State aid is prohibited under EU law unless it has been explicitly authorised by the Commission, for example, to develop certain economic activities without distorting competition. It has traditionally served to support declining industries such as ship-building, coal and steel.
Commissioner Kroes intends to widen the scope of state aid to include the promotion of R&D and innovation on the grounds that the current level of investment in such projects is less than optimal for the EU economy.
The Barcelona European Council of March 2002 adopted the target of increasing spending on R&D and innovation to 3% of GDP by 2010, but most member states are still far off this goal and the Commission considers that the existing rules for state aid must be modernised to meet this challenge.
According to the new plans, aid will be accepted for activities that address specific market failures hampering innovation. Such projects could include aid for feasibility studies, for young innovative enterprises, for the loan of highly qualified personnel and for the development of innovation clusters.
The reform is part of a wider package of state aid reforms intended to help Europe close the innovation gap with its global competitors, a central theme of the EU’s growth and jobs agenda.
