Warning comes as political leaders debate options for financial support package
The financing plan EU leaders are working on to support the bloc’s economic recovery from Covid-19 must make substantial use of grants rather than loans to support R&D organisations, a representative body has warned.
Using mainly loans “would limit the capacity of public or not-for-profit research organisations…to provide technology solutions, with huge negative consequences for innovation in the EU,” the European Association of Research and Technology Organisations said in a paper published on 19 May.
Loans can essentially support only near-market innovations and should be used to support only private companies, Earto said. Otherwise, research and technology organisations’ business models will be hit, it said, and in turn the public sector’s ability to alleviate market failures will suffer.
Earto urged EU leaders to swiftly agree the bloc’s 2021-27 budget and to increase the share going to grant-based R&D programmes such as Horizon Europe, the successor to Horizon 2020.
“Europe’s technological excellence will be the decisive strategic factor to build Europe’s economic and industrial recovery, competitiveness, sustainability, digital capacity and resilience in the long run,” Earto said. Investment in R&D has “never been as important”.
EU leaders are discussing options for a financial recovery package, and a milestone came on 18 May when France’s president Emmanuel Macron and Germany’s chancellor Angela Merkel presented ideas for a €500 billion recovery fund.
Their ideas were welcomed by European Commission and European Council presidents Ursula von der Leyen and Charles Michel, but met resistance from leaders of more frugal governments, including Austria’s chancellor Sebastian Kurz.
On 20 May, the Commission issued country-specific recommendations aimed at mitigating a severe economic crisis in the short term and at “achieving sustainable and inclusive growth which facilitates the green transition and the digital transformation” in the medium term.
“The coronavirus has hit us like an asteroid and left a crater-shaped hole in the European economy,” said Valdis Dombrovskis, the Commission’s executive vice-president for the economy. “Once conditions allow, we will need to strike a balance between achieving fiscal sustainability while also stimulating investment.”