The next wave of Europe’s digital economy

Graebel Relocation examines the implications of a single digital market, as the European Commission predicts it could create millions of jobs in Europe over the next few years.

The digital age
The rapidly developing digital economy serves as the world's single most important driver of innovation, competitiveness and growth, and it holds great potential for European entrepreneurs and enterprises, according to a recent report by the European Commission (EC).Contributing nearly 8 per cent of GDP of the G-20 major economies as of 2015, the digital economy powers growth and creates jobs. However, other global regions are further ahead, and Europe is looking to amp up its digital economy.Unfortunately, only 2 per cent of European enterprises currently take full advantage of new digital opportunities, which means that many businesses could be excluded from the global market.How European businesses adopt these technologies will help determine their future growth.

European start-up scene

Whether the reason is a stagnant economy, aversion to risk, or an influx of Silicon Valley ventures, European venture capital has stalled in the past decade. Now, after a long period of recovery from the tech bubble and financial crisis, Europe is showing increasing growth.Technology markets are developing in a way that will make career and corporate growth opportunities in Europe important. The most recent influx of innovation has been at the platform level: mobile devices, the cloud, social networking and peer-to-peer commerce.In turn, these new platforms advance the industry, and Europeans lead many of the industries in which the next wave of growth is likely to occur, including energy conservation, premium-category cars (a class below luxury), cybersecurity, mobile apps and games, and healthcare.European Union (EU) officials are planning to reduce the limitations that inhibit European internet start-ups and hold back e-commerce across the EU's 28 different online markets. Currently, only 15 per cent of Europeans shop online at firms based in EU nations other than their own.
European online shopping trends 2015
A survey by Postnord found that when European consumers shop in Europe, they are more likely to purchase from British and German online stores (see Figure 1). Compare these figures with the 45 million and 30 million European shoppers who purchase items online from the US and China respectively.
Top online purchases in Europe 2015
EU officials think that more e-commerce companies and tech firms should help bolster the economy once the proposed plan to streamline European web regulations takes effect. This is likely to occur in 2016.Currently, clothing and footwear is the most popular category of product purchased online in the EU (see Figure 2). With new regulations, however, it is possible that the popularity of other products could grow significantly.

New regulation rollout

Policy-makers believe that the region's homegrown internet companies have not made the big leagues at least in part because of a combination of tax, copyright and e-commerce rules that have inhibited their growth.The EC tackles both issues in its Digital Single Market strategy, which policy-makers estimate could add 415 billion euros to the EU economy annually. Additionally, the EC plans to introduce regulations to improve the security of e-commerce payments and personal data that will significantly impact the way in which individuals and companies conduct business online.ComputerWeekly found that the regulations weren't only about security – they also aimed to consolidate more payment services under one ruling and help open the market to new entrants.

A global outcome

The EC predicts that a single digital market could create up to 3.8 million jobs in Europe in the next few years, and that simpler access to digital goods and services would benefit businesses and consumers throughout Europe.However, for this to become a reality, improvements in data and information security, and a uniform body of laws applicable to all countries, may be needed, to help protect individuals from the various threats posed by the digital economy.As European countries focus more on creating environments that are friendly to start-ups and e-commerce, countries will need to recruit and retain qualified and experienced technology professionals.Unfortunately, that may not be easy. Technology professionals are in high demand throughout the world, thanks in part to a smaller labour pool and the growing need for cybersecurity and IT skills.Companies will need to develop and/or adjust their talent management programmes and relocation policies to ensure they can attract, retain and motivate experienced people.Graebel Relocation aims to provide clients with helpful information about their most pressing issues in this everchanging global economy. Its comprehensive menu of consulting services helps companies to ensure that their relocation policies remain competitive, so they can take advantage of new opportunities created by the digital economy and other global developments. For more Europe-focused articles, see the Autumn 2015 issue of Europe Digital Re:locate magazine. Click here to subscribe, or here to download as an app.
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