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José Manuel Durão Barroso

President of the European Commission

The Innovation Union one year on

Innovation Convention 2011

Brussels, 5 December 2011

Ladies and gentlemen, dear friends,

Welcome to the first annual "State of the Innovation Union Convention" and thank you to Máire Geoghegan-Quinn for having set up this very important event.

It is a pleasure for me to share with commissioners Geoghegan-Quinn and Tajani and with such a distinguished audience my views on the key role of innovation in contributing to growth, jobs and well-being.

History shows - from the Renaissance to the industrial revolution and to the current ICT evolution - that there is no sustainable path to growth and prosperity outside the research-innovation-education triangle.

This is a lesson to remember as the European Union economy is going through the most challenging time in its history and as we try to restore confidence and fiscal sustainability.

We need fiscal consolidation, but smart fiscal consolidation (and I have always said that it is not smart to cut in innovation and research). This is the way to promote growth and competitiveness for today and tomorrow.

Cutting spending in key areas such as innovation, education, research and development would be exactly the wrong cut to do. This would be the shortest way to lower growth and fewer jobs in the future.

This is why innovation is the cornerstone of the Europe 2020 Strategy, our European blueprint to get the economy back on track over the course of the decade.

Innovation is a cross-cutting way of equipping all sectors of our economy to be more competitive.

It is more than product development, it is also about how our society changes and improves.

It is about the way we do business, the way we work, the options we chose as consumers and citizens.

It is indeed about turning new ideas into growth, prosperity, jobs and well-being.

Ladies and gentlemen,

Let me give you a brief assessment of the European Union's innovation performance by recalling a few facts.

Europe starts from a position of strength. It is not short of world-class innovators with the skills and ideas to drive Europe forward. And today's audience is a perfect illustration of this.

A number of our Member States are world leaders in several fields from manufacturing and design to aerospace and telecommunications.

Our economies are supported by some of the world's most dynamic public services and strong traditions in social innovation.

But the truth is that performance is very uneven across Europe. Our collective innovation performance is, in my view, not good enough. Europe is losing ground on several fronts.

And today some emerging powers are rapidly catching up with massive investments in education, research and innovation.

The reality is that we have to do more and better.

Let's look at research.

The share of researchers in the total labour force is of 6% in Europe against 9 in the United States, 11 in Japan.

And yes, we remain the undisputable R&D leader in the automobile sector but we are lagging behind in fast-growing technology driven sectors such as software, hardware and electronic equipment.

And where are our young European leading innovators? In the United States more than half of the leading innovators are in their early 30s, compared to one in five in Europe. US young leading innovators companies account for 35% of total R&D for leading innovators compared to only 7% in Europe.

Let's look now at education. Again the reality is that we have to do more and better.

Only 26% of the workforce currently has a higher education qualification, while 35% of all jobs in the European Union will require high-level qualifications by 2020.

And only 30% of Europeans aged between 25 and 34 have completed a university degree compared to well above 50% in Japan and more than 40% in the United States.

Think also of our entrepreneurs, they struggle with too much administrative opacity and burden. It takes 15 days to start a business in Europe compared to 6 in the United States. And European firms have much less access to venture capital than most of their main international counterparts.

We are by value the largest market in the world but we are still too fragmented and not enough innovative-friendly.

Our services sector accounts for 70% of the economy but our knowledge-intensive services are still under-developed.

Is this situation irreversible? Certainly not.

Europe needs to capitalize on its strengths and to address its weaknesses. We must wake up our sleeping giants notably by completing the Single Market including in services. We must strengthen the links between education, research and innovation and get the right mix of skills.

This is why we have the Innovation Union flagship. It is a strategic and integrated approach to a strategic priority.

It aims at creating the conditions conducive to a successful innovative Europe.

It is about building bridges and pooling resources between EU and national research and innovation systems, between public and private sectors, between the world of science and the world of business, between Europe and our international partners.

It is about doing more, better and faster by removing the bottlenecks for innovative ideas to be turned into products and services that create growth and jobs.

It is also about promoting excellence by training, attracting and retaining the best and the brightest from Europe and from outside Europe.

So where are we one year on the Innovation Union?

Overall good progress has been made.

  • First on building bridges and pooling resources.

Health and ageing is certainly one of the main societal challenges faced by all European countries and where action at European level can bring clear added value.

The pilot European Innovation Partnership "Active and Healthy Ageing", by creating synergies between European, national and regional levels, is turning this challenge into opportunities.

Opportunities for citizens to live independent and healthy lives for longer; and for healthcare companies to expand the market of innovative products and services targeted to this growing segment of the population.

Another good example is the European Institute of Innovation and Technology (EIT) which I took the initiative to create during my first mandate of my Commission and which was launched in 2008.

Today I am happy to say that the EIT has successfully reached its core objective by bringing together higher education institutions, research organisations and businesses in new types of partnerships operating so far in three areas: sustainable energy, climate change and ICT.

  • Secondly, the Innovation Union is making progress on doing more, better, faster.

Europe needs more affordable patents: the Commission has tabled proposals for the creation of unitary patent protection. This will reduce the costs of patenting by 80% and I call for a political agreement on these proposals before the end of this year, this month of December. Frankly, after 30 years of discussing this issue of the Community Patent, it's time to get it approved.

We also need to use public procurement more strategically. With around 20% of EU GDP in 2009, public procurement has a huge potential to pull European innovations to the market.

To exploit this potential, we will soon present a proposal to simplify the public procurement framework which will include concrete innovation-friendly measures such as a new procedure for buying innovation and the facilitation of joint procurement across borders.

We are also working on faster standard-setting. We have presented a standardisation package to modernize and speed-up standard setting by 50%.

For a better access to capital, we are creating a single market for venture capital funds so that they can easily raise capital across Europe and better invest in European SMEs through a simple, single registration in its home Member State. This is a critical point – I think most of you can agree on that – where in fact we are lagging behind compared to some of our international partners, and the way to do this is precisely to have in mind SMEs. Because something we should never forget is that companies, before they get bigger, are small. And that is why we need to invest in those new companies, so that we can attract also young people from Europe that are not yet so committed to these areas as in some of our partner countries, so some regulation is coming soon to exactly target this objective.

Finally the new Cohesion policy and the new Common strategic framework for research and innovation, Horizon 2020, will also contribute to this overall process to do more, better and faster. Both will enter into effect in the next European budget period to start in 2014.

By bringing together all the main research and innovation instruments at European level, the Horizon 2020 framework, adopted just last week by the Commission, will drastically simplify the rules governing EU funding and will be key to foster an excellent research base. It will focus on major societal challenges and on industrial competitiveness as well.

We have proposed (we still have to convince the Member States and for that we count on your support) to dedicate €80 billion to research and innovation funding, that is an increase of 46% for this new framework programme.

It clearly shows that innovation is really one of our highest priorities. And let me tell you that innovation, in this Horizon 2020 programme is not just about the amount of money, which is much more ambitious than in previous programmes compared to the Seventh Framework Programme. It is also about the management and its concept, namely in terms of reducing the administrative burden. We have been very often in contact with the scientific community – of course Máire Geoghegan-Quinn, that is a part of her daily job - but I also, whenever I can, visit universities all over Europe, or centres of research. And one complaint we have been receiving from many scientists is about the administrative burden in terms of all these processes. I think now we are offering a much better, simpler and much more rational way of dealing with European institutions when it comes to this kind of funding.

So this is a concrete way of reflecting in our proposals the concerns of the scientific and of the innovation community. These priorities are also reflected in our proposals for the new Structural Funds. The new Structural Funds including cohesion funds will have an important accent also in terms of innovation and we are now defining the Structural Funds, including the Cohesion Funds, not in the old ways of assistance, with a culture of entitlement where because you come from a poor region you believe you are entitled to have some money from the European Union, but also making that conditional on programmes for the modernisation of those regions including on innovation, including with partnerships, between the regions and the European institutions, so that they can get funding for developing research and innovation, and also have access to the more important and erudite aspects of the knowledge economy.

  • The third aspect where I think we are making some progress, is on promoting excellence.

Exchanges of ideas and best practices are key to foster excellence and here an important objective is to complete the European Research Area by 2014. We should have by then a real single market for knowledge, research and innovation.

I believe we are on the right track but our efforts cannot relent. The idea of excellence is now well known and supported also by the scientific community, namely through the excellent work done by the European Research Council.

Ladies and Gentlemen,

Before concluding, let me mention, an innovation in the Commission: I am pleased to announce that I have appointed Professor Anne Glover to the post of Chief scientific adviser – a new position created in the Commission.

Professor Glover, a distinguished biologist, is currently the Chief scientific adviser to the Scottish Government.

She will provide me with scientific advice as well as updates on major scientific and technological developments which may have an influence on European policies. She will act also as a bridge with the scientific community.

To ensure that innovation fully contributes to our smart, sustainable and inclusive growth, we must communicate more and better on new scientific developments and new technologies, on their benefits for the society and also on their risks.

A good public understanding of such complex issues is key to dismiss possible misperception and anxiety, and to guarantee social acceptance of innovation and indeed more than acceptance: openness to innovation.

And a conference such as this one today plays a key role in this regard. With all the outstanding innovators and thinkers here today, I am sure we will get many good ideas to advance on Innovation Union.

Ladies and Gentlemen,

Jean Monnet, one of the founding fathers of European integration, once said: "Those who decide not to start any enterprise because they are not assured that things will move in conformity with their plans are condemning themselves to absolute immobility."

I really believe we have to dare starting new enterprises and being open to new thinking. This is what the European Union is about.

The stakes are high. Innovation is nothing less than our capacity to create the future we aspire to.

And I am happy that we will now celebrate the winners of our Women Innovators Award. They are perfect illustrations of people who dare thinking differently and pursuing their ideas.

This award is also an encouragement for more women to follow their steps.

If we are serious when we speak of transforming Europe into an Innovation Union we cannot waste any talent.

All your talents are needed! And I count on all of you.

I thank you for your attention.

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