The RHOMOLO ex ante macroeconomic impact assessment of the European Innovation Act

This paper presents an ex ante macroeconomic impact assessment of the European Innovation Act (EIA), a regulatory reform package to be adopted in 2026 aimed at closing Europe's structural gap between high-quality research and its commercialisation. Unlike traditional EU investment programmes, the EIA addresses regulatory bottlenecks through three targeted measures tackling weak IP exploitation and the underuse of R&D procurement as a tool for innovation. Micro-level cost-benefit estimates are mapped into RHOMOLO, the European Commission's spatial dynamic CGE model covering 235 NUTS-2 regions. Four core channels are simulated over a ten-year horizon: private investment with productivity impacts, pure total factor productivity (TFP) gains, minor public expenditure increases, and net costs or savings modelled as lump-sum transfers. The simulation results suggest that the EIA could generate between EUR 256 billion and EUR 452 billion in additional EU GDP cumulatively over ten years, creating between 238 and 507 thousand jobs at peak impact in year 10, when GDP would be between 0.24% and 0.42% above the no-policy scenario. Investment and productivity channels dominate supply-side effects, leading to persistent positive effects on the economy, demonstrating substantial macroeconomic returns from the regulatory innovation framework under analysis.