COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A renewed European Agenda for Research and Innovation - Europe's chance to shape its future The European Commission's contribution to the Informal EU Leaders' meeting on innovation in Sofia on 16 May 2018
Date: 2018-05-15
Institutions: European Commission, Secretariat-General
Subjects: EU research policy, European Structural and Investment Funds, State aid, diffusion of innovations, digital literacy, innovation, investment, research and development, research body, university

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.5.2018 COM(2018) 306 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A renewed European Agenda for Research and Innovation - Europe's chance to shape its future  The European Commission's contribution to the Informal EU Leaders' meeting on innovation in Sofia on 16 May 2018  
 
 
"Our future cannot remain a scenario, a sketch, an idea amongst others. We have to 
prepare the Union of tomorrow, today." 

Commission President Jean-Claude Juncker 
State of the Union, Strasbourg, 13 September 2017 

"Research and Innovation are crucial for our future. They are the only way to 
simultaneously and sustainably tackle low economic growth, limited job creation and 
global challenges such as health, and security, food and oceans, climate and energy." 

European Commission's contribution to the Informal leaders' meeting on 23 February 
2018 

"We will allow for the necessary room for manoeuvre at the various levels to strengthen 
Europe's innovation and growth potential." 

Rome Declaration, Rome, 25 March 2017 

1 

 
 
 
 
 
 
 
 
 
 
 
 
 
The European Commission welcomes the decision of the President of the European Council 
to schedule a debate among Leaders on Research and Innovation and the steps necessary to 
ensure  Europe's  global  competitiveness.  This  Communication  presents  a  set  of  concrete 
actions to boost the EU Research and Innovation agenda and to feed the informal discussion 
that the Heads of State or Government will hold in Sofia on 16 May 2018. 

1. Europe's chance to invest in the future 

Investing  in  research  and  innovation  is  investing  in  Europe’s  future.  It  helps  us  to  compete 
globally  and  preserve  our  unique  social  model.  It  improves  the  daily  lives  of  millions  of 
people here in Europe and around the world, helping to solve some of our biggest societal and 
generational challenges. From making 1.6 million Ebola vaccine doses available, to creating a 
battery 100 times more powerful than ordinary ones, through to developing hydrogen fuel cell 
powered buses for our cities, research and innovation is everywhere around us. 

This  reflects the fact  that  society  can only  move forward as  fast as  it innovates.  It can  only 
provide  lasting  prosperity  if  it  makes  the  most  of  the  knowledge,  entrepreneurial  spirit  and 
productivity  of  its  people.  And  it  shows  that  any  economy  can  only  stay  ahead  of  the 
competition if it stays at the frontier of cutting-edge research and innovation.  

This  is  the  challenge  facing  our  Union  today  as  we  seek  to  maintain  and  improve  the 
European  way  of  life.  It  is  time  to  invest  in  the  future.  Technology-driven  innovations,  the 
increasing  digitisation  of  all  sectors  and  global  megatrends  are  changing  the  way  we  live, 
offering  huge  opportunities,  but  also  creating  new  challenges.  As  this  trend  accelerates,  the 
need to innovate will be ever more acute. Countries around the world are investing massively 
on  research  and  innovation  in  all  areas  of  the  economy.  This  is  intensifying  global 
competition and threatens the leading competitive position of Europe in key industrial sectors.  
Deepening  Europe’s  innovation  capability,  ensuring  the  necessary  investments,  and 
accelerating the diffusion of innovation across Europe is therefore a question of necessity for 
our future prosperity. 

The stakes are high – but so is Europe’s potential. The next wave of innovation, combining 
physical and digital, will be rooted in science, technology and engineering, where Europe has 
and needs to maintain a competitive edge. With 7% of the global population, Europe accounts 
for  20%  of  global  research  and  development  investment  and  around  one  third  of  all  high-
quality scientific publications.1 Europe is also home to a strong industrial base. 

Europe  must  build  on  these  assets  and  on  its  values  to  develop  its  own  distinct  model  of 
innovation.  It  should  make  the  most  of  its  collaborative,  partnership-based  culture,  which 
helps to foster innovation right across our Union. And as it does so, it must ensure the high-
level  of  European  protection  of  citizens'  data  and  privacy  –  which  is  now  the  global 
benchmark – becomes a source of competitive advantage when it comes to new technologies, 
such as Artificial Intelligence or big data.2  

1  Report "Science, Research and Innovation Performance of the EU 2018". 
2  COM (2018) 237.  

2 

 
                                                            
The EU is the most open research and innovation area in the world. Not only does it welcome 
research  organisations  from  all  over  the  world  into  its  projects,  but  it  also  collaborates 
extensively  with  international  partners  on  joint  programmes.  In  order  to  promote  a  level 
playing  field,  it  should  encourage  new  market  opportunities  for  innovative  goods  and 
services.  It  should  also  stimulate  synergies  and  cross-border  investment  in  research  and 
innovation bringing mutual benefits to people and businesses,3 while ensuring that the EU can 
uphold its interests in strategic sectors. 

In  other areas,  however Europe  is  experiencing an innovation deficit.  This  is  not  down to  a 
lack of ideas or initial start-ups: the problem is rather a lack of scale-up and diffusion, with 
innovations  not  always  being  translated  into  new  market  and  growth  opportunities.  And 
industry investment in research and innovation has to step up. The EU is being outpaced by 
China  and  the  United  States  in  levels  of  investments  in  the  technologies  that  are  set  to 
dominate in the future.  

To  make  the  most  of  its  potential,  and  to  overcome  its  obstacles,  Europe  must  focus  its 
approach on three levels. First, substantial investment is needed in scientific and technological 
research,  with  a  focus  on  major  societal  and  industrial  challenges  such  as  security,  climate 
change,  and  the  impact  of  an  ageing  population.  Second,  the  business environment  must  be 
made  more  innovation-friendly  and  less  risk-averse.  Third,  European  citizens  must  be 
supported through what will be a fast and, for some, turbulent transition. 

Europe’s chance to lead the next wave of innovation will depend on our ability to put together 
the right mix of policies and instruments. It is essential for Europe to support the competitive 
development of strategic value chains of the future.4 The Digital Single Market5, the Energy 
Union,6 Industrial Strategies7 and our Competition Policy provide us with a solid framework. 
Tools  such  as  the  Investment  Plan8,  the  Horizon  2020  programme  for  research  and 
innovation9 and the European Structural and Investment Funds10 have a proven track record. 
This foundation has helped put Europe at the forefront of many areas of global science and 
technology and created better conditions for firms to innovate and compete.  

It is now time to move to the next level. And we can only do so if we take a truly European 
approach, collaborating across borders and acting on a Union-wide scale. Success will depend 
on  our  capacity  to  use  private  capital  and  public  investment  together  effectively.  It  will 
depend  on future-proof European and national regulatory  frameworks  that  are  favourable to 

3  This is particularly relevant when the EU negotiated trade agreements. See the Commission's proposal for a 
regulation establishing a framework for screening Foreign Direct Investments into the EU, COM(2017)487. 
4  Report  "Re-finding  Industry  –Defining  Innovation",  of  the  independent  High  Level  Group  of  Industrial 

Technologies chaired by Jürgen Rüttgers, European Commission, 2018. 

5  COM (2015) 192 , COM (2015) 550. 
6  COM (2015) 80, COM (2016) 763. 
7  COM (2017) 479. 
8  30%  of  the  funds  allocated  by  the  Investment  Plan  were  devoted  to  Small  Medium  Enterprises,  22%  to 

research and innovation projects and 11% to projects that aim at enhancing Europe's digital capacity.  

9  The  EU  is  currently  spending  close  to  EUR  80  billion  for  its  Horizon  2020  Research  and  Innovation 

Framework Programme over 2014-2020.  

10  The European Structural and Investment Funds are investing over EUR 44 billion in research and innovation, 

including some EUR 30 billion in transition, less developed, outermost and sparsely populated regions. 

3 

 
                                                            
innovation.  It  will  depend  on  a  single  market  where  effective  and  fair  competition  rewards 
and  incentivises  private  investment  in  innovation.  It  will  depend  on  the  capacity  to  push 
European  universities  to  be  more  entrepreneurial.  It  will  depend  on  ensuring  that  every 
Member State and every single region in Europe can contribute to a rising tide of excellence 
in science and innovation. All of these factors are in the collective control of our Union, now 
is time to take our future in our own hands. 

2. A renewed agenda for a stronger European Research and Innovation Ecosystem 

Research  and  innovation  cuts  across  our  whole  society,  with  different  players,  instruments 
and  policies  involved  at  local,  national  and  European  levels.  Europe  needs  to  bring  these 
different drivers and levels of governance closer together to create a research and innovation 
friendly environment. This includes connecting the different local and regional research and 
innovation ecosystems to foster innovation across EU value chains. 

At  European  level,  regulation,  cross-border  cooperation  and  the  EU  budget  can  all  be 
effective  policy  levers.  Policies  in  areas  like  energy,  transport  and  industry  contribute  to  a 
low-carbon,  sustainable  economy.  Economic  development  through  innovation  is  hard-wired 
into cohesion and agricultural  policies.  Specific programmes have  been set up to  help drive 
the digital revolution in the EU. Research and innovation is at the heart of the full range of 
education  and  training  policies.  Internal  market  and  competition  policies  are  designed  to 
support  and  empower  innovative  firms,  in  particular  Small  and  Medium-Sized  Enterprises, 
and help them to scale-up and develop new markets. 

Nevertheless, there are gaps and emerging issues where Europe can and should improve. This 
Communication highlights the progress made and proposes new actions where the European 
Union can make a difference. 

2.1 Ensuring essential public investment and stimulating private investment 

Evidence confirms that the scale of private and public investment in research and innovation 
has  a  direct  impact  in  enhancing  productivity  and  boosting  global  competitiveness.11 
However, the EU is a long way off the overall 3% of Gross Domestic Product Research and 
Development investment target.12 

11  COM (2018) 2. 
12  COM (2010) 2020, COM(2017) 690. See also Report "Science, Research and Innovation Performance of the 
EU 2018", and report "Lab, Fab, App" of the independent High Level Group on maximising the impact of 
EU research and innovation programmes, chaired by Pascal Lamy. 

4 

 
                                                            
%

3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0

2,03 

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Research and Development intensity 201613 

3,25 

3,09 2,94 2,87 2,75 

2,49 

2,25 

2,03 2,00 

1,69 1,68 

1,29 1,28 1,27 1,24 1,21 1,19 1,18 

1,01 0,97 0,85 0,85 0,79 0,78 

0,61 0,50 0,48 0,44 

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Public investment 

The vast majority of public investment in research and innovation in the EU – around 85% – 
comes from national funding. While public funding for research and development in the EU 
and  its  Member  States  is  broadly  comparable  to  US  spending,  there  are  large  differences 
across  Member  States.  Boosting  public  research  and  innovation  investment  in  the  low-
spending Member States is essential to maximise the EU's innovation potential.  

At the European level, the current EU Research and Innovation programme,  Horizon 2020, 
has  been  very  successful  –  placing  the  EU  as  global  leader  in  many  areas  of  science  and 
technology.14  With  a  total  budget  of  over  EUR  13.1  billion  for  the  period  2014-2020,  the 
European Research Council15 has  helped to drive scientific excellence in frontier research 
and attract some of the best talent to Europe.16 With a budget of EUR 6.2 billion, the Marie 
Sklodowska  Curie  Actions  have  supported  high  quality  researchers  throughout  their 
careers.17  

The Investment Plan for Europe has supported innovative projects and small and medium 
sized enterprises in particular.18 The European Structural and Investment Funds have been 
vital for public investment in research and innovation and for its regional spread.19 

In its proposal on the Multiannual Financial Framework 2021-2027 of 2 May 2018,20 the 
Commission made it clear that research and innovation must continue to be an essential EU 

13  Source: European Commission, Directorate-General for Research & Innovation. Data: Eurostat.  
14  COM (2018) 2, and report "Lab, Fab, App". 
15  The  European  Research  Council  was  established  in  2013  for  implementing  a  part  of  Horizon  2020.  It  is 
composed of an independent Scientific Council, its governing body consisting of distinguished researchers, 
and an Executive Agency, in charge of the implementation. It forms part of Horizon 2020. 

16  To give an example, Prof Feringa, a European Research Council grantee and scientist in charge for a Marie 

Skłodowska-Curie co-fund project, won in 2016 the Nobel Prize for Chemistry. 

17  Marie  Skłodowska-Curie  actions  are  part  of  the  Horizon  2020  programme.  Since  2013,  nine  Nobel  Prize 

winners have been either former Marie Skłodowska-Curie fellows or supervisor . 

18  30% of the funds allocated by the Investment Plan were devoted to SMEs, 22% to research and innovation 

projects and 11% to projects that aim at enhancing Europe's digital capacity.  

19  See  report  "Science,  Research  and  Innovation  Performance  of  the  EU"  in  BG,  CZ,  EE,  HR,  LV,  LT,  HU, 
MT, PL, RO, SI and SK the European Structural and Investment Funds are the main source of funding for 
research and innovation. 

20  COM(2018) 321. 

5 

 
 
                                                            
 
 
 
priority.  The  Commission  proposed  to  increase  investments  in  research  and  innovation  by 
allocating  EUR  100  billion  to  the  future  programme  Horizon  Europe  and  the  Euratom 
Research and Training Programme. Equally, the Commission proposed to mobilise around 
EUR  11  billion  for  market  based  instruments  including  financial instruments  and  budgetary 
guarantees  in  a  dedicated  window  under  the  InvestEU  Fund,  which  in  return  will  mobilise  
EUR 200 billion of private investment to support research and innovation.21 This reflects the 
consensus that investment in research and innovation is not only critical to the EU's jobs and 
growth; it is also an area with a very high European added value. 

Innovation  must  be  a  central  driver  for  EU  policies  and  programmes  for  2021-2027. 
Complementarities and synergies with EU funding programmes will be fully exploited, so that 
funding  is  streamlined  and  coordinated  for  the  benefit  of  improved  research  and  innovation 
activities.  In  this  way,  in  addition  to  the  Horizon  Europe  programme,  other  major  funding 
programmes such as the Connecting Europe Facility the European Regional Development and 
Cohesion  Funds,  the  Digital  Europe  Programme,  the  European  Defence Fund,  the  Common 
Agricultural  Policy  and  the  Space  Programme  will  also  provide  a  significant  stimulus  to 
innovation.  

Private investment 

Low  private  investment  in  innovation  is  a  persistent  weakness  in  Europe.  The  level  of 
business research and innovation investment in the EU is at 1.3% of Gross Domestic Product. 
This  pales  in  comparison  to  China  (1.6%),  the  United  States  (2%),  Japan  (2.6%),  or  South 
Korea (3.3%).22 

21  Other  programmes  such  as  the  Innovation  Fund,  Single  Market  Programme,  Funds  for  agriculture  and 
maritime policies, the European Social Fund, Erasmus + , the EU Culture and Values programmes, will have 
key innovation components. 

22  Report "Science, Research and Innovation Performance of the EU 2018".   

6 

 
                                                            
EU companies spend less on Research and Development than their competitors23 
Evolution of business R&D intensity, 2000-2016 

3,5

3,0

2,5

2,0

1,5

1,0

0,5

South Korea 

Japan 

United States 

China 

EU 

)

%

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Europe  needs  an  industry  that  innovates  and  invests  in  innovation.  To  boost  private 
investment,  Europe  needs  an  improved  environment  for  businesses  with  a  simple,  clear  and 
effective  regulatory  framework.  It  needs  to  provide  the  open  and  competitive  markets,  the 
right  incentives  for  investment,  and  easier  access  to  finance,  particularly  for  small  and 
medium-sized  businesses.  Funding  for  industrial  research,  notably  through  public-private 
partnerships, is also particularly important to keep up with global competition. 

The EU Industrial Policy Strategy seeks to improve overall business conditions for private 
innovation investment, including facilitating the public procurement of innovative solutions. 
This  is  done  through    a  comprehensive  set  of  actions  ranging  from  the  modernisation  of 
intellectual property frameworks to the adoption of Digital Single Market initiatives such as 
cyber-security  and  data  flows  regulation.24  It  complements  the  EU  Better  Regulation 
Agenda,  which  ensures  that  EU  polices  and  laws  are  as  effective  and  efficient  as  possible 
through  systematic  stakeholder  consultation,  evaluations  and  impact  assessments.25  Recent 
initiatives on Artificial Intelligence, High Performance Computing and the Data Economy 
amongst  others  will  help  place  Europe  to  be  at  the  forefront  of  the  next  innovation  wave.26 
The  Investment  Plan  for  Europe  removes  obstacles  to  investment,  provides  visibility  and 
technical assistance to investment projects, and makes smarter use of financial resources.27  

A specific European weakness is venture capital – a key source of financing for innovative 
start-ups. Overall investment in venture capital is at one fifth the level of the United States.28 

23  Source: European Commission DG Research and Innovation. Data: Eurostat, OECD. 
24  COM(2017) 479.  
25  COM(2015) 215 and COM(2017) 651. 
26  COM(2018) 008, COM(2018)237. 
27   http://www.consilium.europa.eu/en/policies/investment-plan/  
28  PwC / CB Insights MoneyTree™ Report, Q4 2017. 

7 

 
 
 
                                                            
 
 
 
 
The average size of these funds in Europe is too small to attract major institutional and private 
investors. This leads to a shortfall in the financing of companies as they grow as well as to an 
over-reliance on public support.  

Venture capital funds raised (billion euro) in the EU and in the United States, 2007-2016 29 

United States

EU

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40

35

30

25

20

15

10

5

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31,5 

26,4 

25,6 

24,6 

16,5 

15,1 

18,7 

15,8 

6,7 

8,6 

4,6 

2,6 

3,3 

3,5 

3,2 

3,5 

4,8 

4,9 

6,0 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

The European Fund for Strategic Investments has revived investment in strategic projects, 
with a third of an expected total investment of more than EUR 500 billion expected to go on 
research and innovation.  

The Commission has placed a strong focus on facilitating access to finance for innovation, at 
both  early  and  growth  stages.  This  is  done  through  the  InnovFin  financing  tools  under 
'Horizon  2020'  (expected  investments  of  EUR  30  billion)  and  the  Programme  for  the 
Competitiveness  of  Enterprises  and  Small  and  Medium-Sized  Enterprises  (expected 
investments  of  EUR  40  billion).  Small  and  Medium  Enterprises  can  also  access  finance  for 
innovation  through  financial  instruments  supported  by  the  European  Regional  Development 
Fund.30  

In  the  future,  we  need  to  "do  more  with  less"  by  using  financial  instruments  smartly  and 
efficiently  to  attract  and  target  a  critical  mass  of  private  investment.  To  go  with  it,  we  also 
need a tax system that supports innovation by allowing the costs of research and innovation 
investment  to  be  tax  deductible,  with  additional  allowances  for  young  companies.  The 
Commission's proposal the Common Consolidated Corporate Tax Base seeks to make this 
happen.  It  is  now  essential  the  European  Parliament  and  the  Council  swiftly  adopt  the 

29  Source: European Commission, DG Research and Innovation – Data: Invest Europe, NVCA / Pitchbook /  
30   Currently  EUR  9.2  billion  are  planned  for  smart  growth  related  loan,  guarantee  and  equity  instruments 

leveraging important additional public and private funding. 

8 

 
 
 
                                                            
 
 
proposal to allow Member States to make full use of this key instrument to facilitate private 
research and innovation investment.31 

A  major  new  initiative  has  combined  Horizon  2020,  the  European  Fund  for  Strategic 
Investments  and  the  Programme  for  the  Competitiveness  of  Enterprises  and  Small  and 
Medium-Sized  Enterprises  to  launch  VentureEU.  This  initiative  aims  to  boost  venture 
capital  in  Europe,  led  by  private  managers  and  majority  financed  by  private  investment.32 
VentureEU  should  stimulate  institutional  investors  and  encourage  more  fund  managers  to 
enter the European market and operate cross border to tackle existing deficits in longer term 
finance. With investments totalling EUR 410 million from the EU, its initial target is to raise 
over  EUR  2.1  billion  in  the  next  12  months,  leading  to  an  estimated  EUR  6.5  billion 
investments in around 1500 European start-ups and scale-ups. VentureEU has the potential 
to  double  venture  capital  investment  in  Europe.  In  addition  to  that,  the  Commission  is 
currently  developing  the  concept  of  Escalar  initiative,  whose  objective  would  be  to  help 
Venture Capital funds to reach a larger size more quickly by mobilizing large private funds , 
such as pension or insurance funds. 

To  support  this,  initiatives  launched  under  the  Capital  Markets  Union  are  simplifying 
regulatory  frameworks  for  raising  and  managing  venture  capital  funds  in  Europe.  This  will 
ultimately  help  to  make  risk  capital  more  readily  available.  However,  further  efforts  are 
needed to reach a scale adequate to Europe’s economic weight. 

Key steps  

-    Swiftly adopt the next Multiannual Financial Framework to ensure that research and 
innovation continues to be one of the essential EU policy and funding priorities in the 
future, across different budgetary instruments. 

-  Member States to take the necessary steps to maximise their investments in research 

and innovation to reach the 3% of Gross Domestic Product target.  

-  Increase private investment in research and innovation and scale up initiatives such 

as the VentureEU to boost private investment and patient capital.  

2.2   Making regulatory frameworks fit for innovation  

Well-functioning markets that incentivise competition and innovation create jobs and growth. 
Europe's  economy  needs  a  regulatory  framework  geared  towards  innovation  with  the 
flexibility to adapt to a rapidly evolving industry and society. Regulation and enforcement of 
competition rules play a crucial role to level the playing field for new market entrants and to 
provide  incentives  for  innovation.  Common  standards  and  interoperability  rules  facilitate 
take-up  and  market  deployment  of  innovative  solutions.  Regulation,  at  both  European  and 
Member State levels should therefore strike a balance between predictability and flexibility. It 
should guarantee fair competition without sanctioning failure or risk-taking.  

In  the  context  of  new  Multiannual  Financial  Framework,  the  Commission  will  further 
simplify  its  State  aid  rules  to  enhance  synergies  and  support  public  funding  of  innovative 
projects.  It  will  facilitate  the  blending  of  EU  and  national  funds.  It  will  also  allow  Horizon 

31  The  Common  Consolidated  Corporate  Tax  Base  proposal  aims  at  incentivising  R&D  investment  with  a 

super-deduction. COM(2016) 685. 

32  VentureEU is a pan-European venture capital Fund of Funds encompassed by a set of six private-led funds 

(http://europa.eu/rapid/press-release_IP-18-2763_en.htm).  

9 

 
 
 
                                                            
Europe projects with the 'Seal of excellence' label to be easily funded at regional level under 
European Structural and Investment Funds.33 

Regulators  are  key  players  in  innovation,  both  in  creating  the  right  conditions  and  ensuring 
that  regulation  innovates  as  quickly  as  products  and  services  do.  To  ensure  that  European 
policies are developed with innovation in mind, the European Commission already applies the 
Innovation  Principle34  when  preparing  major  legislative  initiatives.  Member  States  should 
step  up  similar  efforts.  Regulatory  frameworks  need  to  enable  more  testing,  learning  and 
adaptation and public policies to make better use of all existing data and analytics.  

To  make  it  clearer  how  existing  regulatory  requirements  apply  to  innovative  ideas,  the 
Commission is piloting Innovation Deals to help innovators address perceived EU regulatory 
obstacles.  Early  results  in  pilots  on  batteries  and  water  re-use  suggest  the  experience  can 
provide useful feedback to improve regulation and promote innovation. 

To stimulate a culture of experimentation and risk taking, effective regulation at national level 
is  also  critical.  With  this  in  mind,  the  Commission  has  proposed  a  new  insolvency  law  to 
allow  struggling  companies  to  restructure  early  on  and  to  prevent  bankruptcy.  It  would 
provide honest innovators and entrepreneurs with a second chance by being fully discharged 
of debt from previous business ventures after a period of 3 years, with appropriate limitations 
to safeguard duly justified general interests.35 

To  help  to  create  and  foster  demand  for  innovative  solutions  by  public  authorities,  the 
Commission  has  published  today  Innovation  Public  Procurement  Guidelines  on  how 
procurement of innovation can  be implemented, including many concrete examples of good 
practice.36 

Key steps 

-  Build future-proof EU and national regulatory frameworks that apply the innovation 
principle.  This  would  ensure  that  whenever  policy  and  legislation  are  reviewed, 
developed or implemented, the impact on innovation is fully assessed. 

-  Give  priority  to  the  transposition  of  the  Directive  on  preventing  restructuring 
frameworks, second chances and measures to increase the efficiency of restructuring, 
insolvency and discharge procedures. 

-  The Commission will further simplify its state aid rules. This  will help facilitate the 
seamless  combination  of  different  funds,  as  well  help  improve  the  use  of  common 
assessment standards for research and innovation projects.  

33  The  Seal  of  Excellence  certifies  internationally  excellent,  but  unfunded  projects,  submitted  to  the  Horizon 

2020 programme so that they can be financed by the Structural Funds. 

34  The Innovation Principle is an integral part of the EU Better Regulation approach, and ensures that whenever 

policy and legislation are developed, the impact on innovation is fully assessed. 

35  European Commission proposal for a Directive on preventive restructuring frameworks, second chance and 
insolvency  and  discharge  procedures 

measures 
(http://ec.europa.eu/information_society/newsroom/image/document/2016-48/proposal_40046.pdf). 

the  efficiency  of 

restructuring, 

increase 

to 

36  C(2018) 3051. 

10 

 
 
 
                                                            
2.3 Making Europe a frontrunner in market-creating innovation 

Europe  is  a  world  leader  in  science.  We  are  home  to  some  of  the  most  creative  and 
entrepreneurial minds and some of most innovative ideas anywhere in the world. This takes a 
long way but we still struggle to bring that innovation to the market.  

Europe  is  relatively  strong  in  adding  or  sustaining  value  for  existing  products,  services  and 
processes, known as incremental innovation. We have seen this in sectors as varied as space, 
aeronautics,  pharmaceuticals,  electronics,  renewable  energy,  bio-based  industries  and 
advanced  manufacturing.  We  have  also  taken  strides  forward  in  supporting  innovation 
through Key Enabling Technologies, such as robotics, photonics, and biotechnology.37 These 
technologies  can  be  used  and  applied  across  many  industries,  generate  knowledge  and  new 
forms of participation and are crucial for addressing key societal challenges, while supporting 
the EU's industrial leadership.38 

But Europe needs to do better at generating disruptive and breakthrough innovations.   

A  breakthrough  innovation  leads  to  entirely  new  products,  services  or  processes  or  to 
substantial improvements in the quality of existing ones. An example would be doubling the 
energy density in a battery for an electric car. This opens up whole new business models and 
market opportunities. Compared to incremental innovation, breakthrough innovations tend to 
come  from  new entrants, often start-ups without existing assets  or  cash flows. They tend to 
entail higher risks, in terms of technology, market and regulation. A disruptive innovation is 
one that threatens to make an existing solution or industry obsolete. Classic examples include 
the  smart  phone  and  on-line  music  and  video  streaming  services.  Disruptive  innovations 
create entirely new products and services, as well as new business models or in some cases 
even new markets. 

Disruptive and breakthrough innovations are still too rare in Europe. This is down to a range 
factors,  including  lack  of  venture  capital,  a  deep-rooted  aversion  to  risk,  lack  of  transfer  of 
new technologies  from the research base, and an inability to exploit the scale of the Union. 
Too  few  European  start-ups  survive  beyond  the  critical  initial  phase  of  2-3  years.  Of  those 
that  make  it  beyond  that  point,  too  few  end  up  growing  into  larger  firms  and  scaling  up 
globally.39 Less than 5% of European Small Medium Enterprises grow internationally.40 

To help boost major breakthrough innovations in Europe, the Commission proposes to create 
a  European  Innovation  Council.  The  European  Innovation  Council  will  offer  a  one-stop 
shop  for  high  potential  and  breakthrough  technologies,  as  well  as  for  innovative  companies 
with potential for scaling up. It will support the commercial pathway of promising ideas from 
the research to industry. This will be done via start-ups, spin-outs or transfers to industry. It 
will support the scaling up of innovation in the start-up phase to make sure that it translates to 

37  http://ec.europa.eu/research/industrial_technologies/pdf/re_finding_industry_022018.pdf#view=fit&pagemod 

e=none 

38  Report "Re-finding Industry –Defining Innovation", High Level Group of Industrial Technologies, European 

Commission, 2018. 

39  The percentage of firms that do not grow at all or by less than 5 % is over 45 % in Europe compared to 37 % 

in the USA. European Parliament (2017), Helping European SMEs to grow. 
http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_IDA(2017)603967 

40  The  EU's  shortcomings  are  evident  from  the  almost  complete  absence  of  EU  based  companies  in  leading 

global technology companies. 

11 

 
 
                                                            
 
more jobs and growth.41 It will do so by streamlining, rationalising and simplifying existing 
structures. It will work in complementarity with the European Institute of Innovation and 
Technology. 

A pilot has already been launched, grouping relevant existing schemes  and introducing first 
reforms  in  Horizon  2020.  EUR  2.7  billion  has  been  earmarked  for  this  between  2018  and 
2020. The future, fully-fledged European Innovation Council will be managed in a way that 
allows  for  investments  in  higher  risk  projects.  Based  on  strategic  advice  from  leading 
innovators,  it  will  prioritise  excellence  and  scale  of  impact.  It  should  accelerate  the 
commercialisation  and  scale  up  of  innovations  by  start-ups  emerging  from  Horizon  Europe 
projects. It should also provide advice on research and innovation funding schemes to ensure 
focus, scale and delivery of European policy priorities.  

The  Commission  will  complement  this  with  the  Innovation  Radar  initiative,  a  tool  that 
allows to spot innovations with market potential financed by the EU budget. 

Key steps 

-  Establish a European Innovation Council to identify and scale up breakthrough and 
disruptive  innovations.  The  focus  will  be  on  fast  moving,  high  risk  innovations  that 
have a strong potential to create entirely new markets.  

2.4  

Setting EU-wide research and innovation missions  

European support for research and innovation helps the EU deliver on its priorities, makes the 
daily  life  of  citizens  that  bit  easier,  and  helps  make  major  breakthroughs  that  will  affect 
millions  right  around  the  world.  From  delivering  our  Paris  Agreement  commitments  on 
climate change, to discovering new planets, making major advances on cancer treatment, EU 
funding has a real and demonstrable added-value. It may even help you to print a 3D version 
of your dream house in the near future. 

Europe can take this added value and impact one step further by setting EU-level research and 
innovation  missions.  These  would  set  ambitious  goals  that  would  push  the  boundaries  for 
research and innovation, drive our jobs, growth and competitiveness agenda, and help solve 
some of society's  biggest challenges. These  missions  would be defined in close  cooperation 
with  Member  States,  stakeholders  and  citizens.  They  could  range  from  the  fight  against 
disease, to clean transport, or plastic-free oceans.  

Recognising that what gets measured gets done, these missions would need to set ambitious, 
targeted and time-bound objectives. Taking  the example of  oceans plastics,  these objectives 
could include, for instance, reducing the amount of plastics entering the marine environment 
by 90% and collecting more than half of the plastics present in our oceans by 2025'. 

The missions will encourage investment and participation across multiple sectors throughout 
the  value  chains,  policy  areas  (e.g.  energy  and  climate,  transport,  advanced  manufacturing, 
health and nutrition, digital), scientific disciplines (including social sciences and humanities), 
as  well  as  different  actors  and  stakeholders.  This  requires  an  inclusive  process  which 

41  High  Level  Group  of  Innovators  in  their  report  "Europe  is  back:  accelerating  breakthrough  innovation" 

(https://ec.europa.eu/info/sites/info/files/eic_hlg_bz_web.pdf ). 

12 

 
 
 
 
                                                            
identifies areas with greatest potential in terms of scale of economic impact on the one hand, 
and  addresses  societal  challenges  on  the  other.  Missions  could  have  a  societal,  scientific  or 
technological  focus  and  should  create  synergies  with  research  and  innovation  strategies  at 
Member State, regional and local level.  

Missions  should  encourage  and  even  require  experimentation  and  risk-taking.  They  will  be 
able to build on and continue the experience of the Graphene and the Human Brain flagship 
projects42, and more recently the Quantum project, all of which have shown ambition and a 
strong technology-driven approach based on multi-disciplinary research.  

Key steps 

-  Launch a first set of EU level research and innovation missions with bold, ambitious 

goals and strong European added value.  

2.5 Support rapid dissemination of innovation and uptake throughout the Union  

There used to be a clear innovation divide in Europe between North and South, and West and 
East. However, that division is now much more nuanced, as a number of countries have made 
significant progress in catching up, notably in terms of investment levels. Pockets of scientific 
and technological excellence have emerged in all parts of Europe. But the innovation divide 
between  regions  still  persists,  with  several  areas  lagging  significantly  behind  in  terms  of 
investment,  innovation  capacity  and  performance.  Weaknesses  in  innovation  dissemination 
explain a large part of Europe's slow aggregate productivity growth.43 

42  Graphene is a Horizon 2020 Project launched by the EU in 2013. It is one of Europe's biggest ever research 
initiatives  that  aims  to  take  graphene  (an  ultra-thin  carbon  material  that  could  replace  silicon)  and  two-
dimensional  materials  from  laboratories  to  the  European  society.  Human  Brain  is  a  Horizon  2020  Project 
launched  in  2013,  which  strives  to  accelerate  the  fields  of  neurosciences,  computing  and  brain  related 
medicine.  They  are  both  facilitated  by  the  European  Development  Fund  investments,  respectively  in  the 
Graphene Institute in Manchester and the European Institute for Neuromorphic Computing in Heidelberg. 
43  "Science  Research  and  Innovation  Performance  of  the  EU  2018"(https://ec.europa.eu/info/support-policy-

making-eu-and-horizon-2020-associated-countries/srip-report_en).  

13 

 
 
 
 
                                                            
Performance of EU regions in terms of innovation44  

Additional efforts are needed to accelerate the uptake of innovation in less developed regions 
and  in  more  traditional  sectors.  Investments  need  to  be  made  more  efficient,  effective  and 
better  tailored  to  regional  and  local  needs.  EU  funding  has  been  instrumental  in  developing 
regional  innovation  eco-systems,  including  "Innovation  Hubs"  that  give  Small  and  Medium 
Enterprises easy access to infrastructure and expertise to experiment with new technologies.  
To  support  these  efforts,  Smart  Specialisation  Strategies  are  key  to  ensuring  that  all  EU 
regions can harness their potential and succeed with innovation-based industrial transition.45 

Since 2014, the focus on innovation within the European Structural and Investment Funds 
has  been  reinforced  through  120  Smart  Specialisation  Strategies  that  promote  innovation 
based on the strengths of each region. Around EUR 80 billion is available from the European 
Regional  Development  Fund  to  encourage  entrepreneurship,  digitisation  and  business 
research,  in  particular  in  the  least  developed  regions.  The  European  Social  Fund  and  the 
Erasmus  +Programme  support  investment  in  developing  people's  skills.  The  Common 
Agricultural  Policy  strengthens  innovation  capacity  in  rural  areas  through  support  for  the 
uptake of digital-based opportunities. 

44  Source: European Commission, Directorate –General for Regional and Urban Policy. 
45  COM(2017) 376. 

14 

 
 
 
                                                            
For Europe to build a stronger innovation capacity and more effective and faster innovation 
diffusion  across  the  Union,  we  need  a  stronger  and  more  strategic  coordination  across 
different  EU  funding  schemes,  with  a  better  alignment  of  priorities  at  European  level, 
including  between  Smart  Specialisation  Strategies  and  Horizon  Europe.  More  support  is 
needed  for  cross-border  and  cross-region  collaborations  across  European  and  international 
value chains. Institutional capacity at regional and local level also needs to be strengthened to 
support reforms of innovation systems and help develop the new skills needed. 

Key steps 

-  Use European Structural and Investment Funds to bring regions into the innovation 
economy.  Smart  specialisation  strategies  should  be  strengthened  and  streamlined  to 
enable  interregional  innovation  support.  Synergies  should  be  created  with  the 
Horizon  Europe  Programme,  InvestEU  Fund,  the  European  Social  Fund,  the 
Erasmus  +Programme,  the  Digital  Europe  Programme,  the  Common  Agricultural 
Policy and other programmes.  

2.6  

Invest in skills at all levels and empower European universities to become more 
entrepreneurial and interdisciplinary  

Developing  a  learning  and  entrepreneurial  society  in  Europe  is  crucial  to  spur  innovation 
across  all  sectors  of  the  economy  and  all  segments  of  the  population.  It  requires  major 
changes  in  the  education  and  training  and  research  system,  as  well  as  in  the  workplace  to 
ensure  that  life-long-learning  and  upskilling  becomes  a  reality  for  all.  This  is  needed  to 
address skills gaps and mismatches that exist in Europe. It is estimated that around 40% of the 
workforce in Europe needs digital upskilling, while 70 million Europeans lack basic literacy 
and numeracy skills. 

More than half of all citizens have either basic or no digital skills46 

No skills

Low

Basic

Above basic

100,00%
90,00%
80,00%
70,00%
60,00%
50,00%
40,00%
30,00%
20,00%
10,00%
0,00%

U
L

K
D

L
N

I
F

K
U

E
S

E
E

E
D

E
B

R
F

T
A

Z
C

E
I

V
L

K
S

S
E

T
M

I

U S
H

Y
C

T
L

R
H

T
P

L
P

L
E

T
I

G
B

O
R

8
2
U
E

At  the  other  end  of  skills  spectrum,  European  universities  need  to  better  tap-in  to  their 
innovation  and  entrepreneurship  potential.47  This  will  help  generate  the  ideas  and  new 

46  Source: Data from the Digital Scoreboard, European Commission. 

15 

 
 
 
 
                                                            
business  models  that  can  translate  into  start-ups  and  spin-offs.  Universities  should  also  be 
more  ready  to  break  down  disciplinary  barriers  and  work  with  business  and  civil  society. 
Moreover,  both  general  and  technical  education  should  better  match  emerging  business  and 
societal  needs  by  offering  more  agile  learning  programmes  that  will  help  to  close  the  skills 
gap as well as help the faster diffusion, reuse and access to knowledge.  

At  the  Gothenburg  Summit  in  November  2017,  Europe's  leaders  recognised  the  key  role  of 
higher  education  in  providing  the  future-oriented  skills  and  competences  to  successfully 
innovate.48 The European Council called on Member States, the Council and the Commission 
to  take  work  forward  on  a  number  of  initiatives,  including  encouraging  the  emergence  by 
2024 of some twenty "European Universities" made up of bottom-up networks of universities 
across  the  EU.49  The  "European  Universities"  will  bring  cross-border  cooperation  to  a  new 
level,  going  beyond  what  exists  today  through  the  development  of  long-term  strategies  for 
top-quality  education,  research  and  innovation,  more  mobility  for  students,  staff  and 
researchers, and true transnational European knowledge-creating teams. They should become 
key  drivers  in  the  European  Education  Area  and  contribute  to  the  international 
competitiveness of universities in Europe.50  

The take up of open science practices at different stages of the researchers' careers can also 
stimulate  attractive  career  environments  for  all,  give  more  recognition  and  reward 
international  and  science-business  mobility.51  The  modernisation  of  universities  and  public 
research organisations should therefore also be supported with an Open Science label. Such a 
high-quality  label  could  be  awarded  to  individual  universities  and  trans-national  university 
partnerships,  and  would  be  recognised  in  future  EU  support  for  trans-national  projects 
involving universities.52 

At the European level, we should pursue and further improve initiatives that have proven to 
bear  good  results,  such  as  the  European  Institute  of  Innovation  and  Technology,  the 
Marie  Skłodowska-Curie  Actions  and  the  HigherEducation  Innovate  Initiative.53  They 
connect  business,  education  and  research  organisations  and  promote  entrepreneurship  and 
stronger knowledge flows throughout the value chain.  

To strenghten knowledge transfer, a stronger link between vocational education and training 
and  innovation  systems  is  needed,  to  contribute  to  skills  intelligence  and  better  skills 
matching in line with the Skills Agenda for Europe.54 

47  https://heinnovate.eu/en  
48  https://ec.europa.eu/commission/publications/eu-leaders-meeting-education-culture_en 
49  European  Council  of  December  2017.  In  response,  the  Commission  presented  on  17  January  2018  a  first 
package  of  measures  addressing  key  competences,  digital  skills  as  well  as  common  values  and  inclusive 
education.  A  second  package  on  facilitating  recognition,  boost  language  learning,  increase  quality  of  early 
childhood  education  and  care  and  present  progress  on  European  universities  and  the  EU  student  card,  has 
been presented on 16 May 2018 with the COM (2018) 267-272. 

50  Work on the "European Universities" has progressed fast since the European Council Conclusions and a first 

call for pilot projects will already be published next October in the framework of Erasmus+. 

51  https://ec.europa.eu/research/openscience/index.cfm?pg=home&section=monitor 
52  A package of incentives shall be put in place, recognising existing successful schemes and supporting new 
ones  that  develop  digital  and  entrepreneurial  skills,  knowledge  transfer,  innovative  curricula,  career 
incentives, cross-sectorial mobility, and trans-disciplinarity. 

53  The  'HEInnovate'  Initiative  enables  universities  to  assess  their  entrepreneurial  capabilities  and  supports 

Member States in enhancing them. 

54  COM(2016) 381.  

16 

 
 
                                                                                                                                                                                          
Moreover,  to  meet  the  demands  of  the  new  economy  and  help  develop  a  more  agile  and 
enterpreneurial workforce, the European Social Fund will continue to help Europeans to re-
skill  and  up-skill,  while  the  Blueprint  for  sectoral  cooperation  on  skills55  can  help  adjust 
training for new occupations in selected sectors. The Digital Education Action Plan and the 
Digital Skills Strategy work towards identifying and developing future skill needs. 

Key steps 

-  Contribute  to  the  modernisation  of  universities  and  public  research  organisations 

with an Open Science label.  

3. Conclusions 

Europe's  economic  and  social  prosperity  depends  on  our  ability  to  innovate.  Sustaining 
Europe's  social  and  economic  model,  modernising  industry  and  building  a  cohesive  and 
inclusive  European  Union  means  ensuring  that  innovation  permeates  all  policies  as  well  as 
social, economic and industrial decisions.     

The  changing  nature  of  innovation  will  bring  new  opportunities  to  drive  job  creation  and 
growth in Europe. We must be in a position to seize these opportunities, while addressing the 
challenges  and  uncertainty.  In  doing  so,  we  must  be  vigilant  that  the  benefits  are  fairly 
distributed within our society.  

This  transformation  will  require  a  shared  ambition  and  a  change  in  mind-set  regarding 
innovation and science in Europe. A shared agenda between regions, Member States and the 
European  Commission  is  essential.  We  must  build  on  Europe's  strengths  and  give  a  new 
direction and a new impetus so that Europe becomes a true global leader in innovation for all.  

The Commission invites Leaders to discuss and give strategic orientation with a view to:  

1.  Swiftly adopting the next Multiannual Financial Framework with the proposed innovation 
funding  to  ensure  that  research  and  innovation  continues  to  be  one  of  the  essential  EU 
policies and funding priorities in the future, across different budgetary instruments. 

2.  Member States taking the necessary steps to maximise their investments in research and 

innovation to reach the 3% of Gross Domestic Product target. 

3.  Increasing private investment in research and innovation and scale-up initiatives such as 

the VentureEU initiative to boost private investment and patient capital.  

4.  Building future proof EU and national regulatory frameworks by applying the innovation 
principle,  ensuring  that  whenever  policy  and  legislation  are  reviewed,  developed  or 
implemented, the impact on innovation is fully assessed.  

5.  Giving  priority  to  the  transposition  of  the  Directive  on  preventing  restructuring 
frameworks,  second  chances  and  measures  to  increase  the  efficiency  of  restructuring, 
insolvency and discharge procedures. 

6.  Further simplifying state aid rules to facilitate the seamless combination of different funds 
and the better use of common assessment standards for research and innovation projects. 
7.  Establishing  a  European  Innovation  Council  to  identify  and  scale  up  breakthrough  and 
disruptive  innovation,  focusing  on  fast  moving,  high-risk  innovations  that  have  a  strong 
potential to create entirely new markets. 

55  http://ec.europa.eu/social/main.jsp?catId=1415&langId=en  

17 

 
 
 
                                                            
8.  Launching a set of European research and innovation missions with bold, ambitious goals 

and strong European added value.  

9.  Using European Structural and Investment Funds to bring the regions into the innovation 
economy.  Smart  Specialisation  Strategies  should  be  strengthened  and  streamlined  to 
enable  interregional  innovation  support.  Synergies  should  be  created,  with  the  Horizon 
Europe  programme,  InvestEU  Fund,  the  European  Social  Fund,  the  Erasmus+ 
Programme, the Digital Europe Programme, the Common Agricultural Policy and other 
programmes. 

10. Contributing to the modernisation of Universities and public research organisations with 

an Open Science label.  

18