Horizon Europe Budget – what would be enough for Europe?

horizon-europe

 In 2017, the expert group set up to advise on EU Research and Innovation (R&I) investment recommended that the R&I budget should be doubled, indicating at least €120 billion for Horizon Europe (HE). The main argument was that R&I is a crucial factor of global competitiveness and that the EU's ambition should be to at least align its investment with that of its main competitors, such as the USA, Japan, South Korea or China. An additional point in this recommendation that received less publicity was that such a bold move would have a sizable effect in innovation-led growth, only if it were accompanied by proportional rises in national R&I budgets that constitute about 90% of total R&I investment in the EU.

In 2018, the Commission proposed HE to have a budget of €83.5 billion (in 2018 prices, or 94.1 billion in inflation adjusted prices). This was a significant increase compared to the close to €80 billion allocated to its predecessor, Horizon 2020, considering that in post BREXIT times the 27 EU Member States would also have to cover for the non-negligible contribution of the UK, estimated at around €10 billion. In February 2020, the initial Council agreement on the 2021 – 27 EU budget brought HE budget down to €80.9 billion.

The COVID 19 pandemic brought another round of negotiations. In May 2020, the Commission proposed to add €13.5 billion from the Recovery Fund to the HE budget agreed in February 2020. The long debate on the EU's long-term budget for 2021-2027 at the special European Council summit of 17-21 July 2021 brought back the HE's budget to its February 2020 level: HE would be allocated €75.9 billion and another €5 billion from the Recovery Fund for supporting R&I projects that are closer to market. These figures have been included in the Council draft budget proposal for EU's long-term budget in early September that is expected to be formally adopted at the end of the month. The finalised proposal will be submitted to the European Parliament on 1 October, which will then work towards adopting amendments in November. 

Reaching an agreement on the EU R&I budget will not be straightforward as a number of MEPs have already expressed their strong opposition to the HE successive cuts, based on major concerns that the role of R&I in support of Europe's recovery from COVID 19 and its future development should not be underestimated. Another hurdle to cross towards the final HE budget is reaching an agreement on the amounts to be allocated to its different components, including public-private partnerships, basic research at the European Research Council (ERC), and the new research missions, let alone the budget distribution among the thematic clusters the more traditional collaborative R&I projects will fall into.

However, this is not only a matter of more budget and of which areas of HE to support more than others. A closer look at the EU budget proposal reveals that Innovation is a central theme in other programmes within the HE spending area, like Digital Europe, as well as in other spending areas such as cohesion, resilience and values, natural resources and the environment or security and defence. Programmes in these spending areas, like the (successors of) Common Agricultural Policy (CAP), the European Structural and Investment Funds (ESIFs) and the European Regional Development Fund (ERDF) include strengthening knowledge, innovation and digitisation as major cross- cutting objectives. At the same time, the proposal for Horizon Europe itself lists several such programmes with which synergies can and should be established.

In answering the question of the title, one would need to look at the possibilities at the level of the entire EU budget that can help create / strengthen innovation ecosystems, where research and innovation actors work around common socioeconomic challenges and objectives. In doing so, it should be kept in mind that a main weakness of Europe is its reduced ability to capitalise on the knowledge it generates compared to the other countries / regions, as also stressed in the aforementioned 2017 expert group report.

A major difficulty in this new type of search for funding is that up to know, the different programmes had their specific audiences that in most cases made limited attempts to obtain funding from other sources, despite improvements in the legal frameworks that enabled the productive utilisation of different funding sources. In view of the more or less significant cuts that the HE budget will ultimately have, the main challenge for R&I actors in the new programming period would be choosing the right budget instruments for their ideas and needs. While this may mean moving away from one's comfort zone, the whole process requires more strategic planning and an increased attention to developing new partnerships. Both are key preconditions for innovation projects to succeed.


By Dr Odysseas Cartalos – Associate at Schuman Associates

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