Finance Ministers Threaten EU R&D Ambitions

We live in austere times in which talk of cuts is common. But there’s a difference between making cuts and cutting off your nose. EU finance ministers appear to be arguing for the latter by opposing the Commission’s long-standing plan to spend 3 per cent of European GDP on research and development.

Admittedly, Europe’s record of achievement in this area is not good. The 3 per cent target was set as part of the Lisbon strategy in 2000, and yet most EU countries’ expenditure on R&D has not changed much. In 2000, EU R&D spending was 1.8 per cent of GDP, by 2008 it was 1.9 per cent of GDP. Japan and South Korea – noted for their record on innovation – spend more than 3 per cent of GDP on R&D and China and India are catching the EU fast (all the data is drawn from the EU’s own Lisbon evaluation, which I have linked to earlier in this paragraph).

The EU’s new 2020 strategy also has as one of its key aims an increase in R&D spending to 3 per cent of GDP. Finance ministers might be forgiven for thinking this target lacks credibility, but scrapping it is completely at odds with the European rhetoric of knowledge- and technology-led growth. It also flies in the face of Europe’s low-carbon aspirations.

Needless to say, given our emphasis on innovation – in order to bring down the cost of low-carbon technology – Political Climate takes a dim view of the EU finance ministers’ move. Matthew’s recent post sets out why innovation is so important. While governments necessarily need to make cuts and, for sure, ‘wider indicators to measure R&D and innovation’ are important, if the finance does not go in, the whole innovation process will be starved of breakthrough inventions.

If finance ministers win this battle, European consumers and taxpayers will likely have to dig deeper to fund the EU’s carbon reductions, Europe may miss out on vital, new technological opportunities and its 2020 ambitions for ‘smart, sustainable and inclusive growth’ and job creation will be thoroughly undermined.