Commission urges member states to boost R&D investments

EU governments must take action to close the innovation gap with global competitors, according to the European Commission’s annual European Semester report, its main tool for coordinating economic and social policies across the bloc.

The main objective of the European Semester is to ensure fiscal sustainability, but this year’s report, published on June 4, also sets out policy recommendations for each country in light of the EU’s new competitiveness agenda.

It highlights insufficient investment in research and innovation (R&I), structural barriers to translating research into commercial success and the slow adoption of digital technologies as key challenges requiring action at national level to boost Europe’s economic performance.

“This year’s recommendations are the continuity of our reform agenda and aim at emboldening member states in their strive for more innovation, more decarbonised industries and more strategic autonomy,” said Stéphane Séjourné, Commission executive vice-president for prosperity and industrial strategy.

More than two decades ago, EU countries set the target of raising public and private R&D spending to 3% of GDP, but today the EU average hovers around 2.2%, far below countries such as the US and South Korea.

The report calls on member states to increase public and private R&D investments, while strengthening collaboration between scientific institutions and businesses and promoting the commercialisation of research results.

There are also recommendations related to improving access to finance for start-ups and innovative companies. “It must be easier, cheaper and faster for scientific discoveries and new technologies to emerge from laboratories and reach the market and for start-ups to scale-up, fully exploiting the potential of the Single Market,” the report states.

“It is encouraging to see the emphasis on R&I, and the recognition that both public and private investment are needed to meet the 3% of GDP target,” said Mattias Björnmalm, secretary general of the CESAER university association, which has been calling for R&I spending to be included in the European Semester.

Last year, research ministers reaffirmed their commitment to reaching the non-binding 3% target by 2030, but this is not enough, said Björnmalm. Meeting this objective requires action from finance ministers. “Here, the European Semester can play a key role by linking political commitments to financial implementation and by helping bring focus to and ensure follow up on these issues through the economic and financial affairs council,” he said.

Other country-specific recommendations in the report include promoting greater coordination among public research organisations, enhancing the attractiveness and mobility of research careers, and expanding public support instruments for innovation such as tax incentives and grants, particularly for SMEs.

More progress needed

This is the second year in a row that the European Semester has put significant emphasis on the need to invest more in R&I. However, in its review of the progress in implementing last year’s recommendations, the latest report highlights R&I as one of the areas where less progress has been made.

Additional mechanisms may be needed to ensure national governments address the challenges to R&I performance highlighted by the Commission. Reforming the European Semester to consider public and private research and development spending in member states was one of the recommendations of the expert group led by Manuel Heitor, set up to advise the Commission on the next Framework Programme.

“The European Semester is not perfect, but it has demonstrated an ability to catalyse progress in other areas. Applying its mechanisms more systematically to R&D investments is therefore an important step forward,” said Björnmalm. “As we continue to develop better frameworks in the future, we should make full use today of the tools we already have at our disposal.”

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In its recently published start-up and scale-up strategy, the Commission pledges to use country-specific recommendations in the Economic Semester to improve innovation policy. It also wants to implement a competitiveness coordination tool to align industrial and research policies and investments at the EU and national levels.

In addition to the R&I programmes managed at EU level, member states have the option of using European funds such as Cohesion funds and the recovery and resilience facility to support innovative projects and reform their R&I systems.

So far, EU states have allocated €55 billion to support R&I from the facility, a €650 billion fund made up of grants and loans to help countries recover from the economic impact of the COVID-19 pandemic.