Despite some good news - financial crisis will hit R&D
28 Nov 2008 by Evoluted New Media
Despite the EU’s annual report showing that sales and profitability increased for EU companies for the first time since records began in 2004 - the current financial crisis is likely to hit industrial spending on future research, said the European Union’s top research official.
Despite the EU’s annual report showing that sales and profitability increased for EU companies for the first time since records began in 2004 - the current financial crisis is likely to hit industrial spending on future research, said the European Union’s top research official.
“We are pleased that R&D investment growth in EU companies has increased, against the background of a slight fall in the growth rate worldwide,” said European Science and Research Commissioner Janez PotoÄnik. But he warns: “The current financial crisis will certainly have an impact on the real economy and is likely to undermine the positive pace of growth we have seen in the past five years in EU companies’ R&D investment.”
The EU Industrial R&D Investment Scoreboard is published annually by the European Commission as part of its Industrial Research Investment Monitoring activity. It shows that worldwide corporate R&D investment growth decreased from 10% in last year's Scoreboard to 9%, but EU corporate R&D investment growth increased by 8.8%, up from 7.4% on last year's Scoreboard.
“However, private sector R&D in Europe remains at 1% of GDP, amidst signs that EU companies are making an increasing share of their R&D investments outside Europe. Therefore, we must continue our efforts to make Europe a more attractive place for business R&D, notably by creating a truly European Research Area, in order to reach the Lisbon objectives,” PotoÄnik said.
The Commissioner said there is “a relatively high correlation coefficient” between R&D spending and overall economic output. As such, the growth rate in R&D spending is likely to go down, but by how much is uncertain he said. Over the past few years R&D spending growth has exceeded GDP growth. “So the alarm would be if the companies would cut it faster than that.”
That makes public-sector spending especially important, he said. “Putting a brake on private and public R&D investment at this time would be a major mistake.
“We must be careful that by trying to fix the crisis in the financial sector, we do not simply displace the problems to another part of the economy, a part which is crucial for jobs and growth in the EU in the medium and long term. The financial crisis will be gone one day or another. The climate change and energy crisis challenges are here to stay, requiring continued R&D investment,” he said.
