According to a presentation from the European Commission’s Directorate General for Budget (DG BUDG), the EU’s executive is considering bundling research and innovation (R&I) financing into a single European Competitiveness Fund (ECF), which would potentially be launched under the next multiannual financial framework (MFF), the EU’s seven-year budget set to cover the 2028-2034 period. Mentions of the ECF first appeared in Ursula von der Leyen’s Political Guidelines released last July and in some of the Mission Letters addressed to the Commissioner-designates last month, but more concrete details have only started to take shape more recently.

In this tentative scenario, eleven different programmes would be merged, including Horizon Europe Pillar I and the European Research Council (ERC), Horizon Europe Pillar II, the European Innovation Council (EIC), the European Institute of Innovation & Technology (EIT), the European Defence Fund (EDF) and the Innovation Fund, as well as the EU4health, Space, Digital Europe, Invest EU and the Single Market programmes.

The proposition is undoubtedly inspired by Mario Draghi’s recently released report on the future of European competitiveness and aims to simplify rules and procedures by creating a common governance, as well as avoid overlaps and delays that can hinder the effectiveness of programmes. It also echoes Enrico Letta’s report on the future of the Single Market, which calls for the creation of an overarching Fifth Freedom within the EU, encompassing research, knowledge, and education.

The idea has made waves in the EU political landscape, as it would entail a sweeping transformation of the EU R&I system. Many stakeholders and observers have welcomed it as a concrete response to the need for technology-focused investments that bridge research and industry, though it also sparked significant doubts and criticism. Concerns have been raised about the political implications of placing all research funding under the competitiveness umbrella, along with critiques of a 'planned economy' approach, since the current proposal appears to leave little room for genuine market-driven innovation. Additionally, there are fears that a top-down hierarchy could make funding decisions more political than technical, and that such a large-scale reform would lead to an excessively complex administrative and governance restructuring of the existing ecosystem.

The Commission is currently expected to present its official seven-year budget proposal by summer 2025, a task that will likely fall to Budget Commissioner-designate Piotr Serafin. The rumoured merging of research funding seems to correspond to a new approach to the EU’s overall budget, as Ursula von der Leyen notably tasked Serafin with developing “a modern and strengthened budget,” no longer “programme-based” but built around the policy priorities of the new College. Meanwhile, the Competitiveness Fund has been listed under the EVP for Prosperity and Industrial Strategy, Stéphane Séjourné, hinting at the additional layer of complexity and potential portfolio overlaps the current organisation and future plans could bring.

As part of the future MFF, the new European Competitiveness Fund will need to survive lengthy negotiations between the European Commission, the European Parliament, and member states, as well as parallel discussions on the tenth Framework Programme for research and innovation (FP10), set to replace Horizon Europe in 2028, with negotiations also expected to begin by mid-2025.