It is also below the 2013 world average (4.9%), and lags behind companies based in the US (5%) and Japan (5.5%).
These results were published in the EC's 2014 'EU Industrial R&D Investment Scoreboard', which analyses the top 2500 companies worldwide, representing about 90% of the total business R&D expenditure.
The data showed that EU-based companies (633) invested €162.4 billion in 2013, whereas US-based companies (804) invested €193.7 billion and the 387 Japanese ones €85.6 billion.
Thus, the European Commission is calling on Europe to invest more in R&D to keep up with competitors.
"With public resources limited, attracting private R&D investment is even more essential. Horizon 2020 is already engaging more businesses than ever before, but now we're ready to step up our game. The €315 billion investment plan presented by the Commission and European Investment Bank will help to raise more private investment for riskier projects, benefiting R&D across Europe," says Carlos Moedas, Commissioner for Research, Science and Innovation.
The Scoreboard companies employed 48 million staff worldwide in 2013. Over the last 8 years (2005-2013), EU based companies have increased employment by 18.2%, with higher R&D intensity sectors driving that growth.
This trend remains strong, despite the small decrease in employment (0.6%) by EU companies last year.
For EU based companies, 97% of the total R&D investment is by companies based in 10 countries. The overall performance is largely driven by companies based in three countries: Germany, France and the UK, which account for more than two thirds of the total.
In Germany and the UK, companies' investment continued to grow (5.9% and 5.2% respectively) above the average while French companies saw a decrease in R&D investment (-3.4%).
J&J applauded for commitment to R&D
Of 2,000 companies analysed for their commitment to R&D, Johnson & Johnson has been placed in the top ten line up of businesses investing more than 90% of their total expenditure in research and development.
The report published annually by DG Research and Innovation and the European Joint Research Centre features an analysis of top investors in R&D on a global scale. Other companies ranked in the top-10 this year includes five based in the US, two in Switzerland and one in Japan from the health and auto sectors.
According to the JRC, the report measures the total value of a company's global R&D investment financed with their own funds, irrespective of the location where the relevant R&D takes place.