22nd Oct 2020

EU economic growth hampered by careless research spending

  • E&Y: 'It is not the quantity of public funding of R&D and innovation, but rather its quality that hampers the EU's economic recovery' (Photo: kukkurovaca)

Failure to ensure that research and innovation money is spent on useful projects is hampering the EU's economic recovery, a new report has said.

Published on Wednesday (4 May), the study by Ernst and Young, the global accountancy firm, suggests that while the EU puts enough money towards R&D projects, the cash is carelessly spent.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"It is not the quantity of public funding of R&D and innovation, but rather its quality that hampers EU's economic recovery," says the survey, noting that while the Union had several different programmes designed to boost its innovation statistics over the past decade, it failed to reach targets it had set itself in 2000.

The lack of quality control has been compounded by having too many bosses nominally in charge of innovation, or aspects of it, within the European Commission.

While commission officials in the Enterprise and Industry Directorate General (DG) are in charge of programmes designed to support entrepreneurship, their colleagues in the Research DG look after funding of research while those in the Internal Market DG look after patent and copyright laws. State aid for companies, meanwhile, is dealt with by DG Competition.

The number of different people in charge is almost matched by the variety of innovation funds.

"There are so many different programmes for the funding of innovation that companies wishing to receive funding may have problems in realising where to go and for which line of budget to apply," says the report.

Another fundamental problem is the unclear division of power between member states and Brussels.

In several key sectors in which innovation policy would require a co-ordinated and even harmonised approach at the EU level ... national governments still retain their prerogatives," the study continues.

And while the EU has dedicated a key part of its new 10-year economic strategy to creating an "Innovation Union" it is unclear whether the "wealth of information" will once more create a "poverty of attention".

The report suggests the EU needs to shake up its understanding of innovation, drawn from policy thinking from the 1960s. Instead of supply-side innovation policies, the EU should devote more time and energy to the demand-side.

"The EU seldom lets industry and consumers decide which products and technologies are likely to lead to the best outcomes for society," says the report.

It also recommends rethinking how innovation is governed in the EU to ensure the European Commission has sufficient powers to design a meaningful innovation policy and improving public private partnerships to make better use of private capital.

A survey of industry stakeholders carried out by the report's authors found that 88.9 percent of respondents want stronger coordination of innovation policy at the EU level; 81.5 percent believe innovation is too focussed on competition rather than on investment incentives and almost all (96.3 percent) believe the EU should boost partnerships between industry and universities.


As the EU continues to struggle with the effects of the economic crisis, the importance of investing in innovation and research is increasingly been emphasized. But how much money is enough and where should it be spent? EUobserver investigates.

EU innovation efforts unknown

The efforts of the EU to turn the old continent into an “innovation union” are largely unknown to business leaders, according to a survey by global accounting firm Ernst & Young.

The Acta debate - will innovation be stifled?

Opponents of Acta, the controversial anti-counterfeiting treaty up for vote in the European Parliament in July, say, among other things, that it would stifle innovation. Advocates say the exact opposite.

News in Brief

  1. Commission to press Croatia on migrant 'abuse' at border
  2. Belarus opposition awarded 2020 Sakharov Prize
  3. Belgium's foreign minister in intensive care for Covid-19
  4. MEPs restrict CAP funding for bullfighting
  5. Coronavirus: Liège is 'the Lombardy of the second wave'
  6. UK to keep out EU nationals with criminal past
  7. Report: EU to restrict travel from Canada, Tunisia, Georgia
  8. Pope Francis supports same-sex civil unions


All eyes on EU court for decision on religious slaughter

The European Court of Justice is currently facing a major question: can religious freedom coexist with animal welfare? The decision of whether religious slaughter can continue is expected in a matter of weeks.


EU money used by neo-Nazi to promote Holocaust denial

A prominent Holocaust-denier has made the cover of an EU-funded newsletter, which was published by an avowed German neo-Nazi with a lengthy criminal record. The lack of clear labelling of the MEP behind it violates European Parliament rules.

Stakeholders' Highlights

  1. UNESDAMaking healthier diets the easy choice
  2. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  3. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  4. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  5. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  6. UNESDAReducing packaging waste – a huge opportunity for circularity

Latest News

  1. Nato and EU silent on Turkey, despite Armenia's appeal
  2. EU tells UK to decide on Brexit as deal 'within reach'
  3. EU farming deal attacked by Green groups
  4. France vows tough retaliation for teacher's murder
  5. All eyes on EU court for decision on religious slaughter
  6. 'Big majority' of citizens want EU funds linked to rule of law
  7. EU declares war on Malta and Cyprus passport sales
  8. EU Commission's Libya stance undercut by internal report

Join EUobserver

Support quality EU news

Join us