A lifeline for Europe’s young radical innovators

Europe’s young, dynamic, high-growth firms are in a precarious position, despite their pivotal role in bringing radically new innovations to market. EU start-ups face higher entry and growth barriers than their counterparts in the United States, and consequently Europe has fewer young innovative companies (YICs) than the US. Those that Europe does have are less R&D intensive. The main barriers to innovation are access to finance and the difficulty that YICs have in accruing the benefits from their innovations. In the current crisis, YICs must also adapt to a double whammy of credit that is even more constrained than usual, and higher bankruptcy risk. Policymakers must provide support for these firms, and they must get their policy interventions right.

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