Innovation has been placed at the heart of the EU's strategy to create growth and jobs.

EU countries are encouraged to invest 3% of their GDP in R&D by 2020 (1% public funding, 2% private-sector investment) - this is expected to create 3.7 million jobs and increase the EU's annual GDP by nearly €800 billion.

The EU initiative Innovation Union focuses Europe's efforts – and its cooperation with non EU countries – on the big challenges of our time: energy, food security, climate change and our ageing population. It uses public sector intervention to stimulate the private sector and remove bottlenecks which prevent ideas from reaching the market – including lack of finance, fragmented research systems and markets, under-use of public procurement for innovation and slow standard-setting.

The EU is also working to create a single European Research Area, where researchers will be able to work anywhere in the EU and cooperation across borders will be supported and encouraged.

EU funding

In January 2014, the EU launched its latest 7-year research programme - Horizon 2020 - Almost €80-bn of EU funding is available up to 2020 – in addition to the private and national public investment this money will attract. It  combines all research and innovation funding in one integrated programme.

Its goals are:

• to strengthen the EU’s position in science (€24.4-bn of funding – including €13-bn for the European Research Council)
• strengthen industrial innovation (€17-bn) - including investment in key technologies, greater access to capital and support for small businesses
• address major social concerns, such as climate change, sustainable transport, renewable energy, food safety and security, ageing populations (€24.4-bn).

Horizon 2020 will seek to:

• ensure technological breakthroughs are developed into  viable products  with real commercial potential – by building partnerships with industry and government
• step up international cooperation on research & innovation - by inviting countries and organisations outside the EU to participate 
• further develop the European Research Area.

Other EU research & innovation bodies

• Joint Research Centre (JRC) – the Commission’s in-house service providing independent, evidence-based scientific and technical support for EU policies.
• European Research Council (ERC) – supports especially ambitious and novel research.
• Research Executive Agency (REA) – manages about half of all EU-funded research grants.
• Executive Agency for Small and Medium-sized Enterprises (EASME) – manages several EU programmes to help businesses.
• Innovation & Networks Executive Agency (INEA) – manages the implementation of the EU's trans-European transport networks. 
• European Institute of Innovation & Technology – sets up partnerships of higher education institutions and research/innovation bodies: ‘Knowledge and Innovation Communities’.