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Horizon 2020: research and innovation for growth

Updated on 29 October 2013

Horizon 2020 will be one of the main European Union instruments aimed at achieving an “Innovation Union“, one of the Europe 2020 growth goals. It will focus on research outputs and innovation, with the goal of accelerating the commercialisation and diffusion of innovation.

Simplified framework

The Commission’s Horizon 2020 package brings together in a single strategic programme the three main current initiatives and sources of funding for EU research and innovation: the Framework Programme for research (FP7), the innovation part of the Competitiveness and Innovation Framework Programme (CIP), and the European Institute for Innovation and Technology (EIT).

Putting these instruments in one common framework aims to improve efficiency, create synergies and simplify rules for participation. In particular, it aims to increase industry participation levels in EU R&D programmes which have fallen over the past 15 years, from 43% in FP4 to 37% in FP5, to 29% in FP6 and 31% so far in FP7. Some large firms have decided to stay out for strategic reasons, not wanting to share their knowledge. However, other reasons regularly mentioned relate to the increasing complexity of participation and use of funding.

To reverse this trend, among other things Horizon 2020 includes a dedicated SME instrument, equity and debt facilities, public-private partnerships (PPPs) and some changes to simplify funding rules. After 9 trilogues the agreement with Council, incorporating many EP amendments, was reached on 25 June 2013: the agreed funding model will pay up to 100% of direct costs (e.g. machinery bought for the project, travel), plus an additional 25% on top to cover indirect costs (e.g. heating, lightning, facility maintenance). Indirect costs will not be reimbursed on full time basis but the Commission committed itself to clarify the possibility of transferring some of the costs incurred in operating large infrastructures into direct, fully reimbursable costs.

Improving R&D commercialisation

The Commission’s impact assessment shows that Horizon 2020 would add an extra 0.53% to EU GDP by 2030, and it would increase employment by 0.21% also by 2030.

To achieve its goals, the programme is to address Europe’s structural innovation gap. Directly commercialisable outputs have not been a core objective of the Framework Programmes in the past. Moreover, the latest data on patenting shows that Europe continues to lag behind its main global competitors. Not only has the EU developed fewer patents, but the economic revenue obtained from the total licensing of these patents is much lower than in the USA or Japan. Overall, the gap has widened considerably over the past decade, in particular with remarkable growth in R&D intensity in the major research-intensive countries of Asia.

Budget question

Initial Commission’s proposal was €80 billion and the EP had called for the 2014-2020 budget to be increased to €100 billion. However the outcome of negotiations with Council within the Multiannual Financial Framework exercise has seen the final figure decrease to €70 billion. This agreement now paves the way for the formal adoption of the “Horizon 2020” legislative package by the European Parliament and the Council in the coming months.

Figure 1: Evolution of global budgets of R&D programmes (€ billion/current prices)

Horizon 2020

Data source: European Commission

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