Viewpoint: Towards €200B for FP 10: consolidation or re-nationalisation of European Research?

Policymakers increasingly recognise the importance of research and innovation for Europe's future. As one case in point, former Italian prime minister Enrico Letta, in a high-level report on the state of the EU common market, called for a "fifth freedom" to improve research, innovation, and education.

His compatriot Mario Draghi echoed this sentiment, saying that as part of an industrial strategy for Europe, the EU must make research and innovation a strategic priority to remain competitive.

Most recently, Ursula von der Leyen also made the case for increased research spending in her political guidelines for the next Commission.

More research and innovation investment is also sorely needed because other regions of the world are already ahead of us and there is a danger that this gap is only growing. The US, in particular, has long been a leader in research and development, with significant investments from both the public and private sectors. The National Institutes of Health has a budget of more 4$5 billion per annum while the total EU expenditure for research is €95 billion over seven years.

China, too, has made rapid strides and has recently overtaken the EU in research spending as a percentage of GDP. Initiatives such as "Made in China 2025" aim to advance high-tech industries, including robotics, aerospace, and artificial intelligence. Massive investments have positioned China as a formidable player on the global stage. According to the Nature Index 2024, seven out of the leading ten institutions this year are in China.

In the face of this, prominent research and industry groups in Europe are calling for a budget of around €200 billion for Framework Programme 10, to enable large scale investment in ground-breaking technologies, new scientific knowledge, and the training of the next generation of researchers.

As we have seen, the political will to invest in EU research is there – the much more difficult question is where the money comes from, So far, neither the EU’s political power players nor the EU research stakeholders have provided an answer.

Next Generation EU 2.0

On first glance, it seems rather straight forward. In 2020, the EU set up ‘Next Generation EU’, a programme financed by selling bonds on the international financial markets, which provided additional funds for the regular EU budget of around €702 billion. This additional money went partly into national post-COVID recovery plans and partly into existing EU funding programmes such as Horizon Europe. The catch is the Next Generation EU is intended as a one-off programme and it is expiring. A successor is not currently officially planned.

Agreeing to a new version of next Generation EU seems a no-brainer, since it allows for fresh money without raising the contributions of the EU’s net paying countries. Ironically, however, resistance can be expected from the EU’s largest contributor. The party of Germany’s finance minister Christian’ Lindner, the FDP, polemicises against an "EU debt union".

Based on previous experience of EU budget negotiations, net paying countries are going to resist increasing their contributions and it is equally unlikely that other EU expenditure is going to be cut to pay for more investment in research.

A third alternative is therefore seemingly gaining traction in some member states in the form of a re-nationalisation of European research funding through thematic “partnerships”, an already existing Europe instrument which foresees financial contributions by the European Commission, interested member states and, in some cases, industry.

In practice this approach is ripe with problems. First of all, it privileges those rich member states that can afford to co-fund partnerships.

Second, the decision-making process in which partnerships a given member state participates (there are already 50) is not always transparent.

Third, national co-funding goes against the common spirit of European unity, since (generally speaking) only entities from participating countries benefit from research funding through these partnerships.

Insisting on increased national co-funding is also somewhat ironic, since most EU members still fail to invest 3% of their GDP on national research and innovation budget, a target they set in 2002 and which, it seems, is being postponed indefinitely to the future.

Somewhat tellingly, the 3% target is not mentioned once among 20 different actions that the member states are addressing as part of the European Research Area.

One thing is clear: the EU's challenges - sometimes referred to as a polycrisis - make it all the more urgent for Europe to invest in its own future. Of three available options to source the necessary funding, overcoming ideological resistance to a next Generation EU successor would be the surest way to ensure FP10 has enough moneyto make a real impact. After all, nation states also regularly issue government bonds. And just like government bonds, the bonds from the EU fund are repaid in the long term.

The choice is stark. If we not find the means to invest more in research and innovation, Europe risks becoming little more than a Disneyland for tourists: open from 9 to 5—Beijing time.

Daniel Spichtinger, is a consultant on EU research policy and projects.