Paris

The European Commission says that it will allow “small and temporary” budget deficits to be run up by member states that are trying to boost spending on research.

The move is seen as lending support to a plan by the European Union (EU) to boost its total research and development (R&D) spending from 1.9% of economic output to 3% by 2010. Normally, member states that run budget deficits above target levels face huge fines from the commission.

Increased public spending on research is needed if the EU is to encourage more private investment; it is relying on industry to come up with two-thirds of the proposed R&D increase.

But even as the commission announced its offer, a survey by the European Round Table of Industrialists, a forum of 45 leaders of Europe's largest research-based companies, found that most of its members plan to increase research activity in the United States or Asia, rather than in Europe.

The commission's offer is part of an action plan released this week aimed at meeting the EU's R&D target. The goal is seen as vital by Europe's politicians if the continent is to compete with the United States and Japan, which both spend about 3% of their economic output on R&D.

The commission's plan calls for EU member states to agree measures to provide tax breaks for industry, to strengthen links between industrial and publicly funded research, to redirect public spending towards research and innovation, and to make careers in research more attractive. It also suggests that member states convert fragmented national research initiatives into Europe-wide programmes in critical technologies such as aerospace and nanotechnology.

But there is still a long way to go to meet the R&D goal. Spain currently spends only 0.97% of its economic output on R&D, lagging behind Italy (1.04%) and Britain (1.84%). France (2.13%) and Germany (2.52%) are closer to the target, but only Finland (3.37%) and Sweden (3.78%) surpass it.

The commission itself has little direct clout to enforce change, as member states set taxes and provide most public research funds. Officials say that it will rely instead on encouraging best practice in innovation and research policy, and on monitoring closely the performance of member states.