Fast tracking state aid for SME research and development

May 22, 2003

Brussels, 21 May 2003

The Commission recently put forward a proposal aimed at simplifying the use of state aid to stimulate SME research and development (R&D) in the Member States. The plan: cut out the middlemen.

Policy-makers have long realised that Europe's ability to compete with its main rivals, the USA and Japan, on innovative R&D rests, to a large extent, on dynamic small and medium-sized-enterprises (SMEs). Hence, policies need to create the right conditions for innovation to flourish in Europe. This reinforces the Lisbon objective and the recently launched EU Action Plan to increase R&D spending to 3% of GDP by the end of 2010.

The European Commission's latest proposal to improve the use of state aid for R&D conducted by SMEs is a step in the right direction. Under the proposed regulation, EU Member States may grant aid for R&D performed by SMEs without having to clear it in advance with the European Commission or with the SMEs themselves. The proposal envisages Member States covering up to 100% of the expenses for fundamental (basic) research, 60% for industrial (market-oriented) research, and 35% for pre-competitive development (market-oriented but pre-commercial research).

Cutting back on red tape will enable Member States to implement measures which favour R&D carried out by SMEs. "It follows the Commission's aim to simplify and streamline the state aid rules and eliminate unnecessary paper work," said Competition Commissioner Mario Monti in a press statement. "It is the first time that the Commission … [has sought] a block exemption … [for] research and development aid," he added.

Breaking down the barriers to R&D

Following the announcement earlier this month, the Commission plans to seek advice from EU Member States on the best way to implement the regulation on R&D aid for SMEs as a group, a 'block exemption', when the needs may vary from one country to another.

European R&D effectiveness is hampered by a lack of coordination, insufficient public support, difficult access to capital and unfriendly fiscal, legislative and regulatory frameworks, according to Research Commissioner Philippe Busquin. He stressed that, in order to reach the goal of becoming the most competitive knowledge-based economy by 2010, as well as the 3% objective, Europe must create conditions that are conducive to research.

"Research in Europe has to face an uphill struggle … The proposed R&D aid notification exemption for SMEs will eliminate needless administrative burdens and boost the use of research funds by enterprises. This is a step forward to achieving the Lisbon goal," he said.

Contact: research@cec.eu.int

More information on this subject:

Action Plan: Investing in research: an action plan for Europe

DG Research
http://europa.eu.int/comm/dgs/research/i ndex_en.html
http://europa.eu.int/comm/research/headl ines.html#02

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