Half of EU economic growth from ICT

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Information and communications technology drives half of Europe's economic growth, according to a report by the European Union (EU) Commission.

The commission's annual ICT i2010 progress report showed that Europe is moving toward a knowledge-based economy, with technology driving innovation and productivity.

The ICT sector is outstripping the rest of the economy, and contributed nearly 50 per cent of EU member states' productivity growth between 2000 and 2004.

"Our integrated European policy for growth and jobs is now starting to pay dividends," said Viviane Reding, the EU commissioner for information society and media.

But she warned against complacency. "ICT companies in Europe are still not able to profit from economies of scale in view of regulatory fragmentation that blocks the emergence of pan-European services and hurts the chances of e-communication operators and software companies to compete on the world market," Reding said. "The EU and its member states need in particular to make a greater effort to remove the remaining impediments within the internal market for online services."

Investment in research from member countries is expected to hit 2.6 per cent of GDP by 2010, still shy of the EU's three per cent goal. Sweden and Finland already exceed the target, spending 3.9 per cent and 3.5 per cent of their GDP respectively.

The report said the UK is just "slightly behind" the leading European countries in ICT development. While it's trailing other EU member countries in advanced enterprise usage and e-government, the UK excels in basic skills development, online commerce and ICT in education. It leads the way in digital TV and is one of six countries - along with Belgium, Denmark, Finland, The Netherlands, and Sweden - which have higher broadband connectivity than the US and Japan.

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