Europe could be on the verge of a major overhaul in how promising technologies move from the laboratory to the marketplace.
The European Commission has unveiled plans for a new European Innovation Act, targeting funding, regulatory, and procurement barriers that can prevent innovative businesses from scaling.
The legislation targets a persistent weakness in the EU’s innovation economy. World-class research and intellectual property are being produced, but promising ideas can struggle to attract investment, navigate fragmented markets and reach customers. The Commission wants to make it easier for companies to turn those assets into commercial products and expand internationally.
The potential economic impact is significant. Analysis by the Commission’s Joint Research Centre (JRC) estimates that the proposed reforms could generate between €256bn and €452bn in additional GDP over 10 years, depending on how effectively they are implemented. The higher-impact scenario could support around 507,000 additional jobs.
Ekaterina Zaharieva, Commissioner for Startups, Research and Innovation, explained the potential impacts of the landmark initiative: “With the European Innovation Act, we are tackling fragmentation head-on: one framework for IP valuation, one digital marketplace connecting buyers and sellers, and one simpler route for public procurement of cutting-edge research and development.
“And this is only the beginning. By 2028, we will create a genuine single market where ideas scale faster, finance circulates more freely, and Europe’s strategic autonomy grows stronger. That is the Europe we are building.”
How the European Innovation Act will tackle the funding gap
A central problem for innovative companies is that investors and lenders find some of their most valuable assets hard to assess.
A technology startup may hold patents, research and proprietary technology worth millions, yet those assets can be much harder to value than conventional physical or financial assets. That can make securing debt or investment more difficult, particularly during the early stages of growth.
The European Innovation Act would introduce a more consistent approach to valuing intellectual property across the EU. The Commission also plans to support a marketplace where intellectual property can be bought and sold, alongside expert advice to help companies use their IP more effectively.
The reforms are expected to generate around €35m in administrative savings. More significantly, the Commission estimates they could enable between €2.7bn and €10.2bn in additional IP-backed finance each year, with €10.2bn representing the upper estimate.
The aim is not simply to put more money into startups, but to make existing intellectual property more usable as a source of capital.
Putting public money behind new technology
The second major strand concerns R&D procurement.
Public authorities already spend heavily on R&D, but the Commission argues that procurement can play a much bigger role in creating demand for emerging technologies.
Under the proposed changes, a common approach would provide greater legal certainty and make it easier for authorities in different Member States to work together on R&D projects.
That could help technologies move more quickly from development into practical use, including innovations in healthcare, education, and clean mobility.
The financial estimates are substantial. The Commission expects the proposed procurement reforms to deliver around €1bn in annual savings for public buyers and generate €25.92bn in additional annual profits for companies.
JRC estimates that R&D procurement could become one of the biggest drivers of the wider economic impact, drawing on evidence that each euro spent on R&D procurement can generate roughly three euros in returns for suppliers.
Testing innovation before rules catch up
The Commission is also pairing the European Innovation Act with a separate proposal on regulatory sandboxes.
These controlled environments allow businesses, researchers and public authorities to trial new technologies and services under regulatory supervision.
They can provide innovators with greater clarity about how existing rules apply while giving regulators practical evidence about whether those rules need to change.
Although regulatory sandboxes already operate in some parts of the EU, there is no consistent approach across areas not already covered by specific legislation.
A common framework would therefore aim to reduce uncertainty for companies developing technologies that sit outside established regulatory models.
Taken together, the measures are intended to address the gap between invention and commercial success. The Commission’s wider economic modelling suggests that closing that gap could have a sizeable effect on growth and employment.
At the same time, the more targeted reforms are designed to improve access to capital and create stronger demand for emerging technologies.
The European Innovation Act forms part of the EU’s broader competitiveness agenda and is now set to move into the legislative process.