HORIZON BLOG: European R&D policy newsbytes

R&D spending by UK businesses in 2022 grew more slowly than the country’s soaring inflation rate – though its pharmaceutical industry remained the top spender, according to a new report from the Office of National Statistics (ONS). 

While inflation jumped 9.1% during 2022, private sector R&D spending rose 6.4% to £49.9 billion, of which pharma spent £9 billion. 

The report is the latest product of a controversial effort by the statistics office to improve the way it counts private sector research spending. The topic, though normally unnoticed outside the professional statistics world, caught headlines in late 2022 when ONS announced that for some years it had been inadvertently undercounting the value of private sector R&D. It said a better count would put the value at £43 billion for 2020, up by £16.1 billion, or 62%, from its prior estimates. 

That raised the estimate of national R&D spending in a way that could be interpreted as a success for the Conservative government’s push to make the country an “innovation powerhouse”.  

In fact, as the politically independent statisticians explained at the time, the revision reflected in house efforts to fix problems they had started to see in their statistical methods. Counting business R&D spending – especially of small companies – is particularly difficult for statisticians in most countries. 

ONS’s latest report suggests it isn’t yet finished checking its sums. To get the new figures, it said it had greatly expanded the number of businesses it surveys about R&D activities, and gathered more detailed information from many of them. But it added that it may make further methodological changes in the months ahead – and until then, it isn’t yet endorsing its detailed breakdown of the numbers as final (a ‘National Statistic’, in its language). Nor is it yet producing a final estimate of how important R&D is to the UK economy overall, as a percentage of gross domestic product.

Germany’s annual assessment of its research, innovation and technology system has recommended the government remove the country’s “strict separation” between military and civilian R&D.  

The report, written each year by a panel of experts and presented yesterday to chancellor Olaf Scholz, concluded that this division should be “fundamentally reconsidered and abolished where appropriate”. 

Linking civilian and military research leads to spillover effects that enhance both types of innovation, the report argues. “Germany has so far largely foregone these positive effects due to its strict separation of military and civilian research.”  

The recommendation is not a shock, as last year’s report also called for more synergies between civilian and military R&D. But the call comes as EU countries mull their response to a suggestion from the European Commission that dual use research be permitted in the successor to Horizon Europe.  

Industry association DIGITALEUROPE has joined calls by MEPs for the successor to Horizon Europe, Framework Programme 10 (FP10), to have a €200 billion budget, more than double that of the current programme.

In a new report on innovation in the EU, the group suggests the programme should dedicate 25% of its funding to digital targets and initiatives.

FP10 should incentivise industry participation, it argues, “including through technology-readiness-level (TRL) balance and more attractive legal and contractual conditions”.

SMEs would also benefit from harmonised rules of participation across connected programmes such as Digital Europe, and from efforts to minimise the administrative burden for beneficiaries, according to the report.

According to a new monitoring report by the European Commission, hydrogen projects funded through the EU framework programmes for research and innovation are largely concentrated in a few countries in north-west Europe.  

Most of the EU’s contribution to the development of hydrogen technologies in Europe is funnelled through institutionalised public-private partnerships, the so-called Joint Undertakings, the report says.  

Since 2007, the Commission financed nearly 800 projects, with more than €2.9 billion. While a large share of funding focuses on mobility applications, particularly in the field of aviation, projects targeting all parts of the hydrogen value-chain have been financed 

Participants are mainly located in the north-west of Europe, and Germany, France and Italy are key players in hydrogen research.  

Hydrogen valleys are also blossoming in Europe, with 17 hydrogen valleys funded by the R&I programmes, the report says.  

The full report is available here.  

The European Institute of Innovation & Technology (EIT) has announced it will increase its efforts to boost innovation capacity in EU outermost regions: Guadeloupe, French Guiana, Réunion, Martinique, Mayotte and Saint-Martin (France), the Azores and Madeira (Portugal), and the Canary Islands (Spain). 

The plan is part of the EIT regional innovation scheme (RIS) which was launched in 2014 and expanded in 2021, with the aim to lose the innovation gap between European countries, boosting the performance of areas scored as 'modest' or 'emerging' innovation ecosystems. 

The EIT plans help EU outermost regions strengthen their technology transfer capacity, and come up with a tailored fundraising programme for start-ups in need of financing. 

More details are available here.  

In a new report published by the European Research Council (ERC), president Maria Leptin lists the main outcomes of the funder’s recent assessment of grant evaluation procedures.  

In the past year, the Scientific Council of the ERC introduced changes in the evaluation processes and evaluation forms for the 2024 calls for research proposals. 

In a report dedicated to that process, Leptin explains the reasoning behind the changes and the decisionmaking process that led to them.  

The report is available here.  

The European Parliament this week approved the new Strategic Technologies for Europe Platform (STEP), the EU’s plan to mobilise investments in the digital, deep tech, cleantech and biotech sectors, as part of wider agreement on the mid-term revision of EU’s long-term budget (MFF).  

It follows an agreement on the MFF budget between the European Council and Parliament earlier this month.  

STEP was originally intended to be a €10 billion package but with budgets across the bloc stretched, especially in light of a €50 billion package to support Ukraine, it was trimmed down to just €1.5 billion, all of which will be channelled through the European Defence Fund (EDF). Read more about the cuts to step here.

France is cutting €900 million from its research and higher education budget for 2024 in line with wider spending cuts totalling €10 billion in an effort to reduce its budget deficit with economic growth slower than expected.  

The government is also slashing €2 billion from environmental and energy transition programmes.

Only 9% of life science researchers understand EU and US legislation on artificial intelligence, according to a new survey of 125 life science professionals carried out by the Pistoia Alliance.  

The EU is on the verge of passing its groundbreaking AI act designed to create the world’s first regulatory framework around uses of the technology. Member states reached a unanimous agreement on the content of the act earlier this month, but it still must pass through more steps before final approval that should come later this spring.  

The US, on the other hand, has loose regulation of the technology and is only in the early phases of creating legislation.  

The new survey found that as much as 35% of life science professionals surveyed have “no understanding at all” of AI legislation. On top of this, 21% said that existing regulations were blocking their research.  

Read the full report here.

Industry association DIGITALEUROPE has published a series of recommendations aimed at making the European single market fit for the digital age.

“We applaud the push for common data spaces, robust cybersecurity and responsible AI development,” said director general Cecilia Bonefeld-Dahl in her forward to the report.

“However, the devil lies in the details. Inconsistent digital laws and fragmented regulations in crucial areas have resulted in a labyrinth of burdens, deterring investors and stifling innovation,” she said.

The publication explores 10 obstacles, including connectivity, disparate data laws, and inconsistent procurement rules, and recommends solutions.