The European Union has invested heavily in research and the development of new technologies, yet the economic benefits of that spending remain difficult to demonstrate. A report published on 15 October 2026 by the European Court of Auditors (ECA) finds that funding has focused too little on turning innovations into marketable products and services. The auditors also highlight shortcomings in the European Commission’s ability to track what happens to projects after their funding ends. The European Union has spent years trying to narrow the technological gap with the United States and China, investing in research, advanced technologies and innovative businesses. Yet a significant share of EU funding supports the development of ideas and technologies that never make it to market. European authorities also lack sufficient information to assess the real impact of these investments. These are among the main findings of the European Court of Auditors’ Special Report 24/2026, which examines how funding under Horizon 2020 contributed to innovation, competitiveness and business development, particularly among small and medium-sized enterprises (SMEs). Horizon 2020, which ran from 2014 to 2020, had a total budget of approximately €79 billion. Around €17 billion was allocated to its Industrial Leadership priority, which aimed to support technological development, attract private investment and strengthen the competitiveness of the European economy. The audit found, however, that funding was not always directed toward projects with the greatest commercial potential. Performance assessments also focused too heavily on the activities carried out and paid insufficient attention to the economic results achieved. EU Funding Supported Research, but the Link to the Market Remained Weak One of the main problems identified by the auditors concerns the development stage of the technologies receiving funding. Many calls for proposals focused on research, validation and technology demonstration, without providing enough support for the later stages, when these technologies were expected to become products or services available on the market. According to the report, only around half of the financial support provided under the Industrial Leadership priority targeted activities closer to commercialisation, involving technologies at higher levels of maturity. This approach limited the potential for investments to contribute to new product launches and the growth of innovative businesses from the programme’s planning stage. For a company developing a new technology, completing the research is only one part of the process. Further steps include testing under real-world conditions, adapting the product to customer needs, obtaining the necessary approvals and securing financing for production and distribution. Without support during these stages, even promising projects can struggle to reach customers. The auditors found that this problem has not been substantially addressed under Horizon Europe, the EU’s current research and innovation programme, which succeeded Horizon 2020. Half of the Funding Went to a Small Group of Beneficiaries The report also highlights how funding was distributed. Across the technology areas examined and the measures supporting SME innovation, approximately 14,500 organisations and businesses participated in EU-funded projects. Although for-profit companies accounted for 76% of participants, funding was heavily concentrated among a relatively small group of beneficiaries. Half of total funding examined went to approximately 550 entities, which accounted for a mere 3.8% of all participants in the group. Funding concentration across the industrial technology areas and SME innovation measures examined by the European Court of Auditors The largest beneficiaries were mainly research organisations, universities and other non-profit institutions involved in numerous collaborative projects. The auditors found that the 10 research organisations receiving the most funding participated in more than 1,700 of the 6,115 projects examined, or some 28% of the total. These organisations also frequently received grants covering up to 100% of eligible costs. In such cases, EU support did not create a direct incentive to mobilise additional private investment. The findings raise questions about whether funding is reaching the businesses best placed to turn research results into economic activity. SMEs Were Not the Main Beneficiaries of Certain Financial Instruments Another issue raised by the European Court of Auditors referred to access to finance for small and medium-sized enterprises. Horizon 2020 introduced several financial instruments under the InnovFin initiative, offering loans, guarantees, equity investments and advisory services. Managed through the European Investment Bank Group, these instruments were designed to help innovative companies secure the resources needed to develop and grow. The audit found, however, that SMEs did not receive the largest share of financing provided through the InnovFin instruments managed by the European Investment Bank. For some financial products, their share was particularly small. SMEs received just 4% of the financing provided through the Energy Demonstration Projects instrument and 5% of the funding allocated through the Infectious Diseases Finance Facility. The auditors also found that the available information was insufficient to establish how effectively these instruments contributed to the development and commercialisation of innovative products. So, while financing reached its intended recipients, its impact on bringing new products to market and supporting business growth remains poorly documented. The European Commission Did Not Systematically Track What Happened After Projects Ended One of the report’s most significant findings concerns the assessment of results. Recipients of EU funding were required to submit final reports, including plans for disseminating and exploiting their research results. However, the European Commission did not systematically assess research outcomes at the end of projects or subsequently monitor whether those plans were implemented. As such, the Commission lacked a sufficiently clear picture of which projects might benefit from additional funding to reach the market. The auditors also identified weaknesses in the indicators used to measure the programme’s performance. These focused primarily on immediate project outputs rather than the longer-term effects on beneficiaries’ economic performance. The data collected did not, for example, allow for a robust assessment of how participation in EU-funded projects affected companies’ innovation capacity. The European Court of Auditors also pointed to limitations in the economic models used by the Commission to estimate the programme’s impact on the European economy. Some models assumed that publicly funded innovations would achieve commercial success, despite the lack of concrete information about how beneficiaries performed after their projects ended. Such assumptions may have led to overly optimistic estimates of the programme’s contribution to economic growth and employment. What the Auditors Recommend for Future EU Funding The report comes as the European Union prepares its next multiannual financial framework, for 2028-2034. The European Commission has proposed establishing a European Competitiveness Fund that would work closely with the next Horizon Europe programme. Together, the two instruments would receive a proposed budget of approximately €409 billion in current prices. Against this backdrop, the auditors are calling for changes to the way innovation projects are selected, financed and evaluated. One recommendation is to place greater emphasis on technologies at more advanced stages of development, having realistic prospects of reaching the market. The Court also recommends taking businesses’ financing needs more fully into account when designing calls for proposals and giving greater weight to potential impact during project selection. Another recommendation focuses on identifying promising projects after their initial funding ends. Technologies with strong commercial potential should be able to access support suited to their next stage of development, including market entry and business expansion. The auditors also want the monitoring system improved so that EU authorities can better assess how public investment affects beneficiaries’ economic performance and innovation capacity. The proposed deadlines for implementing these recommendations vary. Some measures are expected to be addressed as early as 2027, while others would be developed under future EU programmes. The Challenge for the Next EU Budget: Turning More Innovations into Economic Growth The European Court of Auditors’ report brings renewed attention to a major challenge facing the EU’s competitiveness: its ability to turn research results into products, services and businesses capable of growing in European and international markets. Research funding remains essential, including during the early stages when commercial outcomes are uncertain. But public investment also needs to support the transition from research to the practical application of new technologies if it is to contribute to economic development. For SMEs, this transition can be especially difficult. Developing a market-ready product requires financial resources, specialised staff, access to infrastructure and the ability to attract customers or investors. The auditors’ findings suggest that future EU programmes will need to pay closer attention to these challenges and do more to track the results of their investments. With the European Union preparing to allocate hundreds of billions of euros to research, innovation and competitiveness, the effectiveness of that spending is becoming increasingly important. One question the European Commission will need to answer is how many technologies developed with EU support ultimately make it to market and contribute to the growth of the companies behind them. Source: European Court of Auditors, Special Report 24/2026, published on 15 October 2026.