IVA's President: some thoughts on the new, long-term EU budget

Dear IVA Friends, 

In the midst of Sweden’s traditional summer holiday, European Commission President Ursula von der Leyen presented the new, long-term EU budget proposal for 2028–2034. At EUR 2 trillion, or approximately SEK 22 trillion, it is a considerable sum, but it amounts to just over one percent of all EU countries' combined GNI.

Member states reacted predictably. The Swedish government, like those of Germany and the Netherlands, stated that the proposed budget is far too large, and it has flatly rejected the increase as excessive. In nominal terms, the Commission's proposed budget is larger than the current one, which although true, is not surprising when you take inflation and growth into account and does not amount to much greater spending power. If we look at the budget as a share of the EU bloc's total GNI, the proposal is only marginally higher than today’s.

A far more important discussion is how the money should be invested. The Commission has zeroed in on security, competitiveness, and research and innovation, and these are essential priorities if the EU is to assert itself globally. One proposal I find notable is the establishment of a new European Competitiveness Fund with EUR 234 billion for investments in strategic technologies, among other things, and a significant increase in the next framework program for research and innovation (Horizon Europe) to EUR 175 billion. With a combined budget of just over €400 billion, these will be key to strengthening the EU's global competitiveness. But the question remains if this is enough to meet the escalating international competition for markets, technological leadership, resources, and influence.

The European Commission is also proposing a European Defense Union, so the EU can protect itself and act quickly when necessary in the future. In light of global developments, this is a necessary and valid priority.

Negotiations with the member states and the European Parliament are now underway, and the outcome remains to be seen. The budget will be finalized in two years, and much can happen in the interim. Just look at how the world has changed in the last six months alone. I am sure we will revisit this topic as it evolves.

In other summer news, Sweden is once again leading the European Innovation Scoreboard. This is of course encouraging, but I would like to call attention to a lesser-known, yet equally important ranking: Sweden ranks first in “Technology Adoption Speed of Countries,” a University of Oxford study that measures the spread and use of new technology in different countries. This has proven crucial for competitiveness and prosperity, something that is also argued very convincingly in my summer reading, “Technology and the Rise of Great Powers: How Diffusion Shapes Economic Competition,” by Jeffrey Ding. Sweden's distinguished ranking may be due to the well-developed and fruitful cooperation between our universities and industry, the fact that the majority of the population is well-educated and uses new technologies in everyday life, and that industry, institutions, and authorities are quick to introduce new technologies in their relations with citizens. This is something to build on. The authors also point to the value of policies that promote technological development and dissemination.

IVA has a lively fall ahead, with many interesting seminars and several new reports on pressing topics. One of these is a study on how Sweden is faring in the global competition for pivotal technologies such as artificial intelligence, autonomous systems, and materials and biotechnology. In an era characterized by geopolitical uncertainty, rapid technological development, and global arms races, it is crucial for Sweden as a nation of research and innovation to understand our strengths—and our weaknesses. We therefore commissioned the European think tank CEPS to conduct a survey of Sweden's position in strategically important technologies, which will be presented at a seminar at IVA on September 29. You are welcome to attend!

Sylvia Schwaag Serger facing camera
citat tecken

Thank you for being part of IVA’s network!

/professor Sylvia Schwaag Serger, President IVA

Further reading