The European Union is at a critical juncture for its technological competitiveness. With Ursula von der Leyen at the helm of the European Commission, but without an absolute majority in the European Parliament, and facing the strategic challenges posed by the US under Donald Trump's leadership, Europe is at a crossroads: will it be able to transform its ambitions for innovation into real geoeconomic power?
At the heart of the proposals for the next long-term budget (MFF 2028–2034) is the recently announced European Competitiveness Fund (ECF), currently under discussion, which aims to mobilise public and private capital to support strategic technologies. The exact size of the fund is still being negotiated. Still, estimates point to a potential envelope of €400–450 billion, integrated into the new budgetary framework of around €2 trillion proposed by the Commission. The ECF is expected to focus on strategic areas such as climate transition, digitalisation, health and biotechnology, and defence/space. However, the final allocation of the budget depends on negotiations with Member States. Many governments may be reluctant to reduce traditional budget lines, such as agriculture and cohesion, in favour of instruments whose effectiveness still needs to be demonstrated.
In parallel, the successor to Horizon Europe is being outlined, with a budget of around € 175 billion recommended by various stakeholders, including scientific and industrial associations. However, the final figure will only be known after inter-institutional negotiations. The logic of complementarity between the future R&D program and the ECF is clear. While the research program would support the entire scientific journey up to pre-commercialisation, the ECF would seek to accelerate industrial scale-up and the implementation of critical technologies.
One proposal that has received little public discussion is the Commission's suggested "EU Preference" mechanism, which would prioritise strategic technologies produced within the Union. Although lacking final details, this approach aims to use public resources to reduce the risks to private investment in sectors such as AI, biotechnology, and defence, thereby strengthening European technological autonomy and reducing external dependencies.
The proposed governance for the ECF also reflects a more coordinated approach: the creation of a Strategic Stakeholder Board, appointed by the Commission, and an Emerging Technologies Observatory that can identify market failures and guide investments. These instruments are still in the conceptual phase, but they illustrate the objective of making the fund proactive and mission-driven rather than just another financial mechanism.
This redesign of instruments is aligned with the recommendations of the Draghi Report, which warned of stagnant European productivity and estimated that the EU would need to mobilise an additional €750–800 billion annually—around 5% of GDP—to recover global competitiveness. This, however, is an analytical scenario rather than a formally adopted institutional target.
Despite the ambitions, the risks remain evident: implementation may be slow, coordination between Member States is complex, and there is political resistance to significant budgetary changes. Furthermore, the mobilisation of private capital for deep tech projects will only fully occur if the European regulatory environment is sufficiently favourable and predictable. Still, there are encouraging signs. According to the Industrial R&D Investment Scoreboard 2024, European companies increased their R&D investment by 9.8% in nominal terms in 2023, surpassing US companies (+5.9%) for the second consecutive year and partially reducing the historical gap in private R&D investment between the EU and the US.
Compared to the United States, where innovation combines intense private investment with robust federal programs such as DARPA and the NIH, Europe is still striving to build a similarly integrated ecosystem. The ECF + upcoming Horizon Europe pairing offers an unprecedented opportunity to bring these two dimensions closer together under a European logic: coordinated, mission-driven, and aligned with common strategic priorities.
The EU thus has a new window of opportunity. With von der Leyen pushing to modernise the budget, Europe can reinvent its role on the global innovation stage. But success will depend not only on the announced financial amount, but also on the political capacity to implement, coordinate, and deliver concrete results. The clock of competitiveness is ticking, and Europe knows it cannot miss this moment.
Opinion article by Talita Soares, EU Strategy & Policy Advisor.
