The European Parliament wants each member state to spend at least 3 per cent of its gross domestic product on research - nearly double the current amount.
Responding last week to the European Commission's proposals for a European research area, the parliament said all EU states should aim to achieve this level of spending within two years.
It acknowledged that it would be impossible for public authorities alone and said: "Considerable political efforts must therefore be made to improve the preconditions for increasing private-sector contributions in this sphere and raising public awareness."
Latest figures show that just 1.8 per cent of Europe's GDP is spent on research, compared with 2.8 per cent in the United States and 2.9 per cent in Japan.
The United Kingdom spends just above average at 1.87 per cent, but less than Germany, France, the Netherlands, Denmark, Finland or Sweden.
The European Parliament call on member states to create better conditions for allowing businesses access to research results and "not to regard national research programmes solely as programmes intended primarily to strengthen their own economies, but as ways of promoting economic growth, competitiveness, employment and cohesion throughout the European Union."
It criticised "unnecessary legal obstacles", such as the difficulty and expense of establishing patents and suggests tax incentives for businesses that invest in scientific research.
It also stressed the importance of informing the public better on the need for research and on the results it produces so as to encourage more graduates to take it up.
Philippe Busquin, European commissioner for research, mooted the idea of a European research area when he was appointed last year, and it was officially launched at the European summit in Lisbon in March.
Its principal aim - to be achieved with the help of about Pounds 10 billion in loans from the European Investment Bank - is to map research and development excellence in all member states by next year.
In addition, it will set up ways of networking research programmes to try to coordinate the splintered system of research in universities, scientific institutions, international organisations and industry.
Neil MacCormick, Scottish National Party MEP, speaking for the European Parliament's legal affairs committee, said: "It is shocking and alarming that the past five years show a relative decline of research expenditure between the EU and Japan and the US. The future of Europe depends on high-quality research and a determined application of research results in technology and industry."
His opposite number on the legal affairs committee, Malcolm Harbour, Conservative and Unionist Party MEP, said: "We really need to make better use of all the intellectual capabilities that we have across the EU by improving ways of working together ... we have to encourage research and development of skills in taking products to market."
Work to bring about a European research area is expected to begin after a meeting of the European Research Council in June.