The European Commission is planning to replace the three current categories of regions - the less developed regions, transition regions and most developed regions - with three categories of member states for the thematic concentration, according to a provisional version of the regulation covering the European Regional Development Fund (ERDF) and the Cohesion Fund, which was consulted by EUROPE on Wednesday 16 May.
The institution also seems to be moving towards two categories of regions to calculate the financial envelopes, according to the provisional version of the forthcoming Common Provisions Regulation, of which EUROPE has also had sight.
The Commission is thus planning to introduce a major change, according to the version of the ERDF and Cohesion Fund regulation, dated late April. In the article on the thematic concentration for ERDF aid, the institution is planning to set in place three groups of member states: - the first group of member states with a GNI per head of population equal to or greater than 100% of the EU average; - a second group with GNI per head of population greater than or equal to 75% but less than 100% of the EU average; - a final group of member states whose GNI per head of population is less than 75% of the EU average.
Depending on the group to which they belong, member states will then be required to manage their resources on the basis of priorities which have been reduced to five in number: - priority 1: innovation and smart economic transformation; - priority 2: climate change and energy transition; - priority 3: digital connectivity and transport; - priority 4: the social dimension, in connection with the European pillar of social rights; - priority 5: inclusive urban, rural and coastal development.
This means that if a member state was in the first category, it would have to channel at least 80% of the resources (not including technical assistance) of the ERDF into priorities 1 and 2, including at least 60% for priority 1. If the member state belongs to group 2 it must focus at least 70% of its resources on priorities 1 and 2, with at least 50% for priority 1. Finally, member states in group 3 must put at least 60% of their resources into priorities 1 and 2 with at least 40% for priority 1. It is therefore clear that the Commission, in line with its announcements on the next multiannual financial framework (see EUROPE 12013), intends to place particular emphasis on innovation and tackling climate change.
Consequently, the member states will be called upon to observe rules concerning the thematic concentration and co-financing rates connected to their category at national level, but in return, will be free to modulate them on a region-by-region basis. The Commission is determined to simplify the use of the funds, not so much for the beneficiaries' sake, but for its own, a source close to the dossier commented, adding that the move may lead to a nationalisation of the management of co-financing and the thematic concentration. It will be up to the regions to lobby at national level, another source analysed, talking of a paradigm shift and anticipating chaos in certain federal member states, such as Belgium.
Two categories of regions
Another major change is taking shape. The Commission plans to allocate funds on the basis not of three categories of regions (NUTS 2), but of two: - a first group of regions whose GDP per head of population is above the European average, the level of which had not yet been determined in the version of the regulation of which we have had sight; - a second group whose GDP per head of population is below a certain percentage of the European average. The sharing threshold may be set at 100% of GDP per head of population, however.
Three categories of regions will not be completely ruled out, one source told us. Keeping a third category would keep the member states of the east happy, particularly those of the Visegrad group, which will be the hardest hit by the Commission’s budget cuts to the cohesion policy. According to the projections, the cohesion fund may be reduced drastically, by up to 40%.
Indicators
The hand of the eastern member states is also apparent in the indicators used to determine the national envelope. The provisional versions of both texts announce no major changes and seem to give much prominence to GDP per head of population. This has been confirmed by two sources, who predict a system similar to the so-called ‘Berlin’ system (envelope calculated principally on the basis of GDP per head of population at level NUTS 2).
However, the Commission has long announced that alternative indicators will be used, for instance measuring well-being, or taking account of migration flows (see EUROPE 11488). However, it will be hard for the eastern member states to accept being stripped of a benchmark that favours them, on top of the budgetary reduction of the Cohesion Fund, of which they are particular beneficiaries.
Other major changes
Among the other new features, the Commission seems to be planning a mid-term review of the programmes in place, for the ERDF, ESF and Cohesion Fund in particular. The member states must carry out their evaluation in 2025, taking account of the socio-economic situation and the country-by-country recommendations of 2023 and 2024. On this basis, the revised programme may be set up for the years 2026 and 2027.
More generally, the Commission is planning to include all funds under shared management in the Common Provisions Regulation (ERDF, ESF, Cohesion Fund, EAFRD, EMFF, AMG, Internal Security Fund and Integrated Border Management Fund), which has led to scepticism among certain observers as to the coherence of the whole thing with the cohesion policy. Similarly, the Cohesion Fund and ERDF will not have autonomous regulations and will be covered by the same text.
A slight delay
According to the Commission’s timetable, the proposals on the future cohesion policy and the structural and investment funds should be publicly tabled on 29 May. However, given the scale of the arbitration still to be carried out, the text may be pushed back until early June. (Original version in French by Pascal Hansens)