Innovation in Europe: the new European Sovereignty Fund

"Let's make sure that the future of industry is made in Europe": EU Commission President Ursula von der Leyen's words are a slogan, yes. But also, in many ways, they underline an urgent necessity for all European countries and the EU as a whole. When it comes to technology, we have no strategic autonomy. And in today's geopolitics of supply chains, this makes Europe vulnerable.

We're vulnerable because we have little control on the most important innovative supply chains. Raw materials needed to manufacture tech products come from non-European countries, the actual manufacturing happens in China, product designs come from the USA. In many tech fields, EU countries traditionally are just customers. We're good at research, not always at applying it.

That said, it's also true that something is changing. The EU initiatives on the transition to a green and digital economy are making European industry more competitive, thanks especially to a mobilization of private and public funding and the definition of specific industrial and research projects. The EU Chips Act is maybe the best example of this new European style in applied innovation.

But an issue remains: funding. The road to research, innovation and production must be paved with money and the EU budget can't be enough. If we want that cutting-edge technology production happens in Europe, it's - as Commissioner Thierry Breton said - "time to get serious about financing". But above all "to think outside of the box to find ways to finance collectively the strategic investments" we need. Because the EU long-term budget can't stretch that far. Not even remotely.

Enter the EU Sovereignty Fund. Which does not exist, yet. But - Breton explains - "should allow for direct, fast and flexible budgetary support to well-identified projects of interest for EU sovereignty across any sector of our industrial spectrum". In other words, the new fund should first of all help to finance the various IPCEIs launched for specific industrial projects.

"I believe that we should consider the possibility to finance this Fund through common debt, like we successfully did with NextGeneration EU", says also Breton. Because the EU Sovereignty Fund is also a way to collectivise investments between Member States, helping those "who do not have the same fiscal space to help de-risking investments in future technologies and industrial production capacities". A shared effort for a common, and greater, good.

And while Breton confirms "EU's openness and commitment to international trade", he also says that we can (and maybe should) take inspiration from prgrams like the Buy American Act or the US Chips Act. And if this appears a little protectionist... well, so be it. "Let's not be naive. It is high time we show more assertiveness, including the necessary financing, to defend our European strategic interests", says Breton.