INNOVATION PRIORITIES FOR EUROPE

Presentation of J.M. Barroso,

President of the European Commission, to the European Council of 4 February 2011
Contents
1

I. Europe risks losing ground

II. What’s wrong in Europe?

III. What can we do about it?

1. ‘Smart’ fiscal consolidation

2. Improved framework conditions

3. Steer and monitoring at EU level

4. A future-oriented EU budget

Presentation of J.M. Barroso to the European Council, 4 February 2011

Europe risks losing ground
2

• Share of GDP on R&D:

ƒ EU: 2%
ƒ US: 2.8%
ƒ Japan: 3.4%

• Our target = 3% in 2020

• Current national targets only 2.7-2.8%

• In net spending, China will spend more than the EU in 2014

• Share of persons aged 25-34 with a university degree:

ƒ EU: 34%
ƒ US: 42%
ƒ Japan: 55%

Presentation of J.M. Barroso to the European Council, 4 February 2011

EU research and innovation performance
compared to US, Japan and China
3

60
46 49
40
40 32

20
China
0 EU
US Japan
-20

-40

-60 - 55
- 61
-80
2006 Scoreboard
2010 Scoreboard

(US is steadily performing nearly 50% better than EU.

China is still 55% below EU but is catching up).

Source: Innovation Union Scoreboard 2010,

Presentation of J.M. Barroso to the European Council, 4 February 2011 http://www.proinno-europe.eu/metrics
The EU is slowly falling behind on R&D
4

Evolution of world R&D expenditure in real terms

(in € billion at 2000 prices)

450

400

350
US
300

250
EU - 27
200
China
150
Japan
100

50 India
0
2004 2008 2012 2016

Presentation of J.M. Barroso to the European Council, 4 February 2011 Source: European Commission
Europe has world-class innovators…
5

Research and innovation performance index:

best performing EU countries compared to Japan and US
1,000

0,900

0,800

0,700

0,600

0,500

0,400

0,300

0,200

0,100

0,000
EU FR AT JP BE IE US UK NL DE FI DK SE

Source: Innovation Union Scoreboard 2010,

Presentation of J.M. Barroso to the European Council, 4 February 2011 http://www.proinno-europe.eu/metrics
… but performances vary significantly
6

Research and innovation performance: EU Member States

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

E
K

K
L
U

LU
27
PT

FR

AT
LV

SK
PL

EL

ES

BE

FI

SE
LT

SI

IE
O

IT
BG

EE

N
C

C
M

D
U

D
H
R

EU

Source: Innovation Union Scoreboard 2010,

Presentation of J.M. Barroso to the European Council, 4 February 2011 http://www.proinno-europe.eu/metrics
What’s wrong in Europe?
7

• Poor availability of finance

• Costly patenting

• Lack of legal and tax level-playing field

• Outdated regulations and procedures

• Slow standard-setting

• Weaknesses in public education and innovation systems

• Failure to use public procurement strategically

• Fragmentation of efforts

Presentation of J.M. Barroso to the European Council, 4 February 2011

What can we do about it?
8

• ‘Smart’ fiscal consolidation

• Improved framework conditions

• Steer and monitor at EU level

• A future-oriented EU budget

Presentation of J.M. Barroso to the European Council, 4 February 2011

Priority 1: ‘Smart’ fiscal consolidation
9

• Current financial and fiscal pressures may lead to cuts in R&D

and innovation

• We need rigorous fiscal consolidation and growth-friendly

expenditure

• Several Member States are managing to maintain or increase

public investments in innovation and R&D

Presentation of J.M. Barroso to the European Council, 4 February 2011

Priority 2: Improved framework conditions
10

• Create a true EU market for venture capital funds

• Act on intellectual property rights

• Pool excellence in areas of societal concerns:

cf. first Innovation Partnership “healthy and active ageing”

• Faster setting of European standards

• Best practices in using public procurements

Presentation of J.M. Barroso to the European Council, 4 February 2011

Access to finance is more limited in Europe
11

Venture capital in % of GDP, 2000 and 2009

1.2

1.01
1.0

0.8

% 0.6

0.4

0.22
0.2 0.13
0.09

0.0

United States EU estimate

2000
2009

Presentation of J.M. Barroso to the European Council, 4 February 2011

Standards and IPR are key
12

• GSM = Europe world leader

(EU-funded R&D; common EU standard set
quickly; a single legal framework)

• Wi-Fi = Europe follower

(EU-funded R&D but process too slow to set
an EU standard => result = non-EU, US industry-
driven standard has become market leader)

• Electric vehicle

Presentation of J.M. Barroso to the European Council, 4 February 2011

Public procurement can make the difference
13

R&D procurement expenditures

(excluding defence, in € billion in 2007)

16

14

12
€ Billion

10

0
United States EU and
its Member States

Presentation of J.M. Barroso to the European Council, 4 February 2011

Priority 3: Steer and monitor at EU level
14

• Clear role for the European Council to steer progress

• Use the overall 3% R&D target as a compass

• Task Council formations to deliver the “Innovation Union”

• Complete the European Research Area by 2014:

ƒ Unblock deal to ensure full mobility of researchers
ƒ Attract new talent

• Monitor national and EU efforts:

ƒ European Semester
ƒ Europe 2020 strategy

Presentation of J.M. Barroso to the European Council, 4 February 2011

Priority 4: A future-oriented EU budget
15

• A common strategic framework to pool resources and facilitate

joint programming

• Tap innovative sources of funding:

cf. EU risk-sharing facility for R&D: each € invested x 30

• Simplification is key but it requires strong political will at all levels

Presentation of J.M. Barroso to the European Council, 4 February 2011

EUROPE 2020