The EU's next seven-year budget – and its R&D component – is an opportunity to provide a platform for growth and to determine where we see ourselves in a new world order, writes Tom Enders.
Tom Enders is CEO of EADS, the parent company of the European aircraft maker Airbus.
The failure of the EU summit last week to reach an immediate agreement on the EU's long-term budget makes it even more clear that Europe faces some very tough decisions about its budget for the next seven years.
Whatever the choices, the new budget must ensure intelligent and efficient investment of European taxpayers' money, while not missing the clear priorities for stimulating growth and competitiveness which will determine our future. We still have time to put things on the right track.
To be clear, I am not arguing for a budget increase; and certainly not at a time when most countries in Europe are having to cut back their public spending significantly. The task at hand is much more to do with reprioritising the allocation of scarce budgets, to focus funding on the real growth industries and future technologies rather than on "legacy" sectors of the economy.
Most people would agree that our approach to investing in innovation today will dictate our industrial and technological capabilities tomorrow, and the jobs and growth that come with them. That's why I support the recent open letter to the European Commission signed by 44 Nobel laureates, 6 Fields medallists and more than 130,000 European citizens highlighting the risks of cutting investment in innovation under the new budget.
Quite clearly, allocating more than 40% of the budget to industries of the past means neglecting the industries of the future. It is widely accepted that any investment in research and technology (R&T) delivers lasting benefits and opportunities across a huge range of sectors: energy, education, transport, infrastructure, manufacturing, communications and defence, to name but a few. In fact with aerospace R&T alone, every €100m invested generates another €70m elsewhere in the economy year-after-year.
That's why the €80bn currently earmarked for the Horizon 2020 research and development programme is not just about R&T for the next seven years and it's not just about one sector or industry; it's about the intelligent use of limited resources and it's about widespread European competitiveness, growth and security for the next fifty years.
If that sounds dramatic, remember that R&T investment in the 1970's and 1980's is still filtering through in aerospace and defence technology that we depend on today, and in aircraft that will still be cutting emissions, noise and congestion as we approach the end of the century. Likewise, look at how 3D printing is transforming global manufacturing or how nanotechnology could reshape industries as diverse as energy, communications and pharmaceuticals. And consider how much we rely on technology to protect us from terrorism, be it physical or virtual.
So, while there is no easy way to cut the budget, Europe must avoid any false economies — cuts today that will cost us dearly in the long run. Instead, it must start adopting the kind of lean operational practices that industry relies on to cut bureaucracy and maximise the return on investment.
Industrial success stories like Airbus, Ariane or Eurocopter were born from a determination to replace protectionism with optimism and competitiveness 40 years ago. Europe played to the strengths of each nation: putting resources where they made the most impact instead of spreading them too far; pairing leaders in core competencies with complementary support networks; looking outward, beyond any borders, for opportunities to grow.
It's a simple formula, in which success depends on staying ahead of the field with meaningful, pragmatic innovation. But unfortunately, that's a race which Europe could lose before it even gets started. Because right now, Asia reinvests 3.5% of GDP in R&T, while Europe commits just 2%. And China and South Korea top the ITIF (Information Technology and Innovation Foundation) list of countries improving their capacity for innovation, while Europe lags behind way down the table.
So, at best, cutting the Horizon 2020 budget will cut European leadership of key technologies and of the industrial revolution they are driving, costing us the kind of highly skilled jobs that Europe so badly needs. At worst, it will leave us trailing permanently behind the growing number of nations focused on such opportunities, turning the current economic crisis into rampant industrial decline and leaving us exposed to unnecessary security risks.
The budget decision is, therefore, a straight choice between the rise and fall of Europe. Placing Horizon 2020 firmly at the centre of Europe's seven-year budget would send a very clear message to taxpayers, to industry, to investors, to partners and to competition that we are back in the game, and that we are not content to sit still and watch our innovation and industrial capacity head east.
This isn't just a chance to address Europe's budget. It's an opportunity to define how we can work together more effectively, to provide a substantial platform for future growth and to determine where we see ourselves in a new world order, where the currency in which we trade will be innovation, and where this commitment to innovation secures the next generation's future