Digital inclusion key to tackling Europe’s digital transformation gap

Digital inclusion is key to tackling Europe’s crippling digital transformation gap, according to a new report from Vodafone.

A Bridge Across Communities warns that gaps in digital skills and coverage along with unequal access to devices and digital public services are now a strategic vulnerabilities for the continent’s economy, society and democratic resilience.

The report indicates that failing to tackle digital transformation could cost the European Union (EU) €1.3 trillion (US$1.5 trillion) in lost GDP by 2033 with the digital divide a key driver, leading to digitally excluded communities experiencing poorer health, worse educational outcomes and weaker trust in institutions.

Last year’s State of the Digital Decade report by the European Commission found that the EU is falling behind on its digital transformation goals for 2030. The Commission’s analysis shows that, in the current scenario, the collective efforts of Member States will fall short of the EU’s level of ambition

The identified gaps include the need for additional investments, both at EU and national levels, particularly in the areas of digital skills, high-quality connectivity, uptake of artificial intelligence (AI) and data analytics by enterprises, semiconductor production and startup ecosystems.

The implications of Europe’s digital divide

Vodafone’s report draws several concerning conclusions in relation to Europe’s digital divide:

• Health and wellbeing: Digitally excluded people are 1.5-times more likely to struggle interacting with healthcare, increasing reliance on emergency services. Improving access and confidence reduces isolation and improves long‑term wellbeing.
• Education and opportunity: Schools with limited digital capacity struggle to build both core and digital skills. Young Europeans without access or support are twice as likely to lack basic digital skills, depressing lifetime earnings and civic participation.
• Democratic resilience: Digitally excluded citizens are less likely to engage in public decision-making, which increases the risk of eroding trust in civic and democratic institutions.

“Every year we wait, the gap widens between rich and poor, urban and rural, young and old,” said Joakim Reiter, group chief external and corporate affairs officer at Vodafone. “Only if we act now can Europe grow stronger and more resilient, with modern services, higher productivity and robust democracies.”

Entrenched divides and the cost of inaction

A persistent urban‑rural gap in skills and coverage holds back communities and local services, according to Vodafone. Even where 5G is available, a lack of 5G Standalone (5G SA) limits the benefits of ultra‑low latency applications for public services and industry.

Meanwhile, in 2023, 70 percent of 16- to 24-year-olds had basic digital skills versus 28 percent of those aged 65 to 74. This represents a 42‑point generational gap, with parts of south‑eastern Europe lagging in inclusive participation.

What’s more, only 20 percent of European small and medium-sized enterprises (SMEs) are highly digitalized. Today, European companies produce 76 percent of the value of their US counterparts, partly reflecting slower digital adoption.

Digital exclusion fuels other deprivations too. Slower growth, regional decline and lower educational attainment are a self‑reinforcing cycle that fragments societies, increases pressure on already strained budgets and weakens democratic foundations.

“Europe has a unique opportunity to turn digital inclusion into growth, cohesion and trust,” said David Mekkaoui, CEO of All Digital. “Competence centers show us every day that digital inclusion is not abstract: it means a young person finding work, a small business reaching new clients or an older citizen accessing healthcare online. Scaling these solutions can ensure that everyone benefits from – and contributes to – Europe’s digital future.”

Tackling Europe’s digital transformation gap

Vodafone set out four actions for European, national and regional leaders to address the digital divide and enhance digital transformation.

1. Make digital inclusion a strategic government priority. This must be embedded into national economic and resilience strategies.
2. Support digital skills development, including through strong partnerships with the private sector and civil society organizations.
3. Accelerate the digitalization of public services, ensuring all citizens can access and benefit from streamlined public services.
4. Accelerate the rollout of high-quality connectivity infrastructure, by unlocking the single market to create pan-European scale in critical sectors, simplifying regulation and ensuring a fair, inclusive digital ecosystem.

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