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Fuelling the European economy in 2012

02.01.2012 - 13:20

BRUSSELS - While the debt crisis has clearly dominated headlines over the past year, from a technology point of view Europe saw its fair share of milestones and breakthroughs which have the potential to greatly contribute to the European economy. In 2011, the first two satellites in Europe's Galileo global positioning system (GPS) were successfully launched, marking the start of a high-precision positioning system independent from the US and Russia, which could bring in an extra €90 billion to the EU economy over the next 20 years. Also, the take-off of cloud computing, a technology solution that gives everyone access to scalable computing power and resources, was given a boost by Vice-President Kroes, who promised to make Europe ”cloud-active”. In January 2012 Vice President Kroes is expected to come back with her cloud computing strategy for Europe.  This strategy is eagerly awaited since research estimates that cloud computing in the EU could generate over 400,000 new SMEs, reduce the unemployment rate and increase GDP. But for that to happen, remaining barriers need to be removed. So in light of this potential- how will technology feature on the 2012 European agenda?   I see the use of information communication technology (ICT) by governments during 2012 as a key factor in achieving European economic growth. As the largest consumers of IT services in Europe, government agencies and departments can lead by example. Europe is already reaping some of the dividends of a decade of ICT investment, with ICT now driving 25% of GDP growth in the European Union (EU) and 50% of EU productivity growth, and seven of the ten most innovative ICT economies in the world operating here in Europe. In February 2011 a prominent study from the Centre for Economics and Business Research estimated that cloud computing could contribute €736 billion to major EU economies over the next five years. Through a smooth transition to the cloud the public sector can provide a blueprint for private sector counterparts, showcasing the cost savings, flexibility, productivity, and new means of communication and collaboration offered. Special attention here must also be paid to SMEs. They account for 99% of businesses and 80% of employment in the EU, but only use cloud services for 25% or less of core business applications. Establishing suitable framework conditions for the creation of a strong cloud eco-system for start-ups and SMEs in Europe will provide them with access to state-of-the-art software and data storage, originally only available for large companies.

In light of the potential for cloud technology to boost the European economy, the continued deployment of broadband infrastructure across Europe in 2012 is crucial. McKinsey & Company estimates that a 10 percentage point rise in broadband household penetration increases a country’s GDP from 0.9% to 1.5%. Likewise, a quantitative analysis conducted by the OECD indicates that the expansion of broadband significantly improves labour productivity. One of the reasons for this is “remote working”- where companies can source the best workers regardless of their location, whilst workers find it easier to balance their work and family life. And for those in the creative industries, ultrafast internet access through broadband will offer greater opportunities to generate content which can ultimately become a source of income. As such, the European Commission report on Member State progress in developing national broadband strategies that meet the coverage and speed targets defined in the Europe 2020 Strategy, due in 2012, will be a significant benchmark to assess future economic growth opportunities in Europe.

Overall, I want to highlight the amazing changes to our everyday lives that have been introduced by the ICT sector. Taking just one example, in the last twenty years the mobile phone has progressed from a clunky means of making a phone call on the move, to second generation devices which could take photos and access media content, to the third generation which incorporated broadband high speed internet access, to the fourth generation which handles voice calls as just one data stream among many. During this technological journey, sectors have found innovative ways to bring their benefits to the widest audience- such as mobile banking and mHealth applications, while the devices themselves can improve the way we enact with our environment through RFID tags. Indeed, at the current rate of sales growth the expectation is that smartphones will be in use by half of the European population by the middle of 2012. 

I see a similar journey for cloud computing, though the trust and awareness factors relating to new technologies must be addressed. Data protection is among the key concerns. Microsoft believes that strong data protection and data security will build up consumer trust and therefore greatly benefit ICT growth in general and the uptake of cloud computing in particular. The EU Data Protection Directive revision, to be presented in January by Commissioner Reding, will go a long way to answer privacy concerns raised by consumers and businesses alike. Citizens want to be in charge of their personal data and we at Microsoft certainly support that. 

As history has shown, opportunities can emerge in times of crisis. My hope is that 2012 will be the year that the potential benefits ICT innovations can bring to society will be recognised and realised as a critical solution for sustained economic growth in Europe.