Earlier this week, the European Commission proposed to make changes to the long-term EU budget (Multiannual Financial Framework 2021-2027) which will affect Horizon Europe and several other EU programmes.
The proposals seek to provide for targeted reinforcements in a small number of priority areas, to ensure that the EU budget can continue to deliver on the most essential objectives, including promoting the EU’s long-term competitiveness in critical technologies.
In addition to a €50 billion assistance package for Ukraine and dedicated funding to help the EU manage migration, strengthen partnerships and address emergencies, the Commission’s proposal also envisages the creation of a new Strategic Technologies for Europe Platform (STEP) with the capacity to generate €160 billion of investments.
Announced by President von der Leyen in her State of the Union address last year, STEP will help to promote the EU’s long-term competitiveness in critical technologies, in the fields of digital and deep tech, clean tech and biotech. It will build on and top up existing programmes such as InvestEU, Innovation Fund, Horizon Europe (the European Innovation Council – EIC), European Defence Fund, EU4Health and Digital Europe for quick and effective deployment of innovative solutions on the ground. In addition to this, a new innovative structure will be set up to direct existing funding towards STEP projects to speed up implementation in areas which have been identified as crucial for Europe’s leadership.
Under the STEP, a Sovereignty Seal and a Sovereignty Portal will be created to promote synergies among the existing EU programmes. The Sovereignty Seal – an EU quality label for high-quality projects that could not be funded due to budgetary constraints – will be awarded to projects contributing to the STEP objectives, provided that the project has been assessed and complies with the minimum quality requirements of a call for proposals under Horizon Europe or other relevant EU programmes and funds. Suitable projects with the Sovereignty Seal will get privileged and simplified access to other sources of funding under the STEP.
In addition, a Sovereignty Portal will serve as a one-stop shop to help project promoters and companies seeking funds find relevant information about funding opportunities under EU budget programmes for STEP investments.
Impact of the proposed changes on the budget of Horizon Europe
To boost the investment capacity dedicated specifically to promoting STEP objectives, the Commission proposes to allocate an additional €10 billion to several EU programmes, including €0.5 billion to the EIC under Horizon Europe, which will be complemented with more than €2 billion of redeployments (funds diverted from other parts of the programme) and use of decommitted amounts (unused funds from past EIC calls and projects).
The proposed changes to the EIC budget, amounting to an additional €2.63 billion during the period 2024-2027, are as follows:
- €500 million of new funding is allocated as part of the revision of the current long-term EU budget
- €800 million proposed to be diverted from the six Clusters of Horizon Europe’s Pillar II ‘Global Challenges and European Industrial Competitiveness’ between 2025 and 2027 (no funds would be diverted in 2024 to avoid changes to the 2023-2024 Work Programme of Horizon Europe)
- €130 million from the reflows of the EIC pilot under Horizon 2020
- €1.2 billion resulting from total or partial non-implementation of research projects supported by Horizon Europe and its predecessors
Detailed information about the amounts that the Commission proposes to redirect from other parts of Horizon Europe is available on p.57 of this document.
Consequently, if the Commission’s proposal is approved, the six Clusters of Horizon Europe would end up with lower budgets in the final years of the programme and thus fund fewer collaborative projects. At the same time, the EIC would have its budget significantly increased during the same period to help the EU fund market-creating innovation.
While the exact split of the additional funds between the three main funding instruments of the EIC (Pathfinder, Transition and Accelerator) is expected to be agreed upon at a later stage, the early information provided by the EIC suggests that it could be entirely channelled through the EIC Fund to provide equity-only support (not grants) to innovative companies under the EIC Accelerator scheme.
Next steps
The proposed amendments to the long-term budget, as well as the various legislative proposals for STEP and other initiatives, will need to be approved by the European Parliament and EU Member States in the Council of the EU.
Discussions between both institutions will take place during the Spanish Presidency of the EU, which will commence on 1 July and will need to be concluded by the end of the year.