EU’s £80bn project in crisis after banning UK as bloc tipped to struggle financially

Expert gives cash savers tips to beat inflation

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Horizon Europe is the EU’s key funding programme for research and innovation. The EU has banned the UK from involvement in the project until it resolves its deepening row over the Northern Ireland protocol. But after the Eurozone inflation jumped in September to 3.4 percent, and with projections that it will continue to rise, the funding for the project could be in jeopardy.

He told Express.co.uk: “There’s a question about what the European Central Bank (ECB) is going to do because it is usually their job to respond to inflation.

“When inflation starts to rise, they can raise interest rates.

“If banks raise interest rates, governments won’t be able to borrow as much to invest, and the same thing can happen in the private sector.

“Higher interest rates also mean that companies that usually invest in science-based projects would usually have a higher cost of capital.”

As Horizon Europe is based around attracting investment and facilitating international science projects in the bloc, high prices might discourage cooperation and hinder the targets of the project.

And if governments can’t borrow as much money to invest if interest rates rise, then it may find it difficult to gather together the funds to carry out the project.

Horizon Europe has a budget of €95.5billion (£80billion) for the period from 2021-2027.

This includes €5.4billion (£4.5billion) from the Next Generation EU instrument, particularly to support the green and digital recovery from the COVID crisis.

The budget is divided amongst four pillars and 15 components to create a programme that will support all the areas of research and innovation

In September, the Members of the European Parliament of the Industry, Technology, Research and Energy (ITRE) committee gathered to discuss the 2022 general EU budget.

And a special focus was given to the budget cut of €316million (£303million) for Horizon Europe.

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Some were left disappointed.

Some were left disappointed.

The European Commission’s initial proposal had allocated nearly €12.2billion (£10.28billion) for the research and innovation programme.

But member states were of the opinion that there was not enough demand for all the money to be spent next year and decided to backload the money to the end of Horizon Europe

With the budget already having been slashed by hundreds of millions, further cuts could be on the cards if interest rates go up as a result of inflation.

This could prove to be damaging for the £80billion pound project.

And after inflation surged above the ECB’s, there are fears that prices rises could become more permanent.

The ITRE committee has voiced its discontent with the original cuts as Horizon Europe looks set to be an important measure in increasing innovation, research and helping with climate strategies within the bloc.

In fact, the ITRE said that sufficient funding for Horizon Europe is essential if the EU is to reach its 2030 decarbonisation targets.

Christian Ehler, member of the committee, said: “As expected, it is as counterproductive as it could be […] while we are still in a pandemic, the Council cuts €45million on health research under Horizon Europe […]

“This completely undermines the idea that the recovery fund does additional money to boost recovery.

“It also is unrealistic if you are serious about the 2030 objective because those require investments now. It will be up to the Parliament to fight for a budget that delivers on recovery, resilience and the twin transition, digital and substantially.”

A huge 17.4 percent spike in energy prices played a large role in the higher inflation rate, according to Eurostat.

But it is how the ECB and eurozone finance ministers respond to the inflation that will ultimately determine the risk to science project funding.

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