Europe produces world-class research, but only a small part is turned into successful new products on the market. To address this challenge, the European Commission has published today the European Innovation Act (EIA).
According to a new analysis by the Commission’s Joint Research Centre (JRC), 3 reforms proposed by the EIA could generate up to EUR 452 billion in cumulative GDP and half a million jobs across the EU over ten years. These conclusions fed directly into the impact assessment underpinning the Act.
A boost to jobs and GDP
The EIA aims to remove barriers for bringing innovative ideas to market. It puts forward three new targeted proposals to tackle specific issues in Europe's innovation ecosystem: a new way to value intellectual property and two measures to make public Research and Development (R&D) procurement a stronger tool for innovation. JRC researchers used RHOMOLO, its regional economic model, to assess what these reforms could mean for the EU economy over a ten-year horizon. The results point to substantial returns.
The JRC projections are based on scenarios that reflect different assumptions about how effectively the measures work in practice. Under the more conservative scenario, the EIA is projected to generate almost EUR 256 billion in additional EU GDP cumulatively over ten years, supporting 238,000 additional jobs at peak impact. Under the more optimistic scenario, cumulative GDP gains reach almost EUR 452 billion, with 507,000 jobs at peak. In both cases, GDP would be well above where it would have been without the reforms.
The largest driver of growth is the Intellectual Property (IP) valuation measure. By making it easier for innovative firms to use their patents to unlock financing, the reform is expected to generate between EUR 2.7 billion and EUR 10.2 billion in additional IP-backed finance per year. That capital expands investments and production capacity, with gains that build on each other over the decade.
The second major driver is R&D procurement. The analysis draws on evidence that every euro spent on R&D procurement generates around three euros in returns for suppliers due to technological learning, development of new technologies and improved production processes among other factors. Applied to the EUR 17.3 billion in annual EU R&D procurement, this is the largest single source of productivity gains.
Innovative regulation at minimal cost
The implementation costs involved are modest. Considering GDP gains add up to hundreds of billions, the benefit-to-cost ratio is exceptionally high.
This is what makes the EIA significant beyond its specific provisions. It demonstrates that well-designed regulation can generate economic returns comparable to, and in some scenarios exceeding, those of direct investment programmes, at a fraction of the budgetary cost.
Testing policies before implementing them
The JRC analysis also makes a broader contribution to how the Commission assesses regulatory reforms. By connecting a detailed ground-level cost-benefit assessment of each measure with EU-wide economic modelling, researchers can trace a chain reaction: a policy change that helps a start-up access finance in one region ripples outward, creating jobs and boosting trade across the EU. That methodology is transparent, replicable, and is now part of the Commission's toolkit for future assessments.
Background
The three proposals in the EIA help close the gap between high-quality research and market deployment in Europe.
The first proposal addresses how IP is valued. Many innovative firms, particularly small businesses and start-ups, hold patents but struggle to use them to secure a loan, because banks have no reliable way to assess what those patents are worth. The EIA proposes to give the EU Intellectual Property Office (EUIPO) a mandate to develop a standardised EU-wide valuation framework, a secondary marketplace for IP transactions, and an advisory centre to support firms through the process.
The second and third measures target public procurement. R&D procurement, where public bodies contract R&D services from competing suppliers before a product exists on the market, is a powerful but underused tool for driving innovation. The EIA would make innovation-friendly procurement procedures mandatory, establishing a preference for EU-made solutions and strengthening Europe's domestic supply base for innovation.
Related links
- Publication date
- 9 September 2026
- Author
- Joint Research Centre
- JRC portfolios 2025-27
