The European Union has always lagged behind American efforts to innovate, but while it has long-term, structural problems to deal with in this area, it is also true that the Commission has been handed a more immediate chance to boost the bloc's prospects. The US has cut back on federal research grants and immigration permits, handing Europe a golden opportunity to attract diverted STEM talent.

To capitalise on the moment, though, policymakers must act. It's high time they removed talent immigration blockers, fast-tracked STEM visas and increased funding for individual researchers. This is a chance to secure the continent's future position on the global innovation stage.

The truth is that the EU has always struggled in this area. Despite the Union's formation in 1993, it has only ever surpassed US innovation once, during the brief spell of 2019-20. Since that period, the gap has widened, with America outstripping its closest ally y/y.

Much of this is due to a lack of investment. In 2021, for example, EU firms and agencies invested €270bn less in R&D than US equivalents. This has a clear impact on overall productivity, driving US hourly output far higher than Europe's.

All this is to say that Europe's innovation deficit is a serious structural problem – not just a cyclical downturn. To address it fully, EU leaders will need to reckon with the long-term effects of their institutions. Already, Ursula von der Leyen is arguing for a deeper single market and heavier investment in pan-European research. That's been put into action with the Horizon Europe program, which will double in size from 2028 to fund science and technology. The Commission is attempting to redefine itself as an entrepreneurial body, including by signalling softer regulatory guardrails.

While I'm pleased to see the Commission take a more pro-business, pro-innovation stance, I am still concerned that it will take time for these measures to deliver results. In addition to the longer-term work of institutional reform, it needs to pursue clever short-term fixes to bridge the gap.

Fortunately, the EU has been given a remarkable opportunity. 2025 marked the first year in half a century where US net migration was negative. Government crackdowns on immigration mean that, since 2024, the US's denial rate for highly-skilled workers has doubled to nearly 47%, while the number of international students has fallen by a quarter.

On top of that, US federal funding cuts have put countless STEM courses, projects, and research trials on ice over the past year and a half. The US administration estimates it has terminated between $6.9 and $8.2bn, with a focus on Ivy League institutions, sending a strong signal that its priorities are shifting away from state-driven research and development.

What both of these factors mean is that STEM talent is firmly up for grabs. Brilliant minds from the likes of India, the UAE, and China are turning away from studying and working in the US, and could very well choose the EU as their next home.

The good news is that the EU already possesses much of the necessary infrastructure to streamline these workers' visa applications. Its Blue Card program was updated in 2021 to standardise residence permits for highly-skilled foreigners, and non-EU labourers are now guaranteed the same rights as EU citizens and can travel freely within the Union after a year of residence.

Nevertheless, reform to the Blue Card system remains incomplete and an unfortunate limitation on EU talent. The program's implementation across the Union is grossly uneven, with Germany accounting for 78% of all permits. More troubling still, the backlog of applications since the pandemic imposes severe restrictions on supply. Visa applications which shouldn't take more than two months can take as long as eight in some areas.

Policymakers must grapple with these visa hurdles now because, frankly, this opportunity is too good to miss. I'm calling for lower minimum salary thresholds and contract length requirements, more processing staff to clear backlogs, and fresh incentives from targeted research grants all the way through to free museum and cultural passes to those who decide to move.

These are all relatively simple and comparatively inexpensive fixes, but they could make all the difference to the future innovation race.

Science and technology will be the driving forces behind the most successful economies of the next fifty years. US policy has handed the EU a chance to secure its future – and it's an opportunity it mustn't pass up.

Yerbol Orynbayev is an economist and former Governor of the World Bank on behalf of Kazakhstan. He served as the Deputy Prime Minister of Kazakhstan from 2007-2013 and Aide to the President on economic policy from 2013-2015. He is known for having steered the nation out of the 2008 Financial Crisis.