Prepared for: the European Commission, European Parliament, Council of the European Union, European Investment Bank, Committee of the Regions, European Economic and Social Committee, and relevant national ministries, agencies, and public financing bodies.
Executive summary
Europe’s current strategic problem is not only that it invents less than it should. It is that too much European knowledge, design capacity, research talent, creative labour, and market-shaping value is financed socially, extracted privately, and then recaptured through foreign platforms, foreign ownership structures, and foreign capital markets. Recent EU competitiveness work has framed the issue in similar terms: Europe faces a structural investment gap, weakening positions in strategic sectors, and an urgent need to strengthen technological sovereignty, productive capacity, and innovation performance. The Draghi report argues for a step-change in investment and industrial strategy, while the Letta report argues for a deeper Single Market architecture centered on knowledge, research, and strategic capability.
This report argues that the EU should broaden its idea of “strategic technology.” It should include not only semiconductors, AI compute, clean tech, biotech, cloud, and defence-adjacent digital systems, but also the cultural, creative, communications, design, educational, behavioral, and media professions that make technological adoption socially legible, commercially viable, and democratically governable. The EU already recognizes that the cultural and creative industries ecosystem represents about 3.95% of EU value added and around 8 million jobs, with over 99.9% of firms being SMEs. OECD work further shows that cultural and creative sectors generate spillovers into innovation, productivity, tourism, social inclusion, and local development.
The central policy recommendation is therefore to create a European Creative and Technological Sovereignty Compact: a multi-instrument financing and governance framework that protects European intellectual production, retains talent, scales public-interest innovation, and prevents value extraction by foreign platform monopolies or acquisition-led dependency. This should include a dedicated fund for long-duration creative and technological practitioners, stronger public procurement, anti-extractive IP conditions on public support, better labour protections in creative and knowledge sectors, and a regionally balanced retention strategy for Europe’s risk-takers, educators, applied researchers, communicators, and media workers. These proposals are normative recommendations derived from the evidence base below.
1. The diagnosis
1.1 Europe has a competitiveness and investment problem, not a talent problem
The EU’s own recent analyses do not describe a continent lacking intelligence or institutions. They describe a continent undercapitalising its strengths, fragmenting markets, and failing to scale strategic capabilities at the necessary speed. Draghi’s 2024 competitiveness report identifies an investment shortfall large enough to require a major increase in annual investment if Europe is to avoid continued relative decline. Letta’s 2024 report likewise calls for a stronger Single Market framework around knowledge, innovation, and strategic autonomy. The European Innovation Scoreboard 2025 also notes that EU innovation performance declined slightly between 2024 and 2025, even though longer-term gains since 2018 remain positive.
This matters because a region can produce excellent researchers, designers, engineers, teachers, psychologists, communicators, and market-makers and still lose the economic benefits if finance, platform control, IP ownership, cloud infrastructure, compute, and scale-up capital remain elsewhere. OECD work on talent attractiveness and regional retention shows that attracting and retaining skilled workers depends not only on openness, but on job quality, career structure, public services, and wider social conditions. Recent OECD regional work on talent retention similarly stresses that employers, education providers, and civil society all shape whether skilled people stay or leave.
1.2 Europe undervalues the sectors that translate invention into social and market reality
Industrial policy often privileges laboratories, fabs, and software stacks while underestimating the professions that make technologies understandable, trusted, distributable, desirable, and institutionally usable. Yet the OECD explicitly notes that cultural and creative sectors contribute to innovation through new products, services, processes, business models, and spillovers into the wider economy. The Commission’s own Horizon Europe work programme for culture, creativity and inclusive society similarly treats cultural and creative industries as engines of innovation across the economy, not as decorative add-ons.
From a neutral analytical perspective, the economic problem is therefore misclassification. Europe frequently treats creative, media, communication, educational, and behavioral professions as “soft” sectors, even when they perform hard economic functions: demand formation, interface design, persuasion, market adoption, public legitimacy, skills reproduction, and social stabilisation. That misclassification leads to chronic underfinance, weak bargaining power, and excessive dependence on non-European platforms for monetisation and distribution. The result is not simply unfairness; it is structural inefficiency.
1.3 Precarity is reducing Europe’s innovation capacity
Recent academic work continues to show that creative labour is frequently precarious, with unstable earnings, portfolio careers, and weak social protections. That is not only a labour-market problem. It is also an innovation problem, because highly skilled workers under financial stress cannot invest in long-duration experimentation, institution building, or high-risk original work. Research on creative labour in the Netherlands and elsewhere shows that non-material values such as autonomy and self-expression coexist with material insecurity rather than replacing it.
A serious EU strategy should therefore reject the romantic assumption that creative and knowledge workers can be paid in “freedom,” visibility, or future optionality. A left social philosophy is useful here not as dogma but as diagnostic clarity: labour that produces public value should not be structurally subordinated to speculative capital or platform rent extraction. Mission-oriented innovation theory similarly argues that the state should shape and create markets, not merely correct market failures after the fact.
2. Why this matters for technological sovereignty
2.1 Strategic autonomy requires ownership of the full value chain
The EU has already moved toward a sovereignty framework in semiconductors, strategic technologies, digital infrastructure, and AI. The European Chips Act is explicitly designed to reinforce the semiconductor ecosystem, reduce external dependencies, and contribute to the EU goal of reaching 20% of global semiconductor market share. The Strategic Technologies for Europe Platform has, according to the Commission’s STEP portal, mobilised €29 billion in EU funding by March 2026 to support strategic technologies. The Commission also launched InvestAI in 2025 to mobilise €200 billion for AI investment, including a €20 billion facility for AI gigafactories.
These are important moves, but they remain incomplete if Europe funds infrastructure while allowing the surrounding layers of storytelling, pedagogy, interface design, commercialization, behavioral adoption, and market communication to remain financially fragile or platform-dependent. A sovereign technological ecosystem is not just chips plus compute. It is chips plus software plus design plus communications plus distribution plus trust plus skills plus institutional memory. That conclusion is supported by research on ecosystems-based industrial policy and on geographically bounded knowledge spillovers between universities, firms, and regions.
2.2 Publicly financed knowledge should not become privately extractable offshore value
A recurring European failure is to subsidise early-stage knowledge creation while tolerating later-stage capture through acquisition, IP migration, tax arbitrage, and foreign platform intermediation. Where public money de-risks innovation, public institutions should attach conditions that preserve at least part of the long-term value in Europe. This logic is consistent with mission-oriented policy and with STEP’s stated purpose of de-risking strategic technologies and crowding in private capital for European industry.
In practical terms, this means grant and equity conditions around domicile, IP location, licensing, data governance, procurement eligibility, and limits on fast foreign buyout if public support has materially created enterprise value. Such conditionality is a policy inference in this report, but it follows directly from the EU’s own concern with resilience, technological sovereignty, and external dependency.
3. Policy objectives
The EU should adopt five linked objectives.
First, keep more invention, design, talent, compute capability, and IP inside Europe. This aligns with current EU sovereignty and competitiveness priorities.
Second, treat cultural, creative, media, market, education, psychology, and communications professions as productive infrastructure rather than as peripheral consumption sectors. The economic literature and OECD evidence support this broader understanding of spillovers and productivity effects.
Third, reduce precarity in high-skill creative and knowledge work so that risk-taking becomes materially possible, not rhetorically celebrated. Academic evidence on precarious creative work supports this need.
Fourth, ensure regionally balanced development so that peripheral and post-industrial regions are not turned into training grounds for talent that then exits permanently. OECD talent-retention work supports this concern.
Fifth, embed social justice and democratic legitimacy inside innovation policy, so that competitiveness is not pursued through deregulated labour depletion but through productive public investment, stronger capability formation, and fairer value distribution. This is a normative recommendation, but it is consistent with the evidence that job quality, social conditions, and institutional capacity matter for talent retention and innovation performance.
4. Recommended measures
4.1 Create a European Creative and Technological Sovereignty Fund
The EU should establish a dedicated fund, either as a new instrument or as a ring-fenced window within the next Multiannual Financial Framework, InvestEU, STEP, or a future European Competitiveness Fund. Reuters reported in 2024 that the Commission was considering such a Competitiveness Fund for strategic technologies, and current EU instruments such as STEP already provide a platform for focused de-risking.
This fund should support:
- long-duration R&D and prototype development,
- independent studios and laboratories,
- public-interest AI and software,
- design, communication, publishing, and media production with European IP retention,
- educational and behavioral innovation,
- high-risk cross-disciplinary projects led by experienced practitioners, not only venture-scalable founders.
A crucial design principle is that eligibility should not be limited to firms with classic venture profiles. Europe contains many high-value creators, educators, communicators, designers, and applied researchers who have been “making stuff for decades” but are poorly served by VC logic, despite generating durable public and market value. That recommendation follows from the structural dominance of SMEs in the cultural and creative ecosystem and from evidence on spillovers beyond firm-level output.
4.2 Introduce “European retention clauses” in public funding
Any substantial public support for strategic innovation should include conditionalities on:
- IP registration and maintenance in Europe,
- substantial EU-based employment and production activity,
- data governance compatible with EU law,
- a period of restricted foreign acquisition or mandatory public-interest review,
- fair licensing rules where public money played a decisive role.
This is not protectionism for its own sake. It is a mechanism to stop Europe financing the upside while importing the finished product back at monopoly prices. The policy rationale aligns with the EU’s own concern over dependency, resilience, and strategic autonomy in chips, AI, and critical technologies.
4.3 Expand industrial policy to include social adoption and communications layers
The EU should fund not only the making of technology but also the making of public understanding, pedagogical materials, civic communication, interface design, and behavioral translation. Technologies fail in practice when users do not trust them, institutions cannot explain them, workers cannot adapt to them, or markets cannot absorb them. Research on knowledge spillovers and ecosystems-based policy suggests that innovation performance depends on linked institutional capacities, not isolated breakthroughs.
This implies dedicated funding calls for:
- European science and technology communication,
- human-centered product and service design,
- public education and reskilling media,
- culturally intelligent digital interfaces,
- multilingual knowledge dissemination,
- psychology- and behavior-informed democratic adoption strategies.
Horizon Europe already points in this direction when it treats culture and creativity as a competitiveness engine; the recommendation here is to elevate that logic from programme language into mainstream industrial policy.
4.4 Protect creative and knowledge workers from destructive precarity
The EU and Member States should develop a minimum social framework for project-based and portfolio-based high-skill labour, including portable benefits, stronger collective bargaining coverage, fair-contract standards, prompt-payment rules, and public-funding conditions that prohibit exploitative unpaid or underpaid subcontracting. Academic and OECD evidence strongly supports the diagnosis that creative sectors are economically significant yet structurally vulnerable.
A neutral view of labour-market efficiency supports this too: if Europe wants greater risk-taking, then it must socialise part of the downside risk for workers whose experimentation benefits the wider economy. Otherwise only the already wealthy can afford to innovate independently. That is both inequitable and allocatively inefficient. Mission-oriented policy literature supports a larger role for public institutions in shaping the conditions of innovation.
4.5 Use procurement as a scale engine for European capability
Europe often funds pilots but does not buy at scale. The Commission, agencies, universities, public broadcasters, hospitals, schools, and municipalities should use procurement to create stable early demand for European tools, software, design systems, educational media, communications services, and socially useful digital infrastructure. The OECD’s ecosystems approach emphasizes the importance of downstream adoption and demand in innovation systems.
This means shifting from fragmented grant logic toward capability-building demand. Procurement can be especially powerful for sectors that do not fit traditional manufacturing models but do generate strategic capacity, such as publishing infrastructure, educational technology, public-interest AI, civic media, behavioral research services, and multilingual communications systems. That is an inference from the evidence on spillovers, ecosystems, and regional innovation.
4.6 Build regional “creative-tech capability zones”
The Cultural and Creative Cities Monitor and OECD regional evidence both suggest that local ecosystems matter. The EU should therefore support regional capability zones that link universities, art and design schools, vocational education, local SMEs, labs, public media, municipalities, and cooperative finance. The goal would be to reduce geographic concentration, create quality work outside core metropolitan hubs, and combat internal European talent drain.
These zones should be explicitly designed for mixed professions: coders with designers, psychologists with interface teams, artists with robotics labs, journalists with data scientists, teachers with simulation developers. Innovation increasingly occurs at the boundaries of disciplines, and public policy should reflect that. This interdisciplinary recommendation is an inference grounded in the ecosystem and spillover literature.
4.7 Strengthen Europe’s own media, platform, and distribution sovereignty
If European creators and applied knowledge workers remain dependent on non-European platforms for distribution, discovery, and monetisation, then upstream funding will continue leaking downstream value. The EU should therefore consider stronger support for European cloud, hosting, marketplaces, publishing stacks, audiovisual platforms, interoperable social infrastructure, and rights-management systems. The broader sovereignty rationale is consistent with the Digital Decade package and current EU strategic technology policy.
This does not require autarky. It requires bargaining power, domestic alternatives, and the ability to choose Europe without accepting technical inferiority or financial punishment. That is the practical meaning of strategic autonomy.
5. Governance and implementation
Implementation should be shared across the Commission’s DGs for research, industry, communications networks, employment, education, culture, competition, and regional policy, with financing support from the EIB Group and coordination with national development banks. The issue is cross-cutting by nature and should not be siloed inside culture policy alone. Existing EU instruments already span these domains, including Creative Europe, Horizon Europe, STEP, the Chips Act ecosystem, and Digital Europe.
A practical governance model would combine:
- Base grants for early-stage and independent capability,
- Patient public equity or revenue-based finance for scale-up,
- Procurement commitments for validated public-interest solutions,
- Social conditionality on labour standards and fair pay,
- Retention conditionality on IP, domicile, and public-value capture.
That mix is a policy proposal, but it follows from the evidence that Europe needs both scale and resilience, and that innovation systems function through coordinated institutions rather than single subsidies.
6. Metrics for success
Success should not be measured only by unicorn counts or private exit valuations. Those metrics bias policy toward financial extraction rather than durable European capability. The EU should track:
- EU-based IP ownership after public support,
- retention of highly skilled workers,
- median income stability in creative and knowledge professions,
- public procurement share awarded to European sovereign-capability providers,
- regionally distributed job creation,
- European market share in strategic digital and media infrastructure,
- downstream adoption of publicly supported technologies,
- social outcomes including educational reach, public trust, and democratic accessibility.
This broader metrics framework is consistent with the logic of mission-oriented policy and with OECD evidence that cultural and creative sectors have economic and social impacts beyond immediate revenue.
7. Political framing
From a true neutral perspective, this agenda is neither anti-market nor anti-American. It is pro-European capability, pro-democratic resilience, and pro-productive investment. It accepts that open markets can create prosperity, but also that markets do not automatically preserve regional knowledge, labour dignity, or technological sovereignty. Where asymmetries of capital, scale, and platform power are severe, public institutions must intervene to protect long-term collective capacity. That conclusion is strongly aligned with current EU sovereignty thinking and with the mission-oriented innovation literature.
From a left social philosophy, the same agenda can be framed more directly: Europe should stop socialising the risk and privatising the reward. The people who build knowledge, culture, communication, education, and technology should not be left in precarious competition while value is captured elsewhere. A socially democratic Europe should reward productive contribution, sustain public institutions, and preserve strategic sectors as common developmental assets. This is a normative conclusion of the report, supported by the evidence above on precarity, spillovers, public value, and talent retention.
Conclusion
Europe does not lack intelligence, culture, or ambition. It lacks a sufficiently coherent mechanism for turning those strengths into retained public value and durable sovereign capability. The solution is not only more money, though more money is needed. It is better-structured money: patient, conditional, socially grounded, regionally distributed, and explicitly designed to keep IP, talent, production, and market power in Europe. Current EU policy already contains many of the relevant building blocks, from the competitiveness agenda to chips, AI investment, strategic technologies, and creative-sector support. What is missing is integration.
A credible European response would therefore fund the actual risk-takers, especially those with long records of productive work; stabilize the professions that translate invention into society; impose public-interest conditions on publicly supported innovation; and build a political economy in which technological and cultural power are not continuously exported and sold back to Europeans. That is how economic regression can be halted without sacrificing democracy, labour dignity, or social cohesion.
Selected references
Brook, O. (2025). Precarity and second job-holding in the creative economy. Cultural Trends.
European Commission. (2024). The future of European competitiveness (Draghi report).
European Commission. (2025). 2025 State of the Digital Decade package.
European Commission. (2025). European Innovation Scoreboard 2025.
European Commission. (2025). InvestAI initiative / AI gigafactories materials.
European Commission. (2026). Cultural and creative sectors.
European Commission. (n.d.). European Chips Act.
European Commission. (n.d.). Strategic Technologies for Europe Platform (STEP).
European Commission / DG RTD. (2025). Horizon Europe Work Programme 2025 – Culture, Creativity and Inclusive Society.
Eurostat. (2023 data, published 2025). Government expenditure on cultural, broadcasting and publishing services.
Letta, E. (2024). Much more than a market.
Marčeta, P., Been, W., & Keune, M. (2023/2024). Turning post-materialism on its head: self-expression, autonomy and precarity at work in the creative industries.
Mazzucato, M. (2018). Mission-oriented innovation policies: Challenges and opportunities. Industrial and Corporate Change, 27(5), 803–815.
OECD. (2024). Economic and social impact of cultural and creative sectors.
OECD. (2024). The state of academic careers in OECD countries.
OECD. (2025). An ecosystems approach to industrial policy.
OECD. (2026). How can regions attract and retain the talent needed for their green transition?
Ponds, R., Van Oort, F., & Frenken, K. (2009). Innovation, spillovers and university–industry collaboration: An extended knowledge production function approach. Journal of Economic Geography, 10(2), 231–255.
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