Former Italian Prime Minister and current President of the European Central Bank, Mario Draghi, presented the report on European competitiveness to the President of the European Commission, Ursula Von Der Leyen. The report emphasizes the need for increased investment in research and innovation, the urgent reduction of bureaucracy, and stronger funding for European Union programs.

The report calls for doubling the EU’s budget for research and innovation to €200 billion in the next seven-year planning cycle, from 2028 to 2034, under the so-called Framework Program 10 (FP10). Draghi considers the current Horizon Europe program challenging to manage due to the high number of submissions, highlights inefficiencies in public-private partnerships that consume a significant portion of the budget, and suggests reforms to the European Innovation Council (EIC), the main funding instrument for innovative companies.

The next Framework Program supporting research and innovation will therefore play a critical role in addressing the innovation gap. According to the report, it should focus on fewer priorities, with a larger percentage of the budget allocated to disruptive innovation.

The document’s relevance stems not only from its author but also from the timing of its release – as the new European Parliament and Commission prepare to take office, and the European Union’s industrial, competitiveness, and innovation policies are set for revision.

The report highlights a significant gap between the EU and the US in terms of GDP, primarily attributed to Europe’s lagging productivity growth, driven by underdevelopment in the technology sector. Over the coming decades, economic growth will no longer depend on population increases but will rely on productivity gains.

Three key areas for action are identified: bridging the innovation gap with the US and China; developing a joint plan for decarbonization and competitiveness; and enhancing security while reducing international dependencies.

European Commission President Ursula von der Leyen stated that her discussions with Draghi had already influenced her political guidelines for the new term, including the proposal for a Clean Industrial Pact, and that the report would be incorporated into the mission letters addressed to future commissioners.

Overall, the investment needs identified in the report amount to an additional €750-800 billion per year, equivalent to 4.4-4.7% of the EU’s GDP.

Consult the press release here.

Detailed analysis of the report here.