On Tuesday 1 April, the European Commission adopted proposals to modify the current programmes financed by cohesion policy in order to better support the efforts of EU countries in the areas of competitiveness and defence, and to provide greater assistance to eastern border regions.
The aim is to encourage Member States and regions to invest in Europe’s strategic priorities while maintaining the objectives of reducing economic, social and territorial disparities. Member States will be asked to reprogramme part of their 2021-2027 funds for new investment as part of the mid-term review of cohesion policy.
“The territories and regions of the Member States are facing new challenges”, said Commission Vice-President Raffaele Fitto when presenting the proposal to the press in Strasbourg.
The proposals include targeted changes to the various funds. “This will give Member States and regions new opportunities to fund the new priorities directly”, said the Commissioner for Cohesion Policy. Member States and regions wanting to take advantage of these opportunities will have to propose changes to their programmes “two months after the new legislation comes into force”, explained Mr Fitto. The reprogramming process should be completed by the end of 2025, enabling programmes to be updated and implemented starting in 2026.
Budget. There will therefore be no new funding for this policy. Member States and regions will need to reallocate existing funds from their 2021-2027 cohesion policy budgets to support these strategic priorities. The proposal indicates that the total additional pre-financing to be paid in 2026 would amount to €16.1 billion. At the same time, taking into account payment forecasts and implementation delays, the net budgetary impact is estimated at €3.6 billion, which will be included in the 2026 draft budget plan.
Flexibilities. In addition to the proposed pre-financing of 30% for investments in the five strategic priorities in 2026, the Commission is proposing an additional pre-financing of 4.5% for cohesion programmes that devote at least 15% of their total amount to the strategic priorities. In the eastern border regions, this additional pre-financing will be 9.5%.
The Commission is also proposing to extend by one year the end date of eligibility for cohesion policy for programmes that devote at least 15% of their overall amount to strategic priorities.
The EU’s eastern border regions will receive additional support. This aid takes the form of a one-off additional pre-financing payment of 9.5% of the programme allocation, on top of the 30% pre-financing already offered, in programmes that devote at least 15% of their overall funding to strategic priorities. These regions will also benefit from the possibility of EU funding of up to 100%.
Competitiveness. The Commission is proposing measures to increase investment in strategic technologies, in particular those that contribute to the objectives of the ‘Strategic Technologies for Europe Platform’ (STEP). The proposal extends the scope of cohesion policy assistance under STEP to all enterprises, irrespective of their size and with no limit on the amount to be reprogrammed to STEP priorities (the Commission proposes that the ceiling of 20% of the ERDF allocation for reprogramming to STEP be removed).
The resources reprogrammed for these specific objectives will benefit from a one-off additional pre-financing of 30% in 2026 and the possibility of EU funding of up to 100% (the same applies to the other four priorities: defence, water, housing and energy transition). The proposal extends support for the industrial decarbonisation of production processes and products to all companies, for example in the automotive industry.
The Commission is also proposing to extend the scope of European Regional Development Fund (ERDF) support to decarbonisation of Emissions Trading System (ETS) installations, such as coke ovens and metal ore processing, and to reduce administrative controls for similar support under the ‘Just Transition Fund’. This will make it easier to support the transition of energy-intensive industries.
Defence. Cohesion policy already supports security and defence-related investments that contribute to economic, social and territorial cohesion (dual-use technologies and infrastructure, such as transport infrastructure).
The proposal aims to enable Member States and regions to use existing funds to strengthen production capacities in the defence sector in all EU regions and companies, and to build resilient infrastructure to support military mobility.
To this end, the Commission is proposing to create two new specific objectives under the ERDF to support defence: - the first will allow Member States and regions to reprogramme funds to enhance productive capacities in defence enterprises, regardless of their size and location; - the second objective is to build resilient infrastructure to foster military mobility in the EU. This should in particular benefit the EU’s Eastern border regions.
Accommodation. The Commission is proposing to double cohesion policy funding for affordable housing. Member States will also be able to mobilise public and private funding through a new financial instrument set up jointly with the European Investment Bank (EIB).
According to Raffaele Fitto, housing is a priority, “so it’s important to make progress in this area”. 75% of Europe’s citizens live in towns or urban centres, and this overpopulation is causing problems, while rural areas are suffering from the opposite problem, explained Mr Fitto.
Water resilience. Member States will have the opportunity to increase their investments to strengthen water resilience, in particular by modernising digital water management infrastructures.
Energy transition. Cohesion policy funds will support investment to develop energy interconnectors and transmission infrastructures, as well as the roll-out of charging points for electric vehicles. The proposal will also facilitate the financing of decarbonisation initiatives.
The legislative changes to cohesion policy proposed as part of the 2025 mid-term review will be examined by the European Parliament and the EU Council. The new programmes are expected to be implemented from the beginning of 2026.
Link to the legislative proposal: https://aeur.eu/f/g70
Link to the Communication: https://aeur.eu/f/g72 (Original version in French by Lionel Changeur)