EU

UK-EU cyber dialogue strengthens policy alignment

The third UK-EU Cyber Dialogue was held in Brussels on 9 and 10 December 2025, bringing together senior officials under the UK-EU Trade and Cooperation Agreement to strengthen cooperation on cybersecurity and digital resilience.

The meeting was co-chaired by Andrew Whittaker from the UK Foreign, Commonwealth and Development Office and Irfan Hemani from the Department for Science, Innovation and Technology, alongside EU representatives from the European External Action Service and the European Commission.

Officials from Europol and ENISA also participated, reinforcing operational and regulatory coordination rather than fragmented policy approaches.

Discussions covered cyber legislation, deterrence strategies, countering cybercrime, incident response and cyber capacity development, with an emphasis on maintaining strong security standards while reducing unnecessary compliance burdens on industry.

Both sides confirmed that the next UK-EU Cyber Dialogue will take place in London in 2026.

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Europe risks falling behind without telecom scale, Telefónica says

Telefónica has called for a shift in Europe’s telecommunications policy, arguing that market fragmentation is undermining investment, digital competitiveness, and the continent’s technological sovereignty, according to a new blog post from the company.

In the post, Telefónica says Europe’s emphasis on maximising retail competition has produced a highly fragmented operator landscape. It cites industry data showing the average European operator serves around five million customers, far fewer than peers in the United States or China.

The company argues that this lack of scale explains Europe’s lower per-capita investment in telecoms infrastructure and is slowing the rollout of technologies such as standalone 5G, fibre networks, and sovereign cloud and AI platforms.

Telefónica points to recent reports by Mario Draghi and Enrico Letta as signs of a policy shift, with EU institutions placing greater weight on investment capacity, resilience, and dynamic efficiency alongside traditional competition objectives.

The blog post concludes that Europe faces a strategic choice between preserving fragmented markets or enabling responsible consolidation. Telefónica says carefully regulated mergers could support sustainability, reduce regional digital divides, and strengthen Europe’s digital infrastructure.

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EU moves to tax low-value e-commerce parcels

The European Commission welcomed the decision by EU Member States to introduce a €3 customs duty on low-value e-commerce parcels arriving from third countries.

A measure, which enters into force in July 2026, that applies to items valued below €150 and aims to restore fair competition instead of allowing online imports to benefit from longstanding exemptions.

The move responds to the rapid growth of cross-border e-commerce shipments and will operate as a temporary solution until the EU Customs Data Hub becomes fully operational in 2028.

Until then, the Council and the Commission will coordinate legal changes and IT systems to ensure smooth implementation and effective customs supervision across the Union.

Once the Customs Data Hub is in place, a permanent customs duty regime will replace the temporary measure, offering authorities a comprehensive view of goods entering and leaving the EU.

The €3 duty applies only to parcels sent directly to consumers and remains separate from ongoing negotiations on a handling fee intended to offset the rising operational costs faced by customs authorities.

The reform builds on earlier Commission proposals to remove duty exemptions for low-value parcels and forms part of the most extensive overhaul of EU customs rules in decades.

European institutions argue that modernised customs controls are essential instead of relying on outdated frameworks, particularly as global e-commerce volumes continue to expand.

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AI use grows among EU enterprises in 2025

In 2025, one in five EU enterprises with at least ten employees reported using AI technologies, marking a significant rise from 13.5% in 2024. AI adoption has more than doubled since 2021, showing its increasing use in business across the EU.

Nordic countries led the way, with Denmark at 42%, Finland at 37.8%, and Sweden at 35%. In contrast, Romania, Poland, and Bulgaria had the lowest adoption rates, ranging from 5.2% to 8.5%.

Almost all EU member states recorded increases compared with the previous year, with Denmark, Finland, and Lithuania showing the most significant gains.

Enterprises mainly used AI to analyse text, generate multimedia, produce language, and convert speech into machine-readable formats. Analysing written language saw the most significant growth in 2025, followed by content generation, highlighting AI’s expanding role in communication and data processing.

Rising AI adoption is also linked to efficiency gains and innovation across EU businesses. Companies report using AI to streamline operations, support decision-making, and enhance customer engagement, signalling broader economic and technological impacts.

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EU supports Germany’s semiconductor expansion

The European Commission has approved €623 million in German support for two first-of-a-kind semiconductor factories in Dresden and Erfurt.

A funding that will help GlobalFoundries expand its site to create new wafer capacity and will assist X-FAB in building an open foundry designed for advanced micro-electromechanical systems.

Both projects aim to increase Europe’s strategic autonomy in chip production, rather than allowing dependence on non-European suppliers to deepen.

The facility planned by GlobalFoundries will adapt technologies developed under the IPCEI Microelectronics and Communication Technologies framework for dual-use needs in aerospace, defence and critical infrastructure.

The manufacturing process will take place entirely within the EU to meet strict security and reliability demands. X-FAB’s project will offer services that European firms, including start-ups and small companies, currently source from abroad.

A new plant that is expected to begin commercial operation by 2029 and will introduce manufacturing capabilities not yet available in Europe.

In return for public support, both companies will pursue innovation programmes, strengthen cross-border cooperation, and apply priority-rated orders during supply shortages, in line with the European Chips Act.

They will also develop training schemes to expand the pool of skilled workers, rather than relying on the limited existing capacity. Each company has committed to seeking recognition for its facilities as Open EU Foundries.

The Commission concluded that the aid packages comply with the EU State aid rules because they encourage essential economic activity, show apparent incentive effects and remain proportionate to funding gaps identified during assessment.

These measures form part of Europe’s broader shift toward a more resilient semiconductor ecosystem and follow earlier decisions supporting similar investments across member states.

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EU survey shows strong public backing for digital literacy in schools

A new Eurobarometer survey finds that Europeans want digital skills to hold the same status in schools as reading, mathematics and science.

Citizens view digital competence as essential for learning, future employment and informed participation in public life.

Nine in ten respondents believe that schools should guide pupils on how to handle the harmful effects of digital technologies on their mental health and well-being, rather than treating such issues as secondary concerns.

Most Europeans also support a more structured approach to online information. Eight in ten say digital literacy helps them avoid misinformation, while nearly nine in ten want teachers to be fully prepared to show students how to recognise false content.

A majority continues to favour restrictions on smartphones in schools, yet an even larger share supports the use of digital tools specifically designed for learning.

More than half find that AI brings both opportunities and risks for classrooms, which they believe should be examined in greater depth.

Almost half want the EU to shape standards for the use of educational technologies, including rules on AI and data protection.

The findings will inform the European Commission’s 2030 Roadmap on digital education and skills, scheduled for release next year as part of the Union of Skills initiative.

A survey carried out across all member states reflects a growing expectation that digital education should become a central pillar of Europe’s teaching systems, rather than an optional enhancement.

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Norges Bank says digital krone not required for now

Norway’s central bank has concluded that a central bank digital currency is not needed for now, ending several years of research and reaffirming that the country’s existing payment system remains secure, efficient, and widely used.

Norges Bank stated that it found no current requirement for a digital krone to maintain confidence in payments. Cash usage in Norway is among the lowest globally, but authorities argue the present system continues to serve consumers, merchants, and banks effectively.

The decision is not final. Governor Ida Wolden Bache said the assessment reflects timing rather than a rejection of CBDCs, noting the bank could introduce one if conditions change or if new risks emerge in the domestic payments landscape.

Norges Bank continues to examine both retail and wholesale models under the broader EU AI Act framework for digital resilience. It also sees potential in tokenisation, which could deliver efficiency gains and lower settlement risk even if a full CBDC is not introduced.

Experiments with tokenised platforms will continue in collaboration with industry partners. At the same time, the bank prepares a new report for early next year and monitors international work on shared digital currency infrastructure, including a possible digital €.

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EU advances ambitious gigafactory programme for AI leadership

The Council has agreed on a significant amendment to the EuroHPC Joint Undertaking regulation, aiming to establish AI gigafactories across Europe alongside a new quantum pillar.

The plan advances earlier efforts to build AI factories and redirects unused EU funds toward larger and more ambitious facilities. Up to five gigafactories are expected, supported through public and private partnerships that promise a stronger technological base for European research and industry.

AI gigafactories will combine high-performance computing, energy-efficient data centres and automated systems to give Europe world-class AI capacity. The regulation sets out firm rules for funding and procurement while protecting start-ups and scale-ups.

It also allows gigafactories to be spread across multiple countries, creating a flexible model that can strengthen European resilience, competitiveness and security instead of relying heavily on American or Chinese infrastructure.

An agreement that updates the governance of EuroHPC and introduces safeguards for participation from partners outside the EU. Quantum research and innovation activities will move from Horizon Europe to EuroHPC in order to consolidate work on critical technologies.

In a shift that aims to widen the impact of supercomputing and quantum infrastructure while supporting the development of essential skills for science and industry.

The next stage involves the European Parliament delivering its opinion on 17 December.

A final Council adoption will follow once legal and linguistic checks have been completed, marking a decisive step towards Europe’s new AI and quantum capability.

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China pushes global leadership on AI governance

Global discussions on artificial intelligence have multiplied, yet the world still lacks a coherent system to manage the technology’s risks. China is attempting to fill that gap by proposing a new World Artificial Intelligence Cooperation Organisation to coordinate regulation internationally.

Countries face mounting concerns over unsafe AI development, with the US relying on fragmented rules and voluntary commitments from tech firms. The EU has introduced binding obligations through its AI Act, although companies continue to push for weaker oversight.

China’s rapid rollout of safety requirements, including pre-deployment checks and watermarking of AI-generated content, is reshaping global standards as many firms overseas adopt Chinese open-weight models.

A coordinated international framework similar to the structure used for nuclear oversight could help governments verify compliance and stabilise the global AI landscape.

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EIB survey shows EU firms lead in investment, innovation and green transition

European firms continue to invest actively despite a volatile global environment, demonstrating resilience, innovation, and commitment to sustainability, according to the European Investment Bank (EIB) Group’s 2025 Investment Survey.

Across the EU, companies are expanding capacity, adopting advanced digital technologies, and pursuing green investment to strengthen competitiveness.

Spanish firms, for example, are optimistic about their sector, prioritising capacity growth, using generative AI, and investing in energy efficiency and climate risk insurance.

Digital transformation is accelerating across the continent. Austrian and Finnish firms stand out for their extensive adoption of generative AI and multiple advanced digital tools, while Belgian companies excel in integrating digital technologies alongside green initiatives.

Czech firms devote a larger share of investment to capacity expansion and innovation, with high engagement in international trade and strategic use of digital solutions. These trends are highlighted in country-level EIB reports and reflect broader European patterns.

The green transition remains central to corporate strategies. Many firms actively reduce emissions, improve energy efficiency, and view sustainability as a business opportunity rather than a regulatory burden.

In Belgium, investments in energy efficiency and waste reduction are among the highest in the EU, while nearly all Finnish companies report taking measures to reduce greenhouse gases.

Across Europe, firms increasingly combine environmental action with innovation to maintain competitiveness and resilience.

Challenges persist, including skills shortages, uncertainty, high energy costs, and regulatory complexity. Despite these obstacles, European businesses continue to innovate, expand, and embrace international trade.

EIB surveys show that firms are leveraging technology and green investments not only to navigate economic uncertainty but also to position themselves for long-term growth and strategic advantage in a changing global landscape.

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