On 1 September, the European Commission’s Joint Research Centre (JRC) released a new report, titled “Can Horizon Europe help to close the competitiveness gap?”, as part of its “Working Paper Series For a Fair, Innovative and Sustainable Economy”. While the report focuses on Horizon Europe, its analysis also draws on data from Horizon 2020, concluding that these programmes have so far not succeeded in narrowing the competitiveness gap between the European Union and the United States. The study notes that US research and development (R&D) intensity increased by nearly one percentage point between 2013 and 2023, compared with only 0.15 percentage point in the EU. According to the author, this gap is largely due to growing private sector-led research in the US, which represents nearly 3% of GDP, against only 1.2% in the EU.

While the report adopts a narrow definition of competitiveness, measured largely through the performance of companies participating in the EU’s framework research programmes, it provides interesting insights into Horizon Europe’s relevance and efficiency, as the EU prepares its plan for the 2028–2034 period. It points out that, on average, €13 billion from the EU budget is attributed to Horizon Europe annually, representing only 0.1% of EU GDP and a small percentage of the €380 billion spent on private and public research and innovation each year, as national funding accounts for 90% of total public spending.

In order to address this disparity and promote further alignment at the EU level, the European Commission has announced the creation of a Competitiveness Coordination Tool, intended to ensure the implementation at both EU and national levels of shared EU policy objectives. However, empirically, such cooperative tools have not worked well nor delivered significant competitiveness gains. In addition, cross-border benefits are very difficult to quantify, making it even more complicated to overcome the tendency to prioritise national interests first. Still, the report highlights the advantage of the Horizon programmes compared with national funding in financing projects on a competitive basis, whereas domestic schemes tend to favour established research-performing institutions.

When looking at the private sector beneficiaries of Horizon funds, despite data showing that Horizon constitutes a significant source of R&D funding for SMEs, the author finds that Horizon 2020 and Horizon Europe have disproportionately benefited large firms, with the three biggest beneficiaries – Airbus, Leonardo and Siemens – collecting about 5% of the total grants going to companies overall. This outcome is not due to the attribution of a few very large grants, but rather results from a large number of projects. However, these financial resources were not found to have a measurable effect on revenues, R&D expenditures or overall company performance of these three beneficiaries over the last ten years, which the study equates with a limited impact on competitiveness.

Overall, companies that received funding through large collaborative projects, such as those under Pillar II of Horizon Europe, have shown limited increases in employment and revenues, which often levelled off at the close of the projects. By comparison, smaller consortia and the Horizon 2020 SME programme, which preceded Horizon Europe’s Pillar III, tended to achieve more sustained increases in employment and revenues. The report suggests that the size and structure of consortia can influence outcomes for competitiveness and notes that adjustments to consortium rules or fund allocation could help optimise the impact of collaborative projects.