While China races ahead in R&I and the US retools for AI supremacy, Europe risks becoming a continent of consultations and underfunded strategies. New OECD data reveals a quiet crisis in EU innovation investment. It’s time to stop managing decline and start leading with intent. The future won’t wait.

📢 Don’t miss The Insider Unfiltered at the end of this newsletter - your go-to snapshot on the latest AI policy, tech shifts, and geopolitical moves.        

Editorial

Europe’s Innovation Equation Needs a Recalculation

In 2023, China’s R&D spending grew at more than five times the rate of the European Union’s. Its total R&D output, adjusted for purchasing power, is now 96% of the United States’. In the government sector alone, China spends 1.6 times more than the US. Let that sink in. While China accelerates, Europe stabilizes. A polite way to say stagnates.

The latest OECD data confirm what many in Brussels quietly admit: the EU’s R&D growth engine is running on legacy inertia and fragmented ambition. Gross domestic expenditure on R&D in the EU rose just 1.6% in real terms last year. In France, it declined. In Germany, it barely moved. Meanwhile, Poland and Spain – yes, Poland and Spain grew by over 8%.

With this background, we really have to admit: we are living through a structural phase of policy failure. A crisis of vision.

Governments are redirecting R&D spending into defence and energy. A necessary strategic pivot, yes. But it also reflects short-term political reflexes, not long-term competitiveness bets. Funding for health research and frontier science is down. Even the aggregate Government Budget Allocation for R&D (GBARD) across the OECD has collapsed. From 5.5% growth in 2022 to just 0.6% in 2023. And while R&D intensity in the EU remains stuck at 2.1% of GDP, Korea and Israel invest two to three times more as a share of economic output.

Europe needs to stop benchmarking itself against its past and start thinking like a geopolitical bloc with strategic autonomy to defend and future markets to shape. The EU must treat R&D not as a cost to manage, but as a platform for sovereignty, prosperity, and relevance in the global AI, biotech, and clean-tech races.

The good news? Momentum is building. Initiatives like the European AI in Science Strategy, the Bioeconomy Strategy reboot, and FP10 positioning efforts are starting to converge. The challenge now is alignment and speed. What’s missing? The urgency and political will to turn policy proposals into power plays.

If Europe wants to lead, it must stop asking for permission and start budgeting for ambition.

Ricardo Migueis

Head of INESC Brussels HUB

A European Strategy for AI in Science – Paving the Way For a European AI Research Council

Artificial Intelligence is already transforming science but Europe wants to make that transformation smarter, faster, and more coordinated.

The European Commission has launched a new initiative to shape a comprehensive policy approach for AI in science, designed to help researchers across the EU adopt and benefit from AI in a more streamlined and supported way. At stake is not just digital integration, but the future of European scientific competitiveness.

This initiative will present a comprehensive policy approach towards AI in science, making it easier for scientists across the EU to adopt the technology. It will:

• Bring a strategic vision and facilitate coordination at EU and Member State level
• Identify gaps and priorities, while building complementarities with existing and planned EU policies (including relevant research and innovation initiatives)
• Pave the way towards a European AI research council.

The European Commission has opened a Call for Evidence to gather insights, challenges, and perspectives from researchers, innovators, and stakeholders. The feedback window is open until 5 June 2025.

Give your feedback on the AI in Science initiative

ReArm Europe Plan/Readiness 2030

The European Commission ‘s ReArm Europe Plan/Readiness 2030, presented in March 2025, proposes to leverage over €800 billion in defence spending through national fiscal flexibility, a new €150 billion loan instrument (SAFE) for joint procurement, potential redirection of cohesion funds, and expanded European Investment Bank support. It also aims to mobilise private capital through the savings and investments union. ReArm Europe has sparked debate. 

We are fans of the EPRS briefings.

Read the EPRS briefing here.

Commission Publishes DIGITAL EUROPE Work Programme 2025-2027

The European Commission has published the Work Programme 2025 to 2027 for the Digital Europe Programme (DIGITAL). 

This updated programme is deeply rooted in the 2030 Digital Compass, aligning with Europe’s broader vision for a human-centered digital future. But it goes further, responding directly to the political priorities of the new Commission. The goal is simple: make Europe a global powerhouse in key digital domains.

It brings weight to policies like the AI Innovation Package, the Chips Act, the Cyber Resilience Act, and the upcoming Apply AI Strategy. The vision is not just to regulate AI but to lead in its development, adoption, and global influence.

With initiatives such as the EU Digital Identity Wallet and the Interoperable Europe Act, the programme lays the foundation for a secure, interconnected, and citizen-driven digital space.

Read the Work Programme 2025 to 2027 of the Digital Europe Programme

JRC publishes its Highlights Report – From Science to Impact

From its contributions to the AI Act, innovative cancer research or boosting citizens’ engagement and supporting democracy, the JRC plays an important role across a range of fields.

In the newly published 2024 Highlights report the JRC demonstrates its latest accomplishments by providing straightforward examples of its work. This annual report offers insights about the most significant work in 11 key areas done in the past year.

Click here for the detailed overview

Securing the future – Horizon scanning for emerging technologies and breakthrough innovations in the field of digital and network security

Latest Science for Policy brief was published, resulting from the 7th and final Horizon Scanning workshop of Futurinnov, the 2024 collaboration between the European Commission Joint Research Centre and the European Innovation Council (EIC).

This session focused on digital and network security, scanning for emerging technologies and breakthrough innovations shaping the future of secure digital infrastructure, privacy and other adjacent fields.

The workshop brought together experts from different backgrounds and will support the EIC’s strategic intelligence. According to JRC EU Policy Lab expert, João Farinha some of the signals they helped prioritise include:

🔍 Deepfake detection technologies

🔐 Quantum-resistant cryptographic algorithms

💬 Interoperability for end-to-end encrypted messaging

🕶️ Privacy and security challenges in virtual and augmented reality

📉 Detection of false data injection attacks

🛰️ Inter-satellite communication

🤖 Privacy-preserving machine learning

☀️ Tiny solar-powered drones capable of near-perpetual flight

Read more on this by clicking here

Commission Launches Public Consultation On Upcoming Eu Bioeconomy Strategy

On 31 March, the European Commission officially launched a public consultation for the upcoming EU Bioeconomy Strategy, a vital initiative designed to keep Europe at the forefront of sustainable innovation. The plan, set for adoption by the end of 2025, is more than an update. It is a call to action.

The new strategy aims to turn science into solutions. It will focus on getting bio-based innovations out of the lab and into the market, generating green jobs, boosting circularity, and reinforcing Europe’s push toward a decarbonised economy. In short, the EU wants to build a bioeconomy that is not only sustainable but competitive on a global scale.

Led by Commissioner Jessika Roswall , the initiative will align with other key EU frameworks such as the Competitiveness Compass, Clean Industrial Deal, Life Science Strategy, and Ocean Pact. This is about setting the right conditions for entrepreneurs, startups, and scientists to create new business models and bring real solutions to scale.

And now, Europe wants your input.

The public consultation is open to citizens, companies, researchers, foresters, farmers, and anyone ready to shape the future of Europe’s bioeconomy. It runs until 23 June on the Have Your Say portal, with additional feedback sessions planned during EU Green Week and the Circular Economy Stakeholder Dialogue.

The EU Bioeconomy Strategy Is Getting an Upgrade. Have Your Say.

The New European Bauhaus Facility

European Commission is bringing a new kind of tool to the table. The New European Bauhaus (NEB) Facility 2025 to 2027, it is the EU’s latest funding mechanism designed to transform neighborhoods into living examples of sustainability, inclusiveness, and aesthetic value.

Backed by Horizon Europe and complemented by other EU programmes, the NEB Facility is split into two components; both practical, both powerful.

The R&I Component, with an annual budget of approximately €120 million, supports the research, testing, and demonstration of breakthrough ideas. Its focus is clear:

• Green transformation linked to social inclusion and local democracy

• Circular, regenerative approaches for the built environment

• New business models and funding mechanisms to scale impact

The Roll-Out Component brings these ideas to life. It activates EU-wide support beyond Horizon Europe to deploy solutions on the ground. So far, the New European Bauhaus has inspired nearly 500 projects, this facility is how that number grows.

What makes this different? It is not just about money. It is about mobilising expertise, empowering local innovators, and revitalising neighbourhoods with meaning. The roadmap, released in March 2025, outlines everything from governance to budget to upcoming calls.

Funding calls under the R&I component are expected with the adoption of the Horizon Europe 2025 Work Programme at the end of April. Roll-out component opportunities will follow through various EU programmes and national contacts.

Read more on the new funding tool to revitalise neighbourhoods

Impact Report 2025 Takes Stock Of EIC Achievements

The European Innovation Council (EIC) is Europe’s most ambitious platform for turning radical ideas into market-ready solutions, and the numbers speak volumes.

According to the newly published EIC Impact Report 2025, the Council has supported over 700 start-ups, 400 research projects, and 180 transition projects since its launch under Horizon Europe . This support has catalysed more than €12 billion in additional investment, with over €6 billion already allocated by the EIC itself. For every euro invested, more than three euros were attracted in co-investments.

The EIC is not just investing, It’s building. Through instruments like the EIC Fund, Business Acceleration Services , and the Trusted Investors Network, it is creating a robust ecosystem to help companies scale in Europe, with European values.

Sectors like quantum tech, AI, biotech, and semiconductors have received substantial backing, with over 70 EIC-supported companies reaching valuations above €100 million. And now, with new strategic tools like the Startup and Scaleup Strategy and the STEP platform, the EU is aiming even higher to compete globally while keeping its innovation sovereignty intact.

The message is clear. Deep tech is no longer just deep. It is wide-reaching, fast-growing, and a pillar of Europe’s strategic future.

Read the full EIC Impact Report 2025

📢Two-Factor Authentication for EU-Login📢

In 2025, the European Commission will require Two-Factor Authentication (2FA) for EU-Login. This is especially important for accessing the Funding & Tenders Portal, where Horizon Europe projects are managed. The option to use SMS for identification will no longer be available. Instead, users will need to use either the EU Login Mobile app or Security Keys and Trusted Platforms.

The Commission is already preparing for this transition. A brief survey is being conducted to test your knowledge about 2FA and to gather information on any difficulties users may have with the new access method.

Take the Survey about 2-factor authentication

Save The Date For The European Research And Innovation Days 2025

Europe’s flagship research and innovation event returns this autumn. Mark your calendars for 16–17 September 2025 as European Research and Innovation Days take over The Square, Brussels.

This sixth edition arrives at a decisive moment. With the EU preparing its next long-term budget and critical policy milestones on the table, from the Startup and Scaleup Strategy to the AI in Science Strategy, European Life Sciences Strategy, and the upcoming Innovation and Research Area Acts, the stakes have never been higher.

Click below to stay updated on the programme and registration details as they’re announced.

Polish Presidency Conference On Technology Infrastructures, 6-7 May, Warsaw

Europe’s innovation backbone is under the spotlight this May. The upcoming conference “Technology Infrastructures, A Strategic Asset for European Competitiveness” will take place on 6–7 May 2025 in Warsaw, hosted by the European Commission , the Polish Presidency of the Council of the EU, and the Łukasiewicz Research Network .

As the EU prepares its next strategic plan for Research and Technology Infrastructures, this high-level event brings together policymakers, research and technology organisations, industry, startups, and academia to shape the future of Europe’s Technology Infrastructures.

Through keynotes, policy panels, and focused breakout sessions, the agenda will tackle pressing challenges: how to mobilise funding, improve governance, boost accessibility, and create smarter collaboration models. At stake is nothing less than Europe’s ability to lead in industrial innovation, accelerate the green and digital transitions, and compete globally.

Whether you’re a decision-maker or a doer, this is where the alignment happens between EU institutions, national governments, research networks, and industry actors.

Registration is required for both in-person and online participation. Deadlines are fast approaching: April 16 for physical attendance, and April 30 for virtual access.

Click below to view the full programme and secure your spot

Strategy for European Life Sciences

Life sciences are central to Europe’s green and digital transitions. They power innovation across sectors and shape how we respond to climate change, food security, and public health. But despite its scientific depth, Europe is slipping behind in translating research into market-ready solutions.

Why? Complex regulation. Fragmented funding. And a valley of death between lab breakthroughs and real-world deployment.

This upcoming strategy aims to change that. It will build on Europe’s scientific strengths while tackling long-standing structural barriers. The Commission’s goal is to strengthen research, simplify access to funding, and accelerate innovation uptake across the life sciences ecosystem from universities and startups to major industry players.

But policy does not shape itself.

The Commission has opened a Call for Evidence, inviting researchers, innovators, companies, and stakeholders to share their insights and help design a strategy that works in practice, not just on paper. The feedback window is open until 17 April 2025.

Click below to contribute your perspective

InvestEU: Ambition, Accountability, and What Comes Next

The InvestEU Programme is Europe’s flagship investment tool. Its mission is bold: mobilise public and private capital to fuel innovation, sustainability, SMEs, and social impact across the continent. And so far, it’s delivering.

As of June 2024, InvestEU has triggered nearly €280 billion in investments, backed by just €26.2 billion in EU guarantees. That’s serious leverage and serious influence. But now, the programme faces a defining moment.

An in-depth analysis released this month ahead of the upcoming ECON-BUDG hearing on 23 April 2025 outlines key performance milestones, but also sharpens the focus on structural issues. Among them: concerns over guarantee depletion, administrative burden, and a lack of transparency in reporting.

The European Parliament is stepping in to play its oversight role ensuring that efficiency does not come at the cost of accountability. The debate is now centred on how to simplify administration without weakening scrutiny, particularly in light of recent amendments proposed by the European Commission .

For research institutions, innovators, and impact-driven enterprises, InvestEU remains a vital funding channel. But its future success depends on policy precision, long-term trust, and the EU’s ability to balance risk appetite with results.

Click here to read the in-depth analysis

The Insider Unfiltered: Latest from AI News, 20250409

OpenAI generates renewed excitement with its image processing

To ChatGPT: “Please take the attached simple picture of a cat happily sleeping on an upholstered chair, near a blazing fire, with a pleasant picture window behind with a flowering tree and make it look like a real scene.”

OpenAI’s Sam Altman posted that new users are being added to ChatGPT by the millions (noting 1 million came in in an hour). Perhaps little things like this are why?, Eric Cohen

OpenAI ’s image processing is now able to merge letters with images and be fascinatingly coherent in making extraordinary images. This further unleashes AI’s potential aid in making efficient branding decisions, adapted to local preferences.

Lots of people are talking about MCP [2]

It is a way to manage the set of APIs agents can interact with, be it external or internal databases.

Google whitepaper on Agentic AI, with use cases and best practices including basis of agent architecture, Agent Ops and evaluation, multi-agent systems (which involve multiple specialized agents collaborating to achieve complex objectives), Agentic RAG, Enterprise Applications (Google shares very detailed and well-written examples of AI-driven tools designed to enhance productivity and streamline workflows in enterprise settings providing secure and scalable solutions).

Contractors Framework (Evolving agents into “contractors” with defined contracts for tasks, outcomes, and feedback loops ensures clarity, negotiation, and iterative improvement in task completion) and an Automotive AI Case Study: A multi-agent system for automotive AI demonstrates specialized agents (e.g., navigation, media search) collaborating through patterns like hierarchical, diamond, peer-to-peer, and collaborative to provide a seamless in-car experience.”, Rakesh Gohel [3]

A Q1 review of political AI landscape, from my non-political eye

• 20250113: The UK government has unveiled bold and ambitious new plans to boost and support the UK’s AI sector [link], inspired on the 50 recommendations by an AI entrepreneur (listed in the US) [link]
• 20250122: Trump announces $500billion in private sector AI infrastructure investment [link]
• 20250202: The U.S. Copyright Office has spoken! [link], it does enable creators to inspire themselves on AI, rather than be forced into a space of non-development
• 20250210, EU: 𝗧𝗵𝗲 𝗘𝗨 𝗷𝘂𝘀𝘁 𝗮𝗻𝗻𝗼𝘂𝗻𝗰𝗲𝗱 𝘁𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝗔𝗜 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗶𝗻 𝗵𝗶𝘀𝘁𝗼𝗿𝘆: €200 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 𝘁𝗼 𝗰𝗿𝗲𝗮𝘁𝗲 𝗘𝘂𝗿𝗼𝗽𝗲𝗮𝗻 𝗔𝗜 𝗰𝗵𝗮𝗺𝗽𝗶𝗼𝗻𝘀 [link]
• 20250213, France: Macron unveils plans for €109B of AI investment in France [link]
• 20250314, France: this article is in Portuguese but it wonders if the EU already has a tech company that can compete with OpenAI – Mistral [link]
• 20250409, Abu Dhabi: The city of Abu Dhabi has just allocated 3.3 billion USD to become the world’s first fully AI-native city by 2027. The government have established a Digital Strategy 2025-2027 that is putting AED 13 billion behind this mission.
• 20250408, US: BIG NEWS! “In a move that starkly reorients federal policy on artificial intelligence, the White House has issued two sweeping memoranda – M-25-21 and M-25-22, designed to accelerate AI adoption across U.S. federal agencies while simultaneously dismantling the risk-averse controls established under the previous administration.

The policies frame AI not as a regulatory risk but as an engine of national competitiveness, efficiency, and strategic dominance. They represent a policy pivot towards what officials call a “forward-leaning, pro-innovation and pro-competition mindset.

At the heart of this shift is the elevation of AI from peripheral experimentation to a core tool of public service delivery.

Agencies are instructed not only to remove internal barriers to adoption but also to actively pursue AI-enabled efficiencies. Civil service leaders – particularly newly empowered Chief AI Officers – are now tasked with catalysing innovation, rather than overseeing procedural compliance.

These officers are to serve as “change agents,” charged with advancing AI maturity assessments, tracking AI investments, and championing use of American-developed AI systems wherever possible.

High-impact AI systems – those that affect access to legal rights, safety, benefits, or core public services – will still be subject to risk controls, but these controls are to be harmonised with existing IT oversight processes, not layered on top of them.

Procurement practices have also been dramatically revised. The M-25-22 memorandum removes what it describes as “burdensome reporting requirements” and replaces them with streamlined, performance-based contracting mechanisms.

Agencies must now justify any potential vendor lock-in, maximise the use of American AI products, and adopt contract terms that preserve government rights over intellectual property and training data.

The policies further instruct agencies to prohibit- absent explicit permission – the use of government data for training commercially available AI models, addressing a longstanding federal concern around the unauthorised commercialisation of public datasets.

Importantly, these policies do not abandon oversight entirely. High-impact AI applications are still subject to AI impact assessments, ongoing performance monitoring, and human appeal mechanisms.

However, the approach taken is one of proportionate intervention rather than blanket constraint. Agencies are required to sunset AI systems that fail to meet baseline performance or safety thresholds, but only after failing to rectify deficiencies through internal reviews and risk mitigation. [link]

20250409, EU: The EU has just launched its AI Continent Action Plan with the goal of competing with the U.S. & China and making Europe a global leader in AI:

1. Building a large-scale AI data and computing infrastructure

• AI Factories: Budget: €10 billion from 2021 to 2027; 13 AI factories by 2026
• AI Gigafactories: 4x more powerful than AI Factories; up to 5 Gigafactories
• InvestAI: €20 billion
• Cloud and AI Development Act: 3x the EU’s data center capacity in 5-7 years

2. Increasing access to large and high-quality data

• Data Labs: will gather & curate high-quality data from different sources
• Data Union Strategy: Improve data access for businesses & administrations

3. Developing algorithms and fostering AI adoption in strategic EU sectors

• Apply AI Strategy: Accelerate AI adoption in strategic sectors, such as healthcare, automotive and advanced manufacturing.

4. Strengthening AI skills and talents

• Talent Pool
• Marie Skłodowska Curie Action ‘MSCA Choose Europe’
• AI fellowships
• Boost AI skills and uptake via the AI Skills Academy
• Pilot a generative AI-focused degree
• Support reskilling through European Digital Innovation Hubs

5. Regulatory simplification

• Launch the AI Act Service Desk in 2025
• Provide free, customized tools and advice to businesses”, Luiza Jarovsky [link].

Personally, in item 5, I hope for easier, cheaper, but mandatory Responsible AI, requiring unbiased data or explainable methods at the cost of quality might never be complete, but requiring transparency regarding how and when to use models is so critical.

I would have enjoyed seeing, in item 3, the strategy bet on using AI in government EU sectors. In item 4, I just love the initiative to entice the best global AI talent to work in the EU.

In item 2,  I do hope we will fully embrace the opportunities of data labs for health INESC TEC DataSpace Manifesto will be published soon! – it’s still too hard to combine data from everywhere to everywhere and access clean data every time. 

A large gap in trust in AI between emerging and non-emerging economies, 20250314:

There is a massive gap in trust in AI between English-speaking/ Western European nations and Eastern/ emerging economies. An array of specific insights from Edelman‘s latest Trust Barometer report reveal fundamental forces that will shape the global future of AI. [link]

The best our natural resources to power data and AI infrastructure efficiently, 20250407

We have all heard how costly it is to keep big AI infrastructure from overheating and the enormous costs in water to cool it down. Portugal has found a creative solution. Sines data centre cools engines using sea water! And warms up our cold Atlantic waters in the process. A wonderful use of natural resources. [link]

Ana Costa e Silva, PhD in AI, MBA

AI Strategist @ INESC TEC