Growth Engine Research and Innovation – How Market-Based Solutions Can Safeguard Europe’s Prosperity
On 19-20 February, SME Europe in cooperation with Taxpayers Association of Europe (TAE), the Hanns Seidel Foundation (HSS), the Economic Advisory Council of Bavaria (WBU), the European Economic Senate (EES), organized an event on “Growth Engine Research and Innovation – How Market-Based Solutions Can Safeguard Europe’s Prosperity” at the Representation of the Free State of Bavaria to the EU, Brussels.
Europe needs innovation-friendly, market-based conditions to unleash entrepreneurial creativity and technological progress. This was the central message of a high-profile event held in Brussels.
Around 300 participants from across the European association landscape, EU institutions, business, research, media, and civil society attended the event. The diverse audience included stakeholders from European industry associations, innovators, startup founders, public policy experts, and institutional representatives – a clear indication of the issue’s wide relevance across sectors and institutions.
Europe Needs a New Growth Deal
The event was opened by Eric BEIßWENGER, Minister of State for European Affairs and International Relations in Bavaria. In his address, he underlined that while Europe has traditionally been a hub of innovation, it is increasingly falling behind in global competitiveness. To reverse this trend, he called for openness to new technologies, a reliable energy supply, and political commitment to reform. Beißwenger proposed a new “Growth Deal” for Europe – one that prioritizes deregulation, lower tax burdens, and a policy approach based on technological neutrality.
Michael JÄGER, President of the Taxpayers Association of Europe (TAE), followed with a clear statement on Europe’s entrepreneurial climate. He criticized the over-regulation and high tax burden faced by business founders and SMEs. “In today’s Europe, anyone choosing to become an entrepreneur must have a masochistic streak,” he remarked. Instead, Jäger called for a policy framework where market-driven entrepreneurship is not just possible but rewarded – especially for small and medium-sized enterprises, which are the foundation of Europe’s economic strength. The trend of startups leaving Europe during their scale-up phase, he warned, is a red flag that must be urgently addressed.
The EU Commission’s New Focus on Competitiveness
The keynote speech was delivered by Dr. Andreas SCHWARZ, Head of Cabinet to the new EU Commissioner for Start-ups, Research, and Innovation, Ekaterina Zaharieva. He acknowledged that Europe has lost ground in recent years due to underinvestment in breakthrough technologies and the fragmentation of its research ecosystem. This has not only stifled innovation but has led to a worrying “brain drain” of talented entrepreneurs and researchers.
Dr. Schwarz emphasized that for the first time, the European Commission has established a dedicated portfolio for start-ups and innovation – a strong political signal. The new Commission sees itself as a “Competitiveness Commission”, with the goal of creating the best possible environment for innovation, entrepreneurship, and growth.
He outlined several concrete measures to be launched in 2025 and beyond:
- Start-up Strategy (from June 2025): Identify and remove key obstacles hindering start-up and scale-up development
- European Innovation Act (from Q1 2026): Accelerate the path to market for innovative technologies
- 28th Regime: Create a voluntary, harmonized legal framework for innovative companies operating in the EU Single Market
- European Research Area Act (ERA): Reduce fragmentation in Europe’s R&D landscape through greater integration and alignment
- EIC Fund (European Innovation Council): Mobilize up to €20 billion in public and private funding for deep-tech innovation by 2027
These actions send a clear message: the Commission intends to move from administrative oversight to proactive leadership – making Europe a fertile ground for future-ready businesses.
Practice, Capital, and Policy – What Europe Needs Now
The panel discussion brought together high-level speakers from politics, business, and academia to address the practical challenges and opportunities for improving Europe’s innovation ecosystem. Alongside Eric BEIßWENGER and Dr. Andreas SCHWARZ, participants included Frank OBRIST (Founder and Chairman, Obrist Group), Dr. Richard BEYER (Scientific Director, European Institute for Public Finance – EIPF), and Niels Flemming HANSEN MEP, Vice-President of SME Europe of the EPP and Member of the European Parliament’s Committee on Industry, Research and Energy (ITRE). The panel was moderated by Dr. Ralf SCHNEIDER, President of the Association of European Journalists (VEJ).
A highlight was the presentation of Frank Obrist’s innovation project, Sub-Zero Methanol – a carbon-negative fuel that removes more CO₂ from the atmosphere than it emits during production. Obrist explained how this breakthrough technology, if scaled, could contribute significantly to Europe’s energy autonomy. However, to succeed, innovations like this need clear political support and recognition, such as being classified as a synthetic fuel by the EU.
Dr. Richard BEYERfocused on the issue of capital. He pointed out that globally, large amounts of capital are available, particularly in sovereign and pension funds. Yet, these funds often avoid Europe due to its complex and uninviting tax and regulatory landscape. To attract this investment, Europe must implement investor-friendly tax regimes, allow for loss-offsetting, and offer clarity in how returns are treated. “Only when capital, management fees, and corporate earnings are each taxed in a clear and separate way,” said Beyer, “can Europe position itself as an attractive investment destination.”
Conclusion: Europe Can Innovate – If We Let It
The closing remarks were delivered by Dr. Ingo FRIEDRICH, President of the European Economic Senate (EES) and Honorary President of SME Europe of the EPP. He underscored that Europe does not lack ideas, talent, or research capacity – but rather the political will to create an environment where innovation can thrive.
This event sent a strong signal: prosperity and global competitiveness will only be secured if Europe unleashes its entrepreneurial spirit. That means removing bureaucratic obstacles, investing in technology, enabling capital flows, and re-establishing a culture that sees innovation not as a risk – but as a shared opportunity.
In summary, Europe can be a global innovation leader – if we choose market-based solutions and make room for those who build the future.
