European countries must come up with more ambitious plans to exploit IT - including more use of broadband - if they are to close the economic growth gap on the US.
In its first progress report on i2010 - the digital economy element of the European Union's strategy for growth and jobs - the European Commission warns that member states need to increase access to broadband, make it easier to circulate digital content around Europe and modernise public services.
Radio spectrum should be freed up for new applications, while more spending on IT and communications research, along with more cross-border competition in the telecom sector, will also help lift the competitive performance of the European economy, it said.
EU commissioner for information society and media Viviane Reding said Europe continues to lag behind its competitors in IT research - investing about half as much as the US. IT and communications are contributing less to European productivity growth than they did 10 years ago, she warned.
Reding said in a statement: "Only through stronger investment in ICT research and effective cross-border competition will we ensure that the great potential of ICT is used to lift our competitive performance across the economy."
Economic growth in the EU is forecast to be around two per cent in 2006 - below the annual GDP growth of 2.7 per cent in the US. The Commission argues that IT can help fill the gap - but that governments aren't acting quickly enough.
The report warned: "The EU needs to shift up a gear if we are not to see a slowdown in the transition to the knowledge economy."
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