The European Commission (EC) has launched its Competitiveness Compass, a scheme that aims to equip Europe to keep pace with worldwide trends in digital transformation and energy transition. With the eIDAS 2.0 framework in place and digital identity wallets focused on natural persons (or people), the EC now aims to make the European business wallet – a wallet for “legal persons,” AKA organizations – “the cornerstone of doing business simply and digitally” in an EU Single Market.

Compass looks to put Europe back on path to innovation

A press release says the Compass “sets a path for Europe to become the place where future technologies, services, and clean products are invented, manufactured, and put on the market, while being the first continent to become climate neutral.” Based off the 2024 Draghi report on EU competitiveness, its three pillars focus on closing the innovation gap, creating a joint roadmap for decarbonization with industry, and reducing external dependency to strengthen security.

In setting its sights on Europe’s future, the Commission is frank about its present. “Europe has many economic strengths, but must act now to regain its competitiveness and secure its prosperity,” says the full communication from the EC. “For over two decades, Europe has not kept pace with other major economies, due to a persistent gap in productivity growth.”

“The EU must reignite its innovation engine.”

The paper calls for “a resolute European response” to the problem, which it frames as existential, and in keeping with worldwide political trends away from cross-continental dependency.

“What is at stake for Europe is not just economic growth, but the future of its model. Our freedom, security and autonomy will depend more than ever on our ability to innovate, compete and grow.”

Simplification, digital transformation go hand in hand

The vision laid out by the EC (which is summarized in this fact sheet) has digital transformation as a key driver of simplification – and vice versa. Both simplification, which “aims at reducing drastically the regulatory and administrative burden,” and “removing barriers in the Single Market” are listed as horizontal enablers, and the EC says digitalization will “go hand in hand with simplification to reduce the reporting burden.” The Compass’ innovation pillar leans heavily into AI, biotech and digital networks.

“Use of digital tools and AI to power simplification efforts at governmental level must be facilitated, with full cross-border interoperability among public sector bodies’ solutions such as e-invoicing, e-signature, e-submissions and digital product passport. Wherever possible, reporting must move to digital formats based on standardized data.”

The European Business Wallet the ‘cornerstone’ of life in EU

The EC lists the European Business Wallet as one of its flagship actions. “Building on the EU eIDAS framework,” it says, “the European business wallet will be the cornerstone of doing business simply and digitally in the EU, providing a seamless environment for companies to interact with all public administrations.”

With wallets come regulations, and they follow in the communique, as well: “in addition to work on simplifying record-keeping under the General Data Protection Regulation (GDPR), the Commission will continue work on its more harmonised implementation and enforcement.” The Compass points EU institutions away from the ‘regulatory ratchet’ and toward better digital regulation and cooperation, in keeping with its commitment to simplification and competitiveness.

Europe anticipates quantum leap, amps up digital infrastructure

In other tech-specific sections of the Compass document, the EC sets its goals around quantum computing. It says “Europe must also maintain a leading position in quantum technologies, which can revolutionise digital encryption systems underpinning today’s security and defence communication, health via scanning and drug discovery, as well as business transactions.”

The Compass includes a plan to develop a Quantum Strategy and a Quantum Act built on the existing Chips Act, “to address regulatory fragmentation, align EU and national programmes and support investment in pan-European quantum computing, communication and sensing infrastructure.”

Likewise, it has plans for digital public infrastructure, “including modern fibre networks, wireless and satellite solutions, investments in 6G and cloud computing capabilities.” Noting that Europe is far behind its own 2030 Digital Decade targets for infrastructure connections, the Compass proposes a Networks Act, aiming to “improve market incentives to build the digital networks of the future, reduce burden and compliance costs, and improve digital connectivity for end-users, by creating an integrated Single market for connectivity and a more coordinated EU spectrum policy.”

Commentators applaud business wallet, potential compliance savings

The Compass announcement has drawn some enthusiastic responses from the industry, which sees it as an extension of the work Europe has put into digital identity wallets to date.

Posting on LinkedIn, Joerg Lenz of Namirial Group says “up until now, efforts on the European level for EU Digital Identity Wallets have been primarily focused on digital identities and wallets for natural persons. This announcement is broadly welcomed in the digital identity community and beyond in order to close the gap for legal persons (organizations) as they also require a digital identity – similar to natural persons.”

David Magård, who works with the EU Digital Wallet Consortium (EWC), echoes the sentiment in his own LinkedIn post. “In the context of the digital identity ecosystem, it’s both exciting and a source of pride to see an enhanced focus on the so-called business wallet.” However, he notes that “the most important area for digitalization in EU, to me, is the work on standardising and ensuring free flow of data. The wallets play a role in this but will not be the only piece of the puzzle.”

Cecilia Bonefeld-Dahl is a director general of DigitalEurope, a trade association representing digitally transforming industries in Europe. On its website, she says “the Competitiveness Compass hits all the right notes: reducing regulatory burden, simplifying rules, boosting investment in innovation and streamlining funding. President Von Der Leyen and her team have set the right direction. Now the hard work begins. If these plans can indeed save €37 bn in compliance costs for companies, that will be a huge boost for Europe’s digital industry.”

Article Topics

Competitiveness Compass  |  digital identity  |  digital public infrastructure  |  digital wallets  |  eIDAS  |  EU  |  Europe  |  European Business Wallet  |  European Commission