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The paper identifies the leading role of digitalization and Industry 4.0 formation for economic development in modern conditions. It is emphasized that new digital technologies can help a united Europe to become more competitive. At the same time, the COVID-19 pandemic underlined the importance of economy’s digitalization and Industry 4.0 development. This also increased the risks to achieving Europe’s economic goals if the digital transformation is not carried out. The main declared provisions for the development of Industry 4.0 in the EU are given. It is determined that in fact these plans were not achieved before the economic downturn which was caused by the pandemic. An analysis of the impact of the COVID- 19 pandemic on EU macroeconomic indicators is proposed: the crisis has revealed the interdependence of global value chains and the value of Europe’s globally integrated Single Market. It is determined that in such conditions a new transition to a more digital and sustainable economic and industrial model in order to support and strengthen the EU’s desire for sustainable competitiveness has gained new meaning and relevance. The EU’s Multiannual Financial Plan for 2021-2027, has been analyzed. It aims to offset the economic and social damage caused by the coronavirus pandemic. Innovation, digital transformation, strategic infrastructure and the single market should be key to boosting the EU’s future growth. A large amount of budget funding of the European Union is aimed at economic recovery through the digital transformation and the formation of Industry 4.0. It is planned that this will help invest more in advanced digital skills and wider use of digital technologies in the economy and society, i.e. the formation of a base for Industry 4.0 further development. Although the effects of the pandemic on the EU economy are not yet fully visible, there is already a strategy to overcome them through the acceleration of innovation, the intensification of digital transformation and the development of Industry 4.0 in all EU countries. [ABSTRACT FROM AUTHOR]