new technologies by European business.

To close these gaps Europe must:

Facilitate access to private sector digital transformation partners through national and European schemes focused on sectors where AI adoption is low, helping companies and industries with scope to scale their AI usage to maximise the value of technology.

To close these gaps Europe must:

Partner employers with educational institutions to build industry-relevant digital skills training for AI and non-AI focused roles, widening the pipeline of working-level AI talent available to European companies.

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