EU will focus funds on strategic technologies to boost competitiveness

A strong focus on supporting strategic technologies is set out in a new EU competitiveness plan, unveiled on January 29 by European Commission president Ursula von der Leyen. Presenting the Competitiveness Compass, von der Leyen said that she wants to “reignite Europe’s innovation engine” in order to deliver the competitiveness boost that Europe needs.

Stéphane Séjourné, the commissioner responsible for industrial policy, added that increasing competitiveness should be “in every euro that we will spend, and in every initiative we will propose.”

But universities are concerned that the strategy overlooks basic research. It’s focus on strategic technologies and the transition from applied research to scale up is “worrying,” according to Julien Chicot, head of research and innovation policy at the Guild of European Research-Intensive Universities.

“The Compass is still missing a clear reference to the next Framework Programme for research and innovation,” he said in a social media post. “It does not acknowledge the importance of fundamental research either.”

This concern is echoed by the Young European Research Universities Network, which wants to see greater acknowledgement of the role fundamental and bottom-up research plays in developing disruptive technologies.

"An isolated focus on applied research and on technological competitiveness poses fundamental risks to the possibilities for Europe to innovate across systemic challenges, thereby undermining the quality and potential of European innovation," the group said in a statement.

German MEP Christian Ehler, who is currently preparing a Parliamentary report on the implementation of Horizon Europe, welcomed the strategy’s ambition of increasing research and innovation investment. But he is worried that the focus will be on funding strategic priorities when bottom-up ideas are also crucial to long-term competitiveness. 

“We cannot plan our future, we can only invest in the best European research and innovation to make sure we are ready for whatever the future brings us,” he said in a statement.

Ehler is also concerned that the Commission is “willing to sacrifice the independence of the Framework Programmes” to fulfil its “wet dream” of centralised research and innovation planning. “If this is the direction the Commission intends to take, it will find Parliament in its way,” he said.

Delivering Draghi

The Competitiveness Compass is designed to deliver on Mario Draghi’s recommendations for boosting EU competitiveness. It will guide the Commission’s work over the next five years, with a focus on three strategic areas: closing the innovation gap, decarbonising and increasing security.

“The EU has fallen behind the US in advanced technologies, while China has caught up in many sectors, and is winning the race for leadership in certain new growth areas,” the Compass says. “The root cause is a lack of innovation.”

In order to stimulate innovation, the Commission plans several initiatives to simplify the EU’s regulatory framework and better coordinate policies at EU and national level.

“Future EU research funding will provide targeted support to industrial competitiveness with a more strategic and less bureaucratic approach to supporting the transition from applied research to the scale-up phase,” the document says.

Central to the simplification effort will be a proposal for a new European Competitiveness Fund under the EU budget for 2028-34. This will support strategic technologies such as artificial intelligence, space, cleantech and biotech.

The fund will “accompany European projects along the entire investment journey, from research, through scale-up, industrial deployment, to manufacturing.”

“We have too many different programmes, sometimes overlapping, sometimes even contradicting [each other],” said von der Leyen. “All our work on improving competitiveness has shown us that we really have to focus more on breakthrough innovation and breakthrough technologies.”

The fund will be deployed alongside a Competitiveness Coordination Tool, whose role will be to align industrial and research policies and investments at EU and national levels.

The strategy also includes more details on the proposed European Research Area Act, which is now due in 2026. This aims to increase EU R&D investment to 3% of GDP while focusing research support on more on strategic priorities, better aligning EU and national funding priorities, and fostering the circulation of knowledge and talent across Europe.

ERC fears lessen

An earlier draft of the Competitiveness Compass raised concerns that the independence of Europe’s main funder of basic research, the European Research Council (ERC), could be undermined, with a call for it to be aligned with the same strategic interests as the European Innovation Council (EIC).

In the final version, this has been modified to say that the two bodies “need to operate in their respective domains along the same strategic interests and cooperate more closely to achieve results.”

The subtle change has not reassured the research community. According to Kurt Deketelaere, secretary general of the League of European Research Universities, the text “still violates” the ERC’s autonomy. 

“This is probably the first time since its creation that [the Commission] has been trying to steer so explicitly the future activities of the ERC,” he said in a social media post.

Changes have also been made to a section in the draft calling for the EIC’s successor to be “structured like an ARPA-type agency,” a reference to the US Advanced Research Projects Agencies such as DARPA for defence R&D. 

The text now says that “the work begun by the European Innovation Council to support scale-up by high-risk companies should continue with increased risk-taking, inspired by elements of the DARPA model.”

Innovation boosters

The Commission is preparing several initiatives to boost innovation in key sectors including AI, semiconductors, quantum, advanced materials and space.

In December, the EU selected seven consortia to establish the first AI Factories, which will provide start-ups and researchers access to AI-optimised supercomputers. Now, it plans to present an EU Cloud and AI Development Act, which will mobilise public and private investment to establish AI gigafactories specialised in training very large AI models.

The Commission also wants to make it easier for companies to grow across the EU by helping them access venture capital and reducing red tape. It will propose setting up a voluntary 28th regime, to harmonise rules in areas including corporate, labour and tax law. 

This would represent a “revolution” for businesses, Séjourné said during Wednesday’s press conference. “The Commission is convinced that the integration of the Single Market offers huge opportunity for simplification.”

Next month, the Commission will propose a series of “omnibus” packages, aiming to simplify several regulations at once, starting in the fields of sustainable finance reporting, sustainability due diligence and taxonomy.

However, von der Leyen insisted the EU remains committed to the Green Deal objectives, and the document reiterates the 2040 target of reducing net greenhouse gas emissions by 90% compared to 1990 levels.