EU businesses post 2.6 pct drop in R&D spending

EU companies cut their research and development (R&D) investments by 2.6% in 2009, the new Industrial R&D Investments Scoreboard reveals. It is the first time that business R&D investments have fallen in a number of years. It should be noted, however, that sales and profits fell by 10% and 21% respectively, and that R&D investment decisions for 2009 were taken in late 2008, at the height of the financial crisis. Under these circumstances, the fact that R&D investments fell so little demonstrates the importance of R&D to businesses.

Published annually by the European Commission's Joint Research Centre, the Industrial R&D Investment Scoreboard brings together information on the R&D investments of the world's top 1,400 companies.

According to the 2010 edition of the report, companies worldwide cut their R&D investments by an average of 1.9%, less than the EU figure. Analysing the figures by region reveals that US companies reduced their R&D spending by over 5%, while Asian businesses boosted their R&D investments.

The report also highlights large differences between sectors. For example, the pharmaceuticals sector cemented its position as the leading R&D investor, increasing R&D by 5.3%. Another sector boasting an increase in R&D spending is the alternative energy sector, which posted a 28.7% increase in R&D investments. One sector which was particularly hard hit by the financial crisis was the automobile and parts sector, and its R&D investments dropped by 11.6%. Also reporting a fall in R&D spending was the technology, hardware and equipment sector (down 6.4%).

Within Europe, national differences largely reflect the way different sectors are distributed across the region. 'Most of the decrease in R&D for German and French companies was due to automobiles and parts companies, where R&D investment dropped by 7.4% and 14.1% respectively,' the report explains. 'The UK showed only a 0.6% reduction in R&D, partly due to its small automotive sector.'

Some countries with strong reputations for innovation, such as Sweden and Finland, posted declines in the region of 6%; this can be attributed to their large IT hardware sectors, which were severely affected by the crisis. One country that reported an impressive rise of 15.4% is Spain, where some large companies raised their R&D spending significantly - examples are Telefónica (16%) and Acciona (29%).

For the second year in a row, the Japanese car maker Toyota tops the list as the world's biggest R&D investor, after forking out EUR 6.8 billion on R&D. With a budget of EUR 5.8 billion, Volkswagen is Europe's biggest business R&D investor and the fourth biggest investor globally. Just 2 other EU-based companies make the top 10 - Nokia (Finland), which is ranked 7, and Sanofi-Aventis (France), which comes in at number 9.

Commenting on the new report, European Research, Innovation and Science Commissioner Máire Geoghegan-Quinn said: 'The fact that major EU firms have largely maintained their R&D investment shows that they recognise R&D as key to emerging stronger from the crisis. But the wide gap with the top US companies in areas like software and biotechnology and the continuing rapid rise of Asian-based companies highlight the innovation emergency Europe is facing. We urgently need heads of state and government at the December European Council to back the Innovation Union proposals that Antonio Tajani and I announced on 6 October.'

EU Industrial R&D Investment Scoreboard 2010

Source: Community R&D Information Service (CORDIS)