Establishing a link between cohesion policy and structural reforms “can increase the growth potential of regions”, according to a study presented on Thursday 13 February at an event on the future of cohesion policy organised by the German Federal Ministry for Economic Affairs and Climate Action at the premises of the European Committee of the Regions (CoR).
This study (by DLR, Prognos AG and Taurus Eco Consulting), commissioned by the German Federal Ministry for Economic Affairs and Climate Action, also defends the territorial approach, “which addresses the specific needs and strengths of each region”. Targeted intervention based on the ‘Just Transition Fund' could be implemented to improve the effectiveness of this regional approach, according to the study’. It also advocates: - a cohesion policy more closely integrated with other EU programmes, such as Horizon Europe, in order to create synergies; - “increased” interregional cooperation to increase the impact of the European Regional Development Fund (ERDF) and promote knowledge and technology transfer.
Another study (GEFRA Münster, Ramboll Hamburg and ifo Dresden) commissioned by Germany looks at the evaluation of the 2014-2020 ERDF in the country and concludes: - investments of €19.6 billion have been made over the period (‘Recovery Assistance for Cohesion and the Territories of Europe’: €1.4 billion); - public funds (EU and national) accounted for around 78% of investment and private funds for around 22%; - 75% of public funds are allocated to infrastructure and public facilities and are not subsidies; - there is a concentration of investment in structurally weaker federal states; - that per capita investment in East Germany is 3.4 times higher than in West Germany; - ERDF investment represents 0.21% of GDP in East Germany and 0.04% in West Germany.
The future of Cohesion Policy. Next summer, the Commission will present its proposals for the 2028-2034 Multiannual Financial Framework (MFF). In its 11 February document on the next MFF (https://aeur.eu/f/fhy ), the European Commission advocates a “strengthened and modernised cohesion and growth policy, in partnership with national, regional and local authorities”.
According to a Commission representative at the CoR event, there is competition between the concepts of cohesion and competitiveness. It is important to continue to maintain that cohesion represents a contribution to Europe’s global competitiveness and competitive position, “because it is very difficult to imagine how this competitive position can be improved if a large proportion of European territories stagnate or are left behind or do not contribute to the overall objective”, according to the Commission. These two elements are closely linked and cannot be set against each other, according to the Commission.
Other tension: “Clearly, the European budget is under enormous pressure because of new priorities, the cost of enlargement, and the need to repay the loan from the Recovery and Resilience Facility”, according to this source. In the Commission’s view, it is therefore important to demonstrate that regional policy also contributes to EU priorities. Others believe that a third of the European budget is “lost and fragmented in numerous small projects and that the link with European priorities is lost”, acknowledged the Commission representative.
Flexibility. Another system needs to be found to enable the European budget to react to new crises rather than having to examine the same budget envelope and try to adjust it, according to the Commission. This is a problem that will become even more acute in a context of budget cuts. “I don’t have an answer for this solution, but it is clear that the question of flexibility will be very central to the budget discussion”, predicted the Commission representative.
Limited resources. According to Cinzia Alcidi, from the Centre for European Policy Studies (CEPS), one needs to think about the question of flexibility and how this quest to respond to new challenges and the growing demand for funding “puts considerable pressure on limited budget resources.
We don't know how the budget will evolve, but I think it's safe to say that the budget will be limited”, she added. Cohesion policy is one of the most important parts of the EU budget. “It is being closely examined because, for example, absorption rates are decreasing”, said Cinzia Alcidi. She claims that this is largely due to the Recovery and Resilience Facility (RRF). Another very important aspect for her is that the EU is increasingly exposed to crises, which have an impact on the regions.
The CEPS suggests solutions ranging from the creation of reserves, for example, at national level, which can be used in emergencies. Article 20 of the Common Provisions Regulation provides that, in extreme cases, the Commission may trigger the possibility of using certain funds for specific needs. “Perhaps this is too restrictive”, according to Cinzia Alcidi, who says that “we need to think about how to extend the cases in which this flexibility can be activated”. In her view, the key is to have a mechanism that allows a certain degree of flexibility in the use of cohesion policy funds, “without destabilising the whole framework”.
As part of its responsibility for coordinating cohesion policy funds in Germany, the Ministry for Economic Affairs and Climate Action has commissioned two studies on the impact and governance of cohesion policy, to provide input for the negotiations for the 2028/2034 funding period.
The German federal government and the Länder have also published a joint declaration on Cohesion Policy beyond 2027 (see EUROPE 13547/20).
Link to a summary of the two studies: https://aeur.eu/f/fhq (Original version in French by Lionel Changeur)