The European Court of Auditors pointed out this Thursday that the 17 billion euros mobilized by the European Union between 2014 and 2020 to promote industrial innovation were not systematically directed towards projects with the greatest potential for commercial exploitation, and that the European Commission also did not carry out sufficient control to verify whether those subsidies helped companies transform their research into products and services with effective market presence.
These conclusions are included in a report released by the European auditors, which questions the results of part of the investments channeled through Horizon 2020, the main community research program of that period, and warns of the lack of data to determine whether public money generated sustainable economic benefits over time.
"In the interest of true industrial leadership, the EU must systematically ensure that public investment translates into marketable innovations, greater private sector participation, and sustainable economic growth. This has not always been the case," warned the member of the Court responsible for the audit, Petri Sarvamaa.
The examination focuses on the "industrial leadership" initiative of Horizon 2020, endowed with about 17 billion euros aimed at strengthening the competitiveness of the European productive fabric, with special attention to small and medium-sized enterprises, through the development of cutting-edge technologies and their subsequent application in business activities.
However, the Court has found that around half of these resources ended up in non-profit entities, such as universities and public research centers, despite the fact that this funding line was designed to favor the market entry of scientific advances. The auditors also consider that it was not sufficiently demonstrated how the specific needs of SMEs were taken into account when allocating the subsidies.
The auditors have also detected deficiencies in "InnovFin," a European instrument created to facilitate loans and investments to innovative companies, given that only a limited fraction of its funds reached smaller companies and there is not enough information to determine whether they actually contributed to promoting products with a clear commercial outlet.
In the opposite sense, the oversight body recognizes that the specific aid lines for SMEs were indeed useful in promoting technology transfer, although their exploitation in the market was "modest" due to difficulties in accessing financing, regulatory obstacles, and the absence of a solid strategy to market the results of the projects.
To these weaknesses is added that neither Horizon 2020 nor its successor, Horizon Europe, include access criteria linked to the innovative capacity of the applicants, which, in the opinion of the Court, increases the risk that the aids do not concentrate on the initiatives with the most options to generate new products and business opportunities.
Likewise, the auditors reproach the Commission for not adequately analyzing the business evolution of the beneficiaries, a lack of follow-up that complicates knowing to what extent community support contributed to strengthening their competitiveness and long-term growth.
"There is still a gap between research and commercialization, even in the case of market-oriented research," lamented Sarvamaa, who has called for reducing that gap in the upcoming European programs and dedicating more attention to the business expansion phase and the performance of public investments.
Brussels claims progress and adjustments in Horizon Europe
For its part, the European Commission has acknowledged the limitations pointed out by the Court regarding the availability, integrity, and reliability of data on the participating companies, although it has defended that Horizon 2020 played a relevant role in strengthening Europe's scientific and technological capacity, in addition to contributing to employment and economic growth.
In its response to the audit, the community executive maintains that it has already introduced changes in Horizon Europe, corresponding to the period 2021-2027, in order to improve the evaluation of the aids through more precise indicators and the incorporation of external information on the financial situation of the beneficiaries, with the aim of measuring their effects even several years after the projects conclude.
Brussels has also claimed the "valuable" role of research centers in bringing new technologies closer to the business fabric and has emphasized that the funded activities reached the expected levels of technological development, especially in the manufacturing industry and in sectors with high energy consumption.
However, it has acknowledged that the previous program did not allow for a sufficient assessment of the innovation capacity of the participants, so it will analyze how to strengthen this aspect in future evaluations, although it has only partially accepted the recommendations of the Court regarding the analysis of business results.
On the other hand, the Commission has rejected the proposals related to the future European Competitiveness Fund, arguing that both this instrument and the upcoming Horizon Europe for 2028-2034 are still subject to negotiation among the community institutions and that it is not appropriate to anticipate their outcome.