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R&D spending in EU expected to be many billions lower in 2020

Image: Africa Studio, via Shutterstock

Expected drop could be much bigger than previously estimated €3.9 billion

Covid-19 could cause total EU R&D spending to decline by many billions of euros in 2020, with the drop being potentially much higher than initially estimated.

The European Commission previously predicted a decrease for the year of €3.9 billion (1.3 per cent), characterising this as “a very large estimated loss of total public and private EU R&D investments”.

However, that was in late March, before the full extent of restrictions on movement and economic and research activity became apparent. Developments since then could have a substantially bigger impact.

The €3.9bn figure was based on an OECD report from 2 March that predicted 2020 GDP growth for the Euro area of 0.8 per cent year-on-year and globally of 2.4 per cent – just 0.3 percentage points lower globally than had been predicted before Covid-19 emerged.

But on 14 April, the OECD updated its estimates, indicating that the impact of the pandemic on GDP could be larger than previously thought.

“If the shutdown continued for three months, with no offsetting factors, annual GDP growth could be between 4 and 6 percentage points lower than it otherwise might have been,” the newer OECD report said.

The bleaker OECD estimate seems to be supported by recent EU data.

According to a 30 April announcement from the EU statistics agency Eurostat, EU GDP fell by an estimated 3.5 per cent in the first quarter of 2020 relative to the last quarter of 2019, making first quarter 2020 GDP 2.7 per cent lower than the first quarter of 2019. 

The Commission declined to provide an updated estimate of its expected fall in EU R&D spending, but Research Professional News understands it is working on a calculation.

In its earlier estimate, the Commission said the fall in spending would be “particularly noticeable in countries such as Germany which host many…large R&D investing companies and labs”. It said: “Innovation processes will slow down as employees in R&D labs and testing facilities may have to stay home.”

Mobility of researchers was expected to be “marginal or close to zero, focusing only on a very limited set of health professionals that do research”, the Commission said then. It warned that this would have “a durable negative impact on Europe’s scientific production, breakthroughs and the translation of scientific outcomes into solutions, which will be very hard to reverse over the medium term, as national science capacity is built very progressively”.

The Commission added at that time that the cancellation of scientific events due to the pandemic was predicted to have “major significant impacts on scientific developments in the medium run”.

A version of this article also appeared in Research Europe