1. EUR17 billion of support was made available between 2014 and 2020 to strengthen the innovation and growth potential of EU businesses

2. Funding for close-to-market research did not systematically target projects with the highest commercial or innovation potential

3. Participants' economic performance and innovation capacity were not tracked

Funding for close-to-market research under the "industrial leadership" priority of Horizon 2020 - the EU's 2014-2020 research flagship programme - was not sufficiently geared towards commercialisation of innovative ideas and products, according to a report published today by the European Court of Auditors (ECA). While the auditors acknowledge that EU strategic priorities were reflected in work programmes, they make several recommendations to strengthen technology transfer and market uptake. They also call for improved monitoring and methods to assess lasting economic value.

"For true industrial leadership, the EU must consistently ensure that public investment translates into market-ready innovation, stronger private-sector participation, and sustainable economic growth. That has not always been the case", said Petri Sarvamaa, the ECA Member in charge of the audit. "There is a persistent gap between research and commercialisation, even for close-to-market research. The next generation of EU research and competitiveness programmes must ensure this gap is significantly reduced".

A substantial share of Horizon 2020's "industrial leadership" funding of around EUR13.6 billion was dedicated to helping EU businesses, particularly small-and medium-sized enterprises (SMEs), to develop new technologies and translate innovative ideas into commercial opportunities. However, according to the auditors, it is not clear how funding was geared towards the SMEs' business needs. The auditors found that even under Horizon 2020's "industrial leadership" priority, which in principle should support research closest to commercialisation, around half of all funding went to non-profit organisations (research organisations, universities, and other educational institutions).

The "industrial leadership" programme also followed a specific objective to make risk finance more available to SMEs through InnovFin, a set of financial instruments (such as equities and loans) managed by the European Investment Bank Group. However, the auditors found that most InnovFin funding did not reach SMEs, and there are no data on whether these financial instruments effectively supported innovation and commercialisation outcomes. On the positive side, the auditors note that the grants provided through the SME Instrument - the programme's third funding option - did provide effective support for technology transfer. Again, though, commercial uptake was only modest, due to funding constraints, weak exploitation planning, regulatory barriers, and insufficient dissemination and exploitation of research results.

Neither Horizon 2020 nor the current Horizon Europe programme includes eligibility requirements linked to applicants' innovation capacity, meaning that money may not be channelled to those projects which present the strongest innovation potential. Moreover, the European Commission did not assess the innovation capacity or business performance of funded organisations, thus making it difficult to determine whether EU funding generated lasting economic benefits.

Lastly, as regards future EU funding for close-to-market research, the auditors emphasise that a stronger focus on commercialisation, scale-up, and measurable impact will be essential to maximise the return on public investment.

Background information

Horizon 2020 (H2020) was the EU's eighth framework programme for research and innovation, with a budget of around EUR79 billion (EUR77 billion in baseline funding, plus additional funding for nuclear research under the Euratom programme). The "industrial leadership" priority had a budget of around EUR17 billion, 80 % of which was allocated to attaining leadership in six sectors: ICT, nanotechnologies, advanced materials, biotechnology, advanced manufacturing and processing, and space. The remaining budget served to improve access to risk finance for innovative businesses, and to support innovation capacities in SMEs.

Today's audit report is expected to feed into the debate for the preparation of the EU's next generation of research and competitiveness programmes. The ECA has already provided opinions on the new European Competitiveness Fund proposals, alongside a successor to Horizon Europe for the next long-term EU budget period.

https://www.eca.europa.eu/en/publications/SR-2026-24

Contact:

ECA press office: press@eca.europa.eu