Vulcan View: The latest EU developments 2 June – 6 June

Business Ambition: Ibec launches policy papers on skills and innovation

Ibec has published its latest two policy position papers as part of its Business Ambition campaign. The first paper focuses on skills, and the second on research and innovation. The campaign is designed to offer policymakers clear, actionable solutions to strengthen Ireland’s ability to adapt and compete in the global economic landscape.

Ibec’s skills ambition

The paper encouraged the Government to capitalise on the National Training Fund (NTF) to ensure a sufficient pipeline of skills that supports the long-term competitiveness of Ireland’s labour market. Ibec recognised the unique competitive potential of the NTF, particularly in relation to future-proofing Ireland’s workforce. As the global economy evolves, the workforce must move with it and adapt to the changes brought by “AI, digital and green transitions, and demographic change”. The group called on the Government to fully leverage the NTF and set a clear cap on the surplus to support skills development.

Furthermore, the group believes that employers should play a more active role in shaping the strategic direction and allocation of funding from the NTF. This would ensure alignment with industry needs.

The paper recommends the creation of a new Lifelong Learning Action Plan to address skills gaps and support workforce development. Persistent skills gaps are undermining Ireland’s competitiveness. As workforce needs evolve rapidly, the impact of these gaps, ranging from limited innovation to rising costs, is becoming more pronounced. Notably, Ireland’s lifelong learning rate stands at 16 per cent (Q4, 2024). In comparison, Sweden stands at 42 per cent while Denmark reports a rate of 32 per cent. Without decisive action to expand lifelong learning and upskilling, the competitiveness of Ireland’s workforce will continue to lag behind its European counterparts.

Ibec’s innovation ambition

The group advocated for increased public investment in research and innovation, aiming for 1 per cent of GNI by 2035, and proposed the establishment of a new multiannual fund to support third-level institutions in achieving their long-term objectives.

Additionally, access to innovation support for the industry, particularly the R&D tax credit, needs to be improved. Despite its significance, credit is often underutilised due to its complexity and the administrative burdens involved. According to Ibec, making the credit more accessible and expanding its scope to include process innovation would better align with global R&D practices and help retain intellectual property within Ireland’s tax base.

This comes as Minister Paschal Donohoe confirmed that an enhanced R&D tax credit will be included in Budget 2026. It will focus on driving innovation and protecting investment. Minister Donohoe emphasised the Government’s commitment to maintaining a stable tax environment for investors in the coming years. Furthermore, the Minister acknowledged the importance of industry feedback in shaping policy, ensuring that business support measures are adaptable and support competitiveness in an unpredictable global landscape. Business-related tax issues remain a priority for the Government, which will continue engagement through public consultations and the business tax stakeholder forum.

To realise the ambitions of Impact 2030, a multiannual, budgeted funding strategy is essential. While the strategy outlines critical actions to advance Ireland’s research and innovation agenda, progress is hindered by the absence of dedicated funding and coordination.

Ibec’s key recommendations include:

• Establishing a stakeholder forum with strong industry representation to guide implementation.
• Securing a ringfenced R&I budget in the next Multiannual Financial Framework (MFF) to close the growing innovation gap between Europe, the U.S., and China.
• Ensuring increased R&I investment strengthens public-private partnerships that support knowledge transfer and commercialisation.

European Commission unveils new International Digital Strategy

On Thursday, 5 June, the European Commission presented a comprehensive new International Digital Strategy. This proposal outlines how the EU aims to navigate the rapidly evolving digital world, foster strong international partnerships, and champion a digital future that aligns with its core values. The strategy comes at a crucial time, as the digital revolution continues to reshape global economies and societies amidst an increasingly complex geopolitical landscape.

The EU’s new International Digital Strategy positions the bloc as a stable and reliable partner, ready to collaborate with countries around internationally on their digital journeys. The strategy isn’t just about looking outwards; it also complements the EU’s internal efforts to enhance its competitiveness in key technologies, such as Artificial Intelligence. However, a core principle is that of shared progress. The EU is committed to supporting its partners in their own digital transitions, ensuring that the benefits of digitalisation are widespread. At the core of this vision is the goal of establishing a rules-based global digital order—one that is open, secure, and deeply rooted in fundamental European values such as democracy, human rights, and the rule of law.

The EU’s three-pronged approach

To achieve its ambitious goals, the EU has outlined three main pillars for its International Digital Strategy:

1. Expanding international partnerships: The EU aims to broaden its network of digital allies. This involves strengthening existing Digital Partnerships and Dialogues with countries worldwide, as well as forging new ones. A new “Digital Partnership Network” will be established to foster greater collaboration. The ultimate goal is to bolster the technological competitiveness and security of both the EU and its international partners. This builds on established frameworks like Trade and Technology Councils and various digital dialogues.
2. Deploying an EU tech business offer: The strategy involves a concerted effort to combine investments from both the EU’s public and private sectors. This financial and technical support will be channelled toward helping partner countries advance their digital transitions. Key initiatives will include support for what the EU terms “AI Factories,” investments in secure and trusted digital connectivity (such as undersea cables or satellite constellations), the development of Digital Public Infrastructure (DPI), and bolstering cybersecurity capabilities in partner nations.
3. Strengthening global digital governance: The EU will actively promote a global digital order that is predictable and based on established rules and international law. This involves championing its values on the world stage, ensuring that the digital transformation upholds principles of social cohesion and protects individual freedoms.

Priorities

The EU’s collaborative efforts with other partners will focus on several key priority areas:

• Secure and trusted digital infrastructure: This is fundamental for the development of critical sectors like energy, transport, finance, and health.
• Emerging technologies: Cooperation will be key in cutting-edge fields such as AI, next-generation mobile networks (5G and 6G), semiconductors (the essential building blocks of electronic devices), and quantum technologies.
• Values-based digital governance: The focus will be on ensuring that digital governance models foster social cohesion, protect human rights, and uphold democratic principles.
• Cybersecurity: Strengthening the cyber defences of partner countries is seen as a direct investment in the EU’s security and stability.
• Digital identities and digital public infrastructure: The EU will work towards arrangements for mutual recognition of digital identities with key partners. This aims to simplify cross-border business operations and make it easier for citizens to move and access services.
• Online platforms: Efforts will continue to promote the protection of children online, safeguard freedom of speech, support democracy, and ensure citizens’ privacy in the digital spheres.

Conclusion

The EU’s International Digital Strategy marks a clear ambition to be a leading and principled player in shaping the global digital landscape. However, this outward-looking strategy is also tempered with a dose of realism regarding the EU’s own long-term goals for technological sovereignty, often referred to as “strategic autonomy.” While the immediate future will see an emphasis on building robust international partnerships – acknowledging that, for instance, decoupling from the U.S. tech ecosystem built over decades is not feasible overnight – this does not mean abandoning the long-term ambition of strengthening Europe’s own capabilities.

Compliments of Vulcan Consulting