The EU’s Industrial Strategy in the Age of Technological Competition
Set against the backdrop of an increasingly competitive world, the European Union’s Industrial Strategy aims to bolster its technological and strategic autonomy. The strategy emphasises resilience in key sectors such as energy, manufacturing, and digital infrastructure, and seeks to reduce reliance on external actors for critical technologies. As part of this vision for future European competitiveness, cybersecurity emerges as a key pillar for safeguarding innovation and allowing European industries to be competitive globally without being vulnerable to external influence. To ensure a competitive industrial strategy, it is crucial to have a robust cybersecurity in place for European industry and digital services.
The Rise of Cyber Threats in a Competitive Global Market
Europe is facing a growing tide of cyber threats which is being continuously amplified by the digitalisation of critical infrastructure and production processes. Julian Lepassaar, head of the European Union Agency for Cybersecurity (ENISA) stated that the amount of disruptive cyber-attacks have doubled from the fourth quarter of 2023 to the first quarter of 2024. Sectors such as energy, manufacturing, healthcare, and finance are increasingly targeted by sophisticated cyber-attacks. These threats pose significant risks and can cripple industrial competitiveness and disrupt essential services. The EU recognises these vulnerabilities as being critical to address, especially in its goal of achieving digital sovereignty. To tackle this, the NIS2 Directive (Network and Information Security Directive 2), a cornerstone of the EU’s strategy to fortify its internal digital defences, was adopted in November 2022, and entered into force January 16th 2023. The directive seeks to mandate higher standards of cybersecurity across essential sectors. Thereby, it aims to increase the resilience of EU industries and ensure the safety of digital and operational technologies. This is key to maintaining the future economic strength of Europe. Despite having sought to respond to the rise of cyber threats and an increasingly competitive market, the EU still falls short on preventive measures against these threats and on reducing its reliance on foreign powers and technologies. While there have been recent strides in outlining strategies for enhancing European competitiveness, cybersecurity remains a critical area that demands further decisive and coordinated action for long-term resilience and autonomy.
Cybersecurity Enables Industrial Innovation
Cybersecurity is more than mere defensive measures. In the realm of industrial innovation, it also acts as an enabler. For instance, in the context of Industry 4.0, which includes the integration of advanced technologies such as artificial intelligence (AI), the Internet of Things (IoT), and 5G. Robust cybersecurity allows European industries to fully harness these advanced technologies. Without sufficient cybersecurity measures, the risks associated with these measures such as data breaches and network vulnerabilities can limit their adoption and effectiveness. This is because, whilst these technologies enhance innovation and productivity, they also increase entry points for cyber-attacks, making it paramount to secure these systems. Trustworthy and proficient cybersecurity mechanisms can allow European industries to fully harness these advanced technologies. This is particularly important in competitive sectors such as aerospace, automotive, and pharmaceutical, and especially in developing emerging technologies. In these sectors, intellectual property theft can severely undermine a company’s competitive advantage. Cybersecurity was not given a dedicated section in Mario Draghi’s report on The Future of European Competitiveness. However, it plays a prominent role in nearly every sector discussed from clean energy to defence. The report calls for streamlined cybersecurity standards, stronger cross-border cooperation, and addressing the skills gap. Strengthening cybersecurity is not only a protective measure, but also a key driver to Europe’s competitiveness and its ambition to lead in advanced technologies.
Fostering Homegrown Cybersecurity Solutions
The EU Industrial Strategy stresses the importance of reducing dependency on foreign technologies, particularly from the United States and China, which dominate the global cybersecurity landscape. As Enrico Letta highlights in his report on the Future of the Single Market, achieving strategic autonomy is critical to ensuring Europe’s competitiveness on the global stage. Seeking to achieve technological sovereignty, the EU has made investments in cultivating homegrown cybersecurity solutions. Initiatives such as the Digital Europe Programme and the European Cybersecurity Competence Centre aim to promote the development of European cybersecurity firms. It is essential to foster innovation and self-reliance in the critical field of cybersecurity. Public-private partnerships will play a growing vital role in achieving these objectives. By encouraging collaboration between governments, industry leaders and academia, the EU can nurture a robust cybersecurity ecosystem that not only secures its industries but also contributes to its global competitiveness. A deeper integration within the Single Market as Letta has called for, is pertinent in this context. It is necessary to reduce fragmentation across member states and promote cross-border cooperation to avoid duplicated efforts and inefficiencies that have previously hampered Europe’s progress in scaling up cybersecurity firms. Additionally, Europe lags in developing cutting-edge technologies such as AI-driven cybersecurity and quantum computing security. There is a lack of R&D investment compared to global competitors, leaving gaps in innovation. Several firms continue to rely on hardware and software from non-EU countries, hindering the EU’s goal of achieving technological sovereignty. Increased investment in R&D and cybersecurity start-ups, alongside frameworks that support small and medium enterprises (SMEs), will be key to building a globally competitive cybersecurity ecosystem capable of ensuring Europe’s digital resilience.
In conclusion, robust cybersecurity is fundamental to the EU’s goal of enhancing its technological and industrial competitiveness. Furthermore, by strengthening its internal defences and fostering homegrown innovation, the EU can protect its industries from the increasing threat of cyberattacks. Harmonising efforts across member states is essential to create a cohesive and resilient cybersecurity framework. However, regulations and frameworks need to be fit for purpose and be able to evolve alongside the advancement of emerging technologies. Public-private partnerships will play a key role in driving innovation and scaling up cybersecurity solutions, such as those facilitated by the European Cyber Security Organisation (ECSO). However, to enable European cybersecurity firms to scale and compete globally, fragmented regulations and limited access to venture capital must be addressed. Ultimately, cybersecurity will not only protect Europe’s industrial base but also enhance its ability to innovate and compete on the global stage, independent of external powers. By addressing these challenges, Europe can strengthen its industrial competitiveness and secure its place in an increasingly interconnected but vulnerable digital world.
