The UK has fallen behind other countries in Europe in areas such as connectivity, digital skills and the integration of digital technology, the 2016 Digital Economy and Society Index (DESI) has revealed.
Released today by the European Commission, the DESI measures countries across the EU on their progress in key areas such as affordable broadband and business integration of cloud services in an attempt to create a "truly digital single market".
While the UK score is above the EU average, however, it is growing more slowly than the average. Denmark, the Netherlands, Sweden and Finland are leading the way, while Estonia, Germany, the Netherlands, Malta, Austria and Portugal are the fastest growing.
Apart from Sweden, all EU countries have improved their score, with the whole of Europe scoring 0.52 out of 1, an improvement from 0.5 in the previous year.
Alex Smith-Bingham, head of digital at Capgemini, said: "Whilst it's encouraging to see that the 2016 DESI shows some improvement in the digital transformation in Europe, it is worrying that progress is slowing.
"This is especially true in the UK where we are categorised as 'lagging behind'. That is, still above the average in Europe, but growing more slowly than the rest of the EU."
Compared to the rest of the world, European countries lead in business adoption of digital technologies, and Denmark, Finland and Norway are world leaders for digital public services. In terms of connectivity, however, Europe is beaten by South Korea and Japan.
According to a recent survey of UK start-ups ahead of the EU referendum, 81 per cent of respondents believe the UK should remain part of the EU.
High-speed broadband is available to 71 per cent of homes across Europe, and is on track to have complete coverage by 2020. Despite this, however, 45 per cent of Europeans don't have basic digital skills.
"The UK has a high rate of internet use and digital skills have increased substantially," Smith-Bingham continued. "However, this is not translating into young people entering the ICT workforce with evidence that STEM graduate numbers are significantly below those of a decade ago. Our digital economy is growing rapidly and we simply do not have the supply of the right digital skills to meet demand... And this is impacting on Britain's ability to compete on a global stage.
"The DESI aims to show where countries should turn their focus in terms of digital investment and it's clear that we need to prioritise digital skills. But it's not just up to the government, businesses must also make investments in building a digital workforce for the future, whether that's through graduate recruitment schemes, apprenticeship schemes or reaching young people throughout their early schooling."
A survey from tech charity Go ON released last year revealed that 12 million UK adults and 1.2 million SMBs do not have basic digital skills. While Greater London fared the best with 84 per cent of skilled adults, Wales was the worst with just 62 per cent.
Gunther H. Oettinger, commissioner for the Digital Economy and Society, said: "The EU makes progress, but too slowly. There is no room for complacency. Action is needed if we want to catch up with Japan, the USA and South Korea."
