New EU budget proposal foresees €94.4 billion for Horizon Europe

The European Commission proposes allocating €94.4 billion to research and innovation in its coming Horizon Europe programme, as part of a massive €1.85 trillion, seven-year EU budget plan to help recover from the COVID-19 crisis.

The Horizon number, Commission officials said, represents an increase in total spending plans for research and innovation – by €13.5 billion, by their own measure. But inside the Brussels policy bubble this afternoon, a lively debate broke out over how to interpret the numbers – with some calling it a cut, others an increase, and yet others no change.

The confusion arose because of the way the Commission announced the news – until the last minute keeping the key numbers secret even from many of its own senior officials. It certainly caught key members of the European Parliament by surprise. One of the key Horizon legislators, Dan Nica of Romania, called it an increase from the most-recent budget plans of the European Council. The other legislator, Christian Ehler of Germany, called it an “almost suicidal” cut. 

In announcing its plan, the Commission promoted the importance of research in the recovery – a fact highlighted during the current health crisis, as governments around the world have poured several billion euros into emergency vaccine and treatment research.  And, as it released its budget plans in Brussels this afternoon, it simultaneously published a whopping 774-page report justifying the political importance of research to health, the economy, trade and just about everything.

According to Commission officials, the planned Horizon budget can be measured in either of two ways – and both would suggest an increase for research.

Under one method, using 2018 prices, the new Horizon Europe proposal amounts to €80.9 billion – the same as negotiated in February by European Council President Charles Michel, after months of bargaining with EU member states. But to that figure, an extra sum of €13.5 billion is proposed, to come from a special €750 billion recovery fund, for much of which the Commission will be borrowing money on the financial markets. That adds up to €94.4 billion, and is compared to the €83.5 billion originally proposed by the Commission in 2018 – so, an increase overall.

Under another counting method, inflation-adjusted “current” prices, the new Commission proposal for Horizon amounts to €91.178 billion – the same as Michel negotiated in February. But to it would be added €14.65 billion in recovery-fund money, bringing the total to €105.8 billion. That compares to the €94.1 billion originally proposed by the Commission in 2018.

But there is still plenty of uncertainty in these numbers. The extra research money, officials said, would go to several research areas including health, green economy, industrial innovation, and a small-business agency, the European Innovation Council. But details of exactly how the special recovery fund will be run – and whether the rules will be any different from the rest of Horizon Europe – are as-yet unclear.

Other key news breaking today on the EU budget:

• The Commission proposed a new standalone health programme, with a budget of €9.4 billion for prevention, crisis preparedness, the procurement of vital medicines and equipment, as well as improving long-term health outcomes. The money sought for the programme, to run from 2021 through 2027, is a big increase on the €413 million initially earmarked. EU law says healthcare is mainly a matter for the member states to manage on their own, so the proposal could face significant resistance. The commission’s role in health is traditionally around the edges: investing in research, coordinating expert networks for rare diseases, and promoting public health policies against AIDS, smoking and other problems.
• The Commission’s proposed €750 billion economic recovery plan is for "targeted reinforcements" to its long-term budget for 2021-2027. All the spending items added together would bring EU spending to €1.85 trillion through 2027. The part of the budget focused on COVID-19 recovery includes a €560 billion Recovery and Resilience Facility, to support investment “in relation to the green and digital transitions and the resilience of national economics.” That facility represents a slight up-tick from the €500 billion plan proposed earlier this week by the German and French governments.
• Military R&D gets the chop in new EU budget. Money proposed for the new European Defence Fund has dropped from €13 billion to €8 billion, the Commission’s revamped budget reveals. The chop wasn’t as bad as some feared, however (€6 billion was the figure touted earlier this week). The money is intended for collaborative defence research into military hardware including drones and lighter-weight armour for soldiers.
• In what appeared to be an orchestrated move, the German research ministry today also confirmed plans for an extra €10 billion in its own research, innovation and education. Under the proposal, €930 million would be invested in the production of green hydrogen, while a further €500 million would help develop other sustainable technologies driving the transition towards a green economy. Artificial intelligence research would get €250 million to help transform Germany into the hotspot for AI. A further €160 million would strengthen and digitise medical technology and pharmaceutical research.
• Even with its recovery plans, the Commission is forecasting a dire economic outlook. In documents supporting its budget request, it says the current quarter “marks the trough of a deep recession” with GDP dropping 7.4 per cent, and it forecasts “only a partial recovery” in 2021. EU unemployment will hit 9 per cent. “Government finances may be permanently weakened.”

Editor’s note: This article was updated during 27 May to reflect additional information from the Commission.