European Innovation Scoreboard 2025, Europe is progressing, but slowing down  

The European Commission published in July the report of the European Innovation Scoreboard (EIS) 2025. It marks a quarter-century of tracking Europe’s progress, offering a crucial look into the continent’s innovative progress. While the report highlights a significant, sustained increase in innovation capacity since 2018, it also signals a worrying slowdown in recent years, placing Europe at a critical juncture. This moment calls for a renewed commitment to innovation as a strategic imperative to drive competitiveness, sustainability, and resilience in a turbulent world. 

Europe’s Direction: Progressing, but Slowing Down 

The overall direction of Europe’s innovation landscape is one of continued, but decelerating, growth. Since 2018, the EU’s innovation performance has climbed by an impressive 12.6 percentage points. However, the report shows that this growth has been slowing, with a marginal decline of 0.4 percentage points from 2024 to 2025. This trend suggests that while Europe has made significant gains, it is now facing new headwinds that are slowing its momentum. 

Despite this, all EU Member States have improved their innovation performance since 2018, with some achieving remarkable gains. This positive trend is a testament to national and EU-level policies designed to foster a more innovative environment, even as geographical disparities persist. 

Strengths and Weaknesses 

The EIS 2025 report highlights key strengths and weaknesses that define the EU’s innovation profile in relation to global competitors. 

Strengths: 

• Human Resources: The report indicates solid performance in areas related to human capital and a research environment that attracts foreign talent. Europe’s universities and research institutions are world-class, producing a steady stream of highly educated graduates, cutting-edge research and strong scientific collaboration. 

• Digitalization and Sustainability: Perhaps Europe’s most unique strength is its dual commitment to both digitalization and sustainability. While other global players may excel in one or the other, the EU is making a concerted effort to lead in both simultaneously. 

• Industrial Resilience with Strategic Autonomy: In an increasingly complex geopolitical world, the EU’s focus on strategic autonomy and industrial resilience is a major strength. The report highlights initiatives like the Chips Act and Critical Raw Materials Act which are designed to reduce external dependencies and strengthen Europe’s technological capacity. This proactive approach ensures that the EU can maintain its supply chains and technological base, even in times of global disruption. 

• Robust SME Innovation: Finally, the EIS also explains that Europe’s innovation is not just driven by large corporations; it is also powered by its vast network of small and medium-sized enterprises (SMEs). This widespread innovation activity among smaller firms is a vital sign of a healthy, dynamic, and decentralized innovation ecosystem. Countries such as Greece, Belgium, Italy, Sweden and Finland perform in the top in this area. 

Weaknesses: 

Even though the European Innovation ecosystem shows several strengths, there is also a group of weaknesses in which the EU and the member states must work and improve. 

• Global Competition: The EU is lagging key global players. South Korea remains the most innovative, outperforming the EU by 35.2 percentage points, and China has overtaken both the EU and the US to become the second most innovative global competitor. This can be attributed to strong growth in government support for business R&D. 

• Venture Capital: This is probably the biggest weakness in EU’ innovations landscape. The European Union with initiatives such as the EIC and the Competitiveness fund aim to support the investment in Start-Ups and Scale-Ups. Besides, the Member states and EU regions are trying to reinforce their funding systems to support the growth of these innovative companies. However, the EU is lacking in the participation of private investors as happens in other regions of the world such as the US. While some countries are performing better, integrating and increasing the access and participation of private investors, the EU as a whole struggles with a consistent lack of sufficient venture capital to support and scale up its innovative startups. The report points to this as a specific challenge that the upcoming European Innovation Act is intended to address.   

• Trade Impacts: The EU’s performance is below average in the Trade impacts dimension, which includes exports and imports of high-tech products and knowledge-intensive services. 

The Performers: Leaders and Laggards 

The report highlights several countries that have shown remarkable upward momentum in their innovation performance. These successes demonstrate that targeted efforts can lead to significant progress, even for nations starting from a lower position. 

• Croatia’s Impressive step forward: Croatia is a great example of a country improving its innovation performance, having moved from the Emerging Innovators to the Moderate Innovators group. Its score has increased by 19.4% since 2018, with key improvements in areas such as innovation expenditures per employee, the adoption of cloud computing in businesses, and an increase in new doctorate graduates. 

• Ireland’s Steady Climb: Ireland has solidified its position, moving to the top of the Strong Innovators group. The country’s innovation performance has grown by 13.3% since 2018 and by 4.1% in the last year alone. This upward trajectory is largely driven by its strengths in digital adoption, specifically in cloud computing, and collaborative efforts among innovative SMEs. 

• Sweden’s Reclaimed Top Spot: Sweden has regained its position as the most innovative Member State, surpassing Denmark. Sweden’s score has increased by 12.9% since 2018, driven by its strengths in business R&D expenditure, digitalization, and production-based CO₂ productivity. Other top performers are Netherlands, Finland and Ireland. 

Countries Lacking Behind: 

• Emerging Innovators: Hungary, Poland, Slovakia, Latvia, Bulgaria, and Romania are in this group. 

• Falling Performance: While many are making progress, some countries have dropped in performance groups. Cyprus, for example, fell from Strong to Moderate Innovators due to a sharp drop in performance in the last year, particularly in areas like SME innovation and employment. Hungary also dropped from the Moderate to the Emerging Innovators group. Other countries that have decreased their innovation results are Lithuania, Czechia, or Austria. 

The Path Forward: How the EU Can Improve 

In SERN, we have analysed the EIS report and the performance of the EU regions and Member States. We are aware of the effort that the key innovation stakeholders and the European Union are making. However, we believe that there is room to improve, and here we propose some lines in which the EU must focus in the next 3 years to reduce innovation disparities and strengthen its global standing. Because the EIS 2025 is not just a report; it’s a “call for action”. Europe’s future prosperity hinges on its ability to innovate, boost competitiveness, and drive sustainability.

1. Closing the Global Gap: The EU has improved, but its growth has been slowing down. The EU is still lagging behind global competitors like South Korea and China, with China making a significant leap to an equal second place globally. The EU’s weaknesses include a lack of access to venture capital and a need for greater R&D investment. 
2. A Policy of Cohesion: The EU’s forthcoming Innovation Act is designed to address challenges like regulatory fragmentation and limited access to venture capital. By using the EIS as a benchmark, this act can help modernise research and innovation across the Union, ensuring that no country is left behind.  The huge disparities that we find in our continent and with our neighbours will only increase if there is no clear, structured, and powerful cohesion policy.
3. Strategic Investment in Key Areas: Future policies must focus on strategic autonomy and industrial resilience. The EU is already taking steps through initiatives like the Chips Act and Critical Raw Materials Act to reduce external dependencies and strengthen technological capacity. The forthcoming Startups and Scaleups Strategy is another crucial step, designed to improve conditions for new and growing companies through better access to finance and talent. 
4. Collaborative Ecosystems: Fostering interconnected innovation ecosystems and improving knowledge transfer from universities and research centers are key to ensuring that Europe’s strong scientific performance translates into market success. This collaboration must specially focus and support the emerging ecosystems. Europe must make a effort to support the innovation ecosystems from the southern and eastern countries. 
5. Strategic Technologies for Europe Platform (STEP) focuses funding on deep-tech, digital, quantum technologies and clean technologies, while the Chips Act and Critical Raw Materials Act are working to reduce external dependencies and strengthen industrial resilience.