This paper outlines how an effective ECF could be built – and what pitfalls to avoid. The Commission is right to call for structural simplification. But simplification is not an end in itself; it only makes sense if it leads to tangible improvements. A one-size-fits-all consolidation risks doing more harm than good. Rolling all directly managed programs into a mega-fund could dilute accountability, sideline sectoral expertise, and undermine the flexibility needed to adapt funding tools to specific challenges.
To avoid these risks, this paper proposes four key design principles for the ECF:
- Clear thematic scope: Only programs that directly support competitiveness, innovation, and industrial development would be included. Programs with different policy objectives – such as LIFE or the Union Civil Protection Mechanism – would remain outside the ECF. The successor to Horizon Europe would also remain a standalone program, focused solely on frontier, curiosity-driven research.
- Thematic pillars integrating the full innovation ecosystem: The ECF would be structured around pillars such as decarbonization, digitalization, biotechnology, and defense/dual-use technologies. Within each pillar, funding would span the entire innovation lifecycle – from early-stage research to commercialization and scale-up – to ensure continuity and maximize impact.
- Deploy the best funding instrument for each case: The ECF would make use of the full range of funding instruments – grants, equity, guarantees, loans, and blended finance. Each would be applied where it delivers the greatest return per euro spent.
- Flexible and clear governance: The legislation would define only the thematic pillars and allocate funds accordingly. Within each pillar, the Commission would have broad flexibility to reallocate resources. Reallocations across pillars would be made via delegated acts. Specific funding instruments would be proposed by the Commission as part of the annual budget precedure and approved by the legislators. Spending decisions would be made by the Commission, with one directorate-general responsible for ensuring coherence across the ECF, while individual instruments would be managed by the DGs with the relevant expertise.
