The European Union’s (EU) 27 member states have endorsed the European Commission’s Innovation Union proposals but risks neglecting corporation involvement just as the head of the London Stock Exchange (LSE) calls for companies to be given tax breaks to invest in start-ups.
EU leaders through the governing Council on Friday proposed a single European patent, completing the European Research Area, joint research programming, moves to create a single European market for venture capital, effective standardisation and using public procurement as a driver of innovation.
José Manuel Barroso, president of the European Commission, said despite the short time available, the EU Council had reached, "very important conclusions on innovation".
Barosso is reportedly presenting innovation as an overarching concern that should steer what happens in other areas, saying before the summit: "Innovation needs to be part of our economic policy, not simply a research instrument."
Part of this work on innovation includes corporate venturing. However, Jocelyn Probert, senior research fellow at Cambridge University’s Centre for Business Research, who had been working on corporate venturing (CVC) for the EU, by email said: "There are minuscule chances of the EU taking anything of what we’ve done on CVC – the CVC research is one element of a Cambridge ‘work package’ which, together with I think seven other ‘work packages’ at other universities around Europe, is part of an EU-financed project on financing innovation and growth that is itself one of many projects financed by the EU.
"So, managing to bring this to the attention of an EU Commissioner or bureaucrat who might actually do something with it will be a tough call… Unfortunate, but such is life. Maybe it’s a cumulative thing, and if the topic keeps getting raised it will eventually reach their consciousness."
Xavier Rolet, chief executive of the LSE, writing in UK news provider The Times, said: "Jobs must come from small and medium[-sized] enterprises (SMEs). There are 23 million SMEs in the EU. There are 4.8 million in the UK alone. Successful SMEs are powered by that fundamental engine of value creation, innovation."
He said 70% of all corporate investment in the EU came from banks, versus 30% in the US, while there was €1 trillionof cash sitting on European companies balance sheets ($2 trillion in the US).
Rolet said: "Capital has not become scarce, it is just not being utilised. The money is there we just need to find a way to unlock it.
"One way is to get blue chips [large companies] to invest in start-ups. A new investment tax credit scheme, encouraging big corporates to invest cash in innovative tech start-ups (high, green and bio) would help to kick-start SME job creation. Blue chip companies are better placed than most to pick tomorrow’s winning technologies in their own sectors."
He added removing the "perverse" tax incentive towards debt would end the second obstacle. In the UK, he said equity was taxed four times through the cycle against tax deductibility for debt’s interest.