Europe is currently facing an innovation challenge and is in the process of falling behind the two powerful economic blocs represented by the United States and China. The Draghi Report, unveiled in September 2024, provides an in-depth diagnosis of this situation and proposes a series of ambitious measures to remedy it. Its priority is to put an end to the fragmentation of the European market. A massive investment shock of €800 billion a year between 2025 and 2030 (equivalent to 4.7% of EU GDP) is recommended, with a potential productivity increase of 6% over 15 years.
This article looks at its main measures for stimulating innovation in Europe.
Speeding up the development of European technologies
The Draghi report highlights that the productivity gap with other world powers is mainly due to Europe's lag in the technology sector. Europe suffers particularly from the absence of champions in disruptive technologies, notably in digital technology and biotechnology. This situation can be explained by an excessive concentration of European companies in mature technological sectors, where R&D efforts are less intensive due to a low potential for disruptive innovation.
Use of AI and data
To reduce compliance and administrative costs for SMEs, it is proposed to allow the use of software powered by artificial intelligence (AI) and data processed by machines. This would facilitate innovation by reducing administrative burdens and allowing SMEs to focus on developing their innovative projects. AI could also play a crucial role in optimising processes and improving operational efficiency.
Ecological transition and growth
The report stresses that the ecological transition is a major lever for economic growth in Europe, offering a dual opportunity: to respond to urgent environmental needs and to stimulate economic innovation. This transition represents not only an obligation to mitigate climate change and preserve natural resources, but also a unique opportunity for :
- Developing new areas of innovation: The ecological transition is paving the way for the emergence of new sustainable technologies, products and services, creating new opportunities for growth and employment.
- Creating sustainable competitive advantages: By adopting environmentally-friendly practices and technologies, European companies can strengthen their long-term competitiveness, improve their brand image and meet consumers' growing expectations in terms of sustainability.
- Stimulating investment and green growth: The ecological transition can attract investment in key sectors such as renewable energies, energy efficiency and clean technologies, thereby contributing to Europe's sustainable economic growth.
Creation of a "competitiveness pillar
The European Union is developing the "Competitiveness Pillar" concept to strengthen the competitiveness of European businesses, particularly SMEs, by promoting innovation, growth and employment. This pillar aims to simplify administrative procedures, reduce regulatory burdens and improve access to finance, thereby helping to promote sustainable economic growth and maintain the EU's position as a major player in the global economy.
Reforming the budget and reducing the EU's strategic dependencies
To strengthen the impact of the EU budget and reduce strategic vulnerabilities, several key measures can be considered:
Reform of the EU budget :
- Focusing resources on strategic and innovative projects.
- Reducing the current dispersal of funds to maximise their effectiveness.
- Focus on initiatives with high growth potential to stimulate innovation.
Reducing strategic dependencies :
- Developing strategic autonomy in key sectors.
- Reducing our technological dependence on China (low-carbon technologies) and the United States (digital technologies).
- Building resilience to geopolitical shocks.
An effective and flexible approach to financing innovation :
- Simplification and consolidation of funding programmes to better concentrate resources.
- Setting up dedicated financing schemes for technology companies and clean technologies.
- Improved budgetary flexibility to enable dynamic reallocation of resources in response to emerging opportunities and challenges.
InvestEU programme
The InvestEU programme plays a central role in supporting large-scale, high-risk investments. It is proposed to increase the size of the EU guarantee for this programme, in order to focus on financing ambitious innovative projects. InvestEU could thus become a major catalyst for innovation projects, offering substantial funding and attracting private investment.
These initiatives demonstrate Europe's clear determination to catch up and position itself as a world leader in innovation. By investing in strategic projects and supporting innovative companies, Europe can create an environment conducive to sustainable economic growth and future prosperity.