The UK vision for the EU's digital economy

The EU must take bold steps to create an open, flexible market with a regulatory framework that reflects the dynamic nature of the digital economy.

The UK's vision in 150 seconds:

What would it mean for consumers?

Unleashing the potential of the digital world to make life easier whilst building trust in the market.

  1. Content that's portable
  2. Fair pricing practices
  3. Protection for online shoppers
  4. Better control of your data
  5. Staying connected abroad
  6. Online public services

What would it mean for businesses?

Creating a level playing field that encourages fair competition and allows the best new ideas to flourish.

  1. One market, one online process
  2. Championing competition
  3. Paying the right amount of tax
  4. A tax regime that works for all
  5. Regulation fit for the digital age
  6. Transferable technology
  7. Data is beautiful
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The potential for the digital economy in Europe

Productivity and economic growth
€340bn growth

By fostering a digital single market, we could create €340bn in additional growth, according to the European Parliament.

Safe and affordable public services
€100bn saved each year

Estimates by the European Commission suggest potential savings of €100bn a year if all public procurement was online.

Confidence in doing business online
315m daily web users

The Commission's digital scoreboard reports that 315 million Europeans use the internet daily, and 360 million each week - reflecting huge demand for online services.

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Prime Minister David Cameron:
As the digital economy expands there are more and more opportunities for companies across Europe to grow, create jobs and help consumers to secure a better deal. All too often however these opportunities are being stifled by burdensome regulations and differing national regimes. It is time to put this right by completing the digital single market once and for all and unlocking the growth that this market could generate.

Europe's electronic communications landscape has transformed into a digital world...

This world is dominated by internet platforms, constantly altered by new and at times disruptive technologies, and full of opportunities for start-ups that pay no heed to geographical boundaries when creating new products and services.

Europe starts from a great position. But the continent's patchwork of national markets and outdated legislation looks increasingly anachronistic in this new world. Compared especially to the United States, it is still too hard to start, fund and scale-up a digital business so that it can compete globally.

3All three of the world's most 'technologically ready' countries are in the EU. And eleven EU Member States are in the world's top 20.

The UK proposes that the EU take bold steps to create an open, flexible market with a regulatory framework that reflects the dynamic nature of the digital economy.

We must avoid knee-jerk reactions to the risks that accompany change. These risks can be managed by establishing a clear, simple set of rules that safeguard the rights of all those legitimately taking advantage of the online economy.

We must also ensure that in an interdependent world, where supply chains are not just global, but virtual, we use trade agreements to build a global digital economy.

This site looks at the digital single market from two points of view: that of consumers, and that of entrepreneurs trying to break into the market. The market still doesn't work for either of these groups in the way it does for the global players.

We should not flinch from disrupting the status quo: in this phase of digitisation, even the giants of today - not long ago start-ups themselves - need to be open to challenge.

The digital single market must be digital by default. It should be even easier to operate online across Europe than it is to do things offline in a single state. Online businesses should go through administrative processes once, not 28 times, and football fans should be able to stream matches they've already paid for wherever they go.

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Mobility and security – a Europe for digital consumers

bn 4 5 5 6 1 2
A Commission study estimated that a fully functioning single market in e-commerce could deliver benefits of €154bn a year for consumers - from greater choice and lower online prices.

Having the internet in your pocket means you feel you should be able to shop anywhere, at any time, and buy from the widest range of providers.

Consumers should not be penalised for using digital services or buying goods outside their home Member State. They should be given confidence that their rights will be protected and their data used in a responsible and transparent way, on the basis of informed consent.

  1. Content that's portable

    Consumer spending on digital video has increased from €120m to €1.2bn since 2009

    Consumers should be able to buy a wide range of digital products and services and use them wherever they are in the EU, just as they can with physical products.

    Their online subscriptions to music or film should still be available when they travel and they should be able to buy online content not easily accessible from a home provider: Europe's creative output is one of its richest resources, and those who want to enjoy it should be able to pay to do so, even when it is only sold in another Member State.

    At the same time, Europe needs to maintain choice and diversity by protecting intellectual property in a way that ensures a flourishing and innovative creative sector. Our enforcement of the intellectual property regime must have teeth.

  2. Fair pricing practices

    Prices for digital products and services should not change unfairly on the basis of where consumers come from in the EU.

    Whilst 47% of EU consumers have shopped online with a provider based at home, only 15% have bought from providers elsewhere in the EU

    When businesses raise their prices unfairly on the basis of the nationality of a consumer, their Internet Protocol or physical address, consumers suffer - and trust in the market decreases.

    Prices of course can differ legitimately, for example because of sales tax or delivery costs. However, there should be no extra charges for making a payment simply because an online retailer is in one Member State and your card issuer in another, and national rules on promotions should not be allowed to stop consumers from one country taking advantage of an online offer that others can access.

    There ought to be transparency about pricing and businesses shouldn't unfairly exploit consumers' trust in the single market.

  3. Protection for online shoppers

    There should be a clear set of online consumer rights that are 100% enforceable by consumers.

    It can be daunting enough to buy cross-border without worrying that your parcel won't be delivered quickly or that a rogue business will mean it's impossible to get help if there's a problem.

    The EU needs a common set of consumer rights tailored to the purchase of digital content.

    These - and Europe's other consumer protections - need to be easy for consumers to understand and act on, and properly enforced by all Member States working together.

    The EU must also find creative ways of making it easier for businesses to meet their obligations, as it can be difficult to understand the legal requirements of a consumer's home market.

  4. Better control of your data

    Consumers must be able to exert better control over their data and should be aware of how it will be used by businesses.

    Data is the lifeblood of the digital economy. We all benefit from greater insight into consumer behaviour, which drives innovation. But consumers need a data protection framework they can trust if they are to be willing for their data to be used to unlock new and better services.

    We need to be prepared for the next evolution in the digital economy, which will be driven by consumers making choices about how to use their own data. People must be able to move their data from one service provider to another, or use it themselves.

    Of course new technologies bring new risks, so we need to set data protection in a broader framework that ensures the security of citizens. But the proliferation of data is inevitable. If we don't create the right climate for seizing the opportunities this brings, we can be confident that data-driven innovation will continue elsewhere and simply be sold into the EU.

  5. Staying connected abroad

    It must be possible to get online whilst in other European countries on the same terms as at home.

    Photo of a phone's roaming cost warning message In a mobile world, being charged a fortune to receive emails or use apps when there's supposed to be a single market feels unfair. SMEs also need to be free to do business on the move.

    But the end of roaming charges must not create a disproportionately difficult environment for the challenger operators that are keeping home prices low. The freedom for consumers to use their devices anywhere must go hand in hand with the freedom for operators to operate anywhere.

    This means we need infrastructure access for operators at a reasonable price via a reduction in wholesale costs.

  6. Online public services

    Public services should be available to use online, saving people time, money, and the frustration of paper-based processes.

    Image of

    Putting 25 public services online at is forecast to save £250m a year.

    By digitising services and requiring consumers to submit data less frequently, public services could be provided more efficiently and more securely for everyone.

    Consumers should be able to use their digital identity to prove that they are who they say they are in a safe and secure way, confident that their data is protected when accessing online services in all Member States.

    Where barriers prevent this also being available in the private sector, we should build on the existing regulation on digital identity to tackle these.

    These tools have the potential to give consumers access to banking, transport and other services online without having to go through paper-based processes.

Innovation through competition - an economy for digital entrepreneurs

The EU's digital market place: 500,000,000 consumers, across 28 nations - plus those in the wider European Economic Area

The internet offers innovators unlimited ways of offering better products and services, as long as we don't have regulation that is easy to comply with for the big incumbents but a struggle for all other businesses.

We have to design rules that help new entrants by providing a level playing field, not an obstacle course that defeats many would-be online exporters at the first hurdle.

The Commission's new investment plan highlights the need to remove barriers to service provision across the EU - this approach should apply equally to the digital market.

  1. One market, one online process

    Online businesses should register once to operate everywhere in the EU.

    There should be a single process, valid across the EU, for:

    • Registering a website domain name, with no requirement for a physical address in the country providing the name.
    • Enabling companies to be formed within 24 hours, with the possibility to fulfil all company law requirements electronically.
    • Registering to pay VAT on all e-commerce within the EU.
    • Navigating national identity requirements through a secure, business-friendly, cross-border electronic identity process.
    • Finding information on how to trade on-line in any Member State.
  2. Championing competition

    New entrants with new ideas must not be frozen out of established markets.

    Data driven innovation could deliver €330bn in economic benefits to the EU by 2020

    The importance of data has changed the dynamic of the online economy.

    The EU needs to look again at whether the competition framework remains fit for purpose, but we need an accurate understanding of online markets before jumping to conclusions.

    The European competition regime has a history of robust enforcement which breaks down incumbent power where there is abuse. It needs to continue to do this in the context of a data-driven economy.

    If, and only if, the economic evidence shows that there are unacceptable distortions of the market, then the Commission should of course consider all the remedies available to it. As digital markets change rapidly, it should also conclude cases much more quickly.

    An open internet is absolutely essential to ensure the emergence of new and innovative business models. It's therefore vital to prevent operators from blocking or throttling rival services.

    But in safeguarding net neutrality we must not be too prescriptive. By creating conditions which support challenger businesses, Europe will be doing the single most important thing to help launch winning European ideas into global markets.

  3. Paying the right amount of tax

    Online businesses should pay the right amount of tax.

    Within Europe, tax rules should be applied consistently to all companies. Digital businesses should pay the appropriate rate of tax on their profits in the countries where they generate those profits.

    Member States and the Commission should work together to ensure that internationally agreed rules can be introduced into the EU once they are finalised. This will be the most effective means of tackling tax avoidance.

    The OECD will consider specific solutions to address digital business models by the end of 2015 if recommendations on other base erosion and profit shifting (BEPS) Action Points do not go far enough. Member States should consider specific proposals upon conclusion and assessment of the OECD work.

  4. A tax regime that works for all

    The European tax regime should encourage entrepreneurship.

    In the UK, businesses can get advice and information about VAT online, and half a million businesses have signed up for an online tax account.

    The process for collecting VAT has to work for small and micro businesses operating across borders, otherwise many will be discouraged from selling outside their home Member State.

    The changes to VAT rules that took effect on 1 January 2015 ensure that large corporates pay tax fairly. But they were agreed before the rise of small, agile online businesses. Some of these may face disproportionate difficulties in meeting the new requirements.

    So, in addition to a single point for VAT registration and guidance, consideration should be given to a single cross-border VAT threshold below which businesses should not have to pay VAT or file a VAT return.

    Once a micro-business is big enough to reach this threshold, the Mini One Stop Shop service should relieve the burden where they operate across borders.

  5. Regulation fit for the digital age

    The way that Europe legislates must meet the requirements of the digital economy.

    Regulatory burdens The internet allows start-ups to gain millions of new customers in a matter of months. This phase can make or break their business.

    If we want European companies to compete globally, we need to support them when they're growing. While innovative businesses are scaling up, the EU should lighten the load from regulation designed for bigger players.

    All new legislative proposals should be innovation-friendly and subject to a digital stress test as part of their impact assessment. And the existing body of law needs to be reviewed to ensure it's still fit for the digital age.

  6. Transferable technology

    New technologies need to be interoperable and transferable across borders, so they develop in a continent-wide market.

    Cloud computing, data science, manufacturing breakthroughs like 3D printing and the 'internet of things' will be enormous sources of growth - under the right conditions.

    The EU needs to help European firms be early adopters of these technologies. It should ensure that Europe is in the lead in establishing or exploiting:

    • common definitions for off-the-shelf products and services;
    • simple contracts that can be used cross-border by both businesses and consumers;
    • and technical standards that allow interoperability where it's needed, while retaining the flexibility necessary for continual innovation.

    This would stimulate the development of European players in new global markets.

    In telecoms markets, operators should be able to purchase standardised infrastructure access across the EU at a reasonable price. This will enable them to provide competitive telecommunications services to businesses operating across borders.

  7. Data is beautiful

    Data fuels creativity and innovation - we must make sure that anonymised data is available to be used.

    Data visualisation Researchers and entrepreneurs can put open data to work, and the bigger the data sets, the better the results.

    Member States and the Commission should support data-driven creativity by adopting the Open Data Charter and guaranteeing common standards for the publication of government data.

    This would mean that public sector open data from across Europe would be available for everyone to use and reuse. Social problems would be better understood and public services would be improved.

    Likewise, the EU should support copyright exceptions to allow research, education, and text and data mining to take place across the market. We must also reject copyright levies in all forms. This would provide a major boost to European innovation.

Download the paper as a PDF

Download the UK's paper now - in English
Download the UK's paper now - in French
Download the UK's paper now - in German
Download the UK's paper now - in Italian
Download the UK's paper now - in Spanish

Supporting technical non-papers

Technical non-paper: e-commerce - further detail on UK proposals for e-commerce

Business Secretary Speech on the Single Market

Vince Cable, UK Business Secretary and Liberal Democrat MP gives the Robert Schuman lecture at the Lisbon Council in Brussels and argues for a re-invigorated digital single market.

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