Expert Insights on the 2025 EU Industrial R&D Investment Scoreboard

Europe is facing a defining challenge. In an increasingly competitive global environment, research and innovation (R&I) have become central to economic growth, industrial leadership, and strategic autonomy. Strengthening R&D investment in Europe is no longer optional — it is essential to close the competitiveness gap with global leaders.

The 2025 EU Industrial R&D Investment Scoreboard (The 2025 EU Industrial R&D Investment Scoreboard | IRI), published by the European Commission’s Joint Research Centre, provides a data-driven assessment of Europe’s innovation performance. When analysed alongside Mario Draghi’s report on European competitiveness and Enrico Letta’s report on the future of the EU Single Market, the conclusion is clear: Europe must significantly increase and better structure its investment in R&D, while addressing structural barriers that limit scale and cross-border impact.

What the EU Industrial R&D Investment Scoreboard reveals

In 2024, R&D investment by EU-based companies grew by 2.9%, a pace significantly below the growth rates recorded in the United States (7.8%), Japan (7.1%), and other major innovation-driven economies. This gap reflects structural and strategic challenges: while Europe continues to host world-class companies and research excellence, its investment intensity and capacity to scale remain limited compared to global peers.

Europe maintains strong industrial capabilities in sectors such as automotive, energy, and health, which continue to drive regional technological leadership and industrial employment. However, the Union lags in high-growth digital and technology-intensive sectors, including software, artificial intelligence, advanced ICT, and high-tech industrial platforms. This structural imbalance restricts Europe’s ability to develop globally competitive technology leaders, attract substantial private investment, and fully exploit cross-border innovation ecosystems.

The Scoreboard highlights a growing concentration of R&D investment among a relatively small number of global firms. In particular, US big tech companies dominate ICT and digital R&D, capturing an unprecedented share of global investment. While EU firms remain strong in automotive and energy, they face increasing challenges in twin-transition technologies, where digital and green innovation intersect, including clean mobility, smart grids, and AI-enabled energy solutions.

The Scoreboard’s extended EU analysis of the top 800 R&D-investing companies shows that Germany and France remain the largest contributors, yet innovation intensity varies significantly across Member States. While innovation leader countries have seen sustained R&D growth of 6.8% annually over the past decade, moderate innovator countries show much lower growth (2.5% annually), and fewer small and medium-sized R&D-intensive firms are emerging. This disparity underscores the need for framework conditions, regulatory alignment, and capital availability to scale innovative companies across Europe.

EU leadership in green patents is notable, particularly in circularity, energy-intensive industries, and clean transport, reflecting Europe’s strategic commitment to the green transition. Yet gaps remain in emerging technologies where green and digital converge, highlighting the need for targeted policies and investments to ensure Europe can compete in both the twin transition and the global technology race.

European competitiveness and innovation: the Draghi and Letta perspective

The Scoreboard’s findings resonate strongly with the strategic analyses shaping EU policy:

Mario Draghi highlights the growing innovation and productivity gap between Europe and its main competitors. He calls for substantial mobilisation of public and private investment, deeper capital markets, and regulatory frameworks that actively support innovation and industrial transformation.

Enrico Letta addresses persistent fragmentation in capital, talent, and innovation markets. His proposal for a “fifth freedom” — enabling the free circulation of knowledge, talent, and innovation — directly targets barriers that continue to limit R&D intensity and cross-border scale-up.

Together, these reports reinforce a shared message: Europe has the knowledge and talent, but lacks sufficient scale, speed, and investment intensity in R&D. Unlocking this potential requires both financial and structural integration, particularly via the Single Market and Capital Markets Union, which can facilitate cross-border investment and scaling of R&D-intensive firms.

Zabala Innovation’s long-standing role in European R&D policy

At Zabala Innovation, supporting European research and innovation has been a core mission since the very first EU Framework Programme (FP1). Over the past decades, we have accompanied the evolution of European R&I policy through the first framework programme on Research and Innovation to Horizon Europe, working with companies, research organisations, universities, and public authorities across Europe.

This long-term engagement provides deep insight into how European innovation funding, policy priorities, and instruments evolve — and how organisations can position themselves strategically to maximise their impact.

Preparing for FP10 and the European Competitiveness Fund

As the EU prepares the next generation of innovation instruments, including FP10 and the European Competitiveness Fund, Zabala Innovation is already helping clients anticipate policy developments, funding opportunities, and strategic positioning.

These upcoming frameworks are expected to play a critical role in:

• Strengthening European industrial competitivenes
• Supporting strategic technologiesMobilising private investment in R&I
• Enhancing Europe’s technological sovereignty
• Early strategic positioning will be key for organisations aiming to benefit from these programmes.

From R&D policy to measurable impact

Experience shows that effective R&D investment requires more than increased funding. It depends on:

• Clear and aligned innovation strategies
• Smart use of EU and national R&D funding instruments
• Strong public–private partnerships
• Predictable and innovation-friendly regulation
• The ability to scale innovation across European markets

When these conditions are met, R&D becomes a powerful driver of competitiveness, sustainability, and long-term economic resilience.

A call to action for Europe’s innovation ecosystem

The 2025 EU Industrial R&D Investment Scoreboard is not just a benchmarking exercise. Its data, combined with Draghi and Letta’s analyses, form a strategic call to action: strengthening R&D investment is fundamental to securing Europe’s long-term prosperity and global leadership.

Supporting the fifth freedom, leveraging the Single Market and Capital Markets Union, and aligning public and private investment are critical steps to scale innovation, foster digital and green technologies, and close Europe’s competitiveness gap.

At Zabala Innovation, we remain fully committed to helping organisations participate in the European R&I ecosystem, access funding, and transform innovation ambition into tangible impact.