Keep It Local: Commission Unveils European Innovation Act to Scale Up Homegrown Ideas

The European Commission has officially presented a proposal for a new European Innovation Act, aimed at helping Europe’s most promising concepts grow, secure financing, and scale up within the European Union. For years, European researchers and entrepreneurs have generated world-class ideas, only to relocate across the Atlantic or head to East Asia when the time comes to turn a prototype into a commercial giant. The Commission’s draft legislation seeks to fix this leaky bucket by establishing a clearer framework across member states, ensuring that innovative concepts developed in European laboratories can be financed and expanded on European soil.

For ordinary citizens, job seekers, and taxpayers, the location where a technology company scales up dictates where high-paying jobs are created and where tax revenues are paid. When European startups pack their bags for foreign markets because expansion capital or regulatory approval is easier to find elsewhere, European taxpayers miss out on the economic return from early-stage public research grants. If the proposed legislation succeeds in making it easier for local companies to expand seamlessly across 27 national markets, European workers gain access to high-tech manufacturing and digital jobs, while consumers benefit directly from homegrown tech breakthroughs in fields like clean energy and health.

In the EU capital, proposing a grand strategy to boost European competitiveness is something of a cherished institutional tradition. The EU has always been effective at pouring money into early-stage research, but it notoriously stumbles at the next hurdle: helping a startup grow from twenty employees to twenty thousand without drowning in 27 different sets of national rules. The Commission is deploying its exclusive right of initiative—its constitutional monopoly on proposing new EU legislation—to tackle this fragmented landscape. However, the real test of Brussels machinery is only just beginning. The executive can write the proposal, but it cannot force member states to agree on harmonization if national capitals feel their domestic regulatory prerogatives are being threatened.

With the Commission's draft published, the proposal enters the ordinary legislative procedure—the standard lawmaking process formerly known as co-decision. The text now moves to the European Parliament and the Council of the EU, which represents national governments. Parliamentary committees will appoint a rapporteur—the lead lawmaker assigned to steer the file—while national diplomats in Council working parties dissect the draft line by line. Once both institutions agree on their amendments, they will sit down together in closed-door compromise negotiations known as trilogues, with the Commission acting as mediator. Only after both Parliament and Council approve identical text will the European Innovation Act officially become law.