Category Archives: Regional policy

The European Union’s regional policy seeks to reduce structural disparities between EU regions, foster balanced development throughout the EU and promote real equal opportunities for all. Based on the concepts of solidarity and economic and social cohesion, it achieves this in practical terms by means of a variety of financing operations, principally through the Structural Funds and the Cohesion Fund. For the period 2007-2013, the European Union’s regional policy is the EU’s second largest budget item, with an allocation of €348 billion. The objective of economic and social cohesion was introduced in 1986 with the adoption of the Single European Act. The policy was finally incorporated into the EC Treaty itself (Articles 158 to 162) with the Maastricht Treaty (1992).

Review and the future of regional policy
Provisions and instruments of regional policy
Structural Funds, Cohesion Fund, European Union Solidarity Fund (EUSF), European Investment Bank (EIB)
Management of regional policy
Budgetary and financial provisions, national regional aid, services of general interest, enlargement

Review and the Future of Regional Policy

Review and the Future of Regional Policy

Review and the Future of Regional Policy Contents

Reports on economic and social cohesion

Sixth progress report on economic and social cohesion
Fifth progress report on economic and social cohesion
Fourth Report on Economic and Social Cohesion
Fourth progress report on cohesion: The Growth and Jobs Strategy and the Reform of European cohesion policy
Third progress report on cohesion – towards a new partnership for growth, jobs and cohesion
Third report on economic and social cohesion: the socio-economic situation of the Union and the impact of European and national policies
Third Report on economic and social cohesion: proposals for regional policy after 2006
Second progress report on economic and social cohesionArchives
First Progress Report on Economic and Social CohesionArchives
Second Report on Economic and Social Cohesion – an assessmentArchives
Second Report on Economic and Social Cohesion: conclusions and recommendationsArchives
10 questions for debateArchives

Lisbon Strategy and regional policy

Cohesion Policy: investing in the real economy
Cohesion policy to deliver the Lisbon Strategy (2007-2013)
Cohesion Policy in support of growth and jobs – Community Strategic Guidelines, 2007-13
Green paper on Territorial Cohesion
Implementation of the partnership for growth and jobs (first report)
The Community Lisbon ProgrammeArchives
A new start for the Lisbon Strategy (2005)Archives
A European initiative for growth
Strategy for sustainable developmentArchives
The Lisbon Special European Council (March 2000): Towards a Europe of Innovation and Knowledge

Thematic communications

Regional Policy serving innovation
The outermost regions: an asset for Europe
Review, challenges and strategy for the outermost regions
Cohesion policy and cities
Regions for economic change

Trans-european networks

Trans-european networks

Outline of the Community (European Union) legislation about Trans-european networks

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Management of regional policy > Trans-european networks

Trans-european networks

TRANSPORT

  • EU guidelines for the development of the trans-European transport network
  • Interoperability of the rail system within the EU
  • Community financial aid to trans-European networks
  • Interoperability of the trans-European high-speed rail system
  • Interoperability of the conventional rail system
  • Connecting the infrastructure network
  • Satellite navigation: Galileo

ENERGY

  • Trans-European energy networks

TELECOMMUNICATIONS

  • Guidelines for trans-European telecommunications networks

Guidelines for trans-European telecommunications networks

Guidelines for trans-European telecommunications networks

Outline of the Community (European Union) legislation about Guidelines for trans-European telecommunications networks

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Management of regional policy > Trans-european networks

Guidelines for trans-European telecommunications networks

Document or Iniciative

Decision No 1336/97/EC of the European Parliament and of the Council of 17 June 1997 on a series of guidelines for trans-European telecommunications networks [Official Journal L 183 of 11.07.1997]. [See amending acts].

Summary

In this Decision, the European Parliament and the Council establish guidelines covering the objectives, priorities and broad lines of action proposed for trans-European networks. These guidelines set out the areas selected for projects of common interest and establish a procedure for the identification of specific projects of common interest in these areas.

The following priorities are established for the achievement of the objectives set out in point 1 above:

  • study and validation of technical and commercial feasibility, followed by the deployment of applications supporting the development of a European information society, in particular applications of collective interest;
  • study and validation of feasibility, followed by the deployment of applications contributing to economic and social cohesion, by improving access to information across the whole Union, building on European cultural diversity;
  • stimulation of trans-boundary interregional initiatives and of initiatives involving regions, in particular the less favoured ones, for the launch of trans-European telecommunications services and applications;
  • study and validation of feasibility, followed by the deployment of applications and services contributing to the strengthening of the internal market and job creation, in particular those offering to SMEs means to improve their competitiveness in the Community and at world level;
  • identification, study and validation of technical and commercial feasibility, followed by the deployment of trans-European generic services providing seamless access to all kinds of information, including in rural and peripheral areas, and interoperable with equivalent services at world level;
  • study and validation of the feasibility of new integrated broadband communication (IBC) networks, where required for such applications and services, and the promotion of such networks;
  • identification and removal of gaps and missing links for effective interconnection and interoperability of all components of telecommunications networks in Europe and at world level, with particular emphasis on IBC networks.

The broad lines of measures to be implemented for achieving the objectives defined in point 1 will cover:

  • identification of projects of common interest by the establishment of a work programme;
  • action aiming at increasing the awareness of citizens, economic operators and administrations about the benefits they can draw from the new advanced trans-European telecommunications services and applications;
  • action aiming at the stimulation of combined initiatives from users and providers for the launch of projects in the field of trans-European telecommunications networks, in particular IBC networks;
  • support, within the framework of the methods laid down by the Treaty, for action to study and validate the feasibility, followed by the deployment, of applications, in particular applications of collective interest, and encouragement of the establishment of public/private collaboration, in particular through partnerships;
  • stimulation of the supply and use of services and applications for SMEs and professional users;
  • promotion of the interconnectivity of networks, the interoperability of broadband services and applications and the infrastructure they require, in particular for multimedia applications, and interoperability between existing services and applications and their broadband counterparts.

The projects designated are eligible for Community support in accordance with the provisions of the Council Regulation laying down general rules for the granting of Community financial aid in the field of trans-European networks.

Member States shall take all measures required at national, regional or local level to facilitate and accelerate the implementation of the projects of common interest in accordance with Community rules.

The Commission shall report every three years on the application of this Decision to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions.

Annex 1 to the Decision defines the three-layer model which is the most appropriate way of describing trans-European telecommunications networks:

  • The “applications” level caters for user needs, taking into account cultural and linguistic differences and, in particular, the accessibility requirements of disabled people. These applications also seek to cater for the specific needs of less developed or less populated regions.
    The areas concerned are the following: a) e-government and e-administration: (e.g. e-procurement activities, personal security, environment and tourism, business support for SMEs and participation in the democratic decision-making process); b) improved access to health services and improvements in the quality of care (e.g. networking of health care institutions, actions on disease prevention and health promotion); c) education and culture (e.g. new ways of presenting educational and cultural information, life-long learning and participation of older people and people with disabilities in the information society).
  • The “generic services” level provides common tools for the development and implementation of new applications based on interoperable standards.
    The areas concerned are the following: a) the mobile services (e.g. for the 2.5-3G mobile networks: guidance and navigation, security, invoicing, emergency services, health, teleworking, learning and culture); b) services in the public interest aimed at all aspects of security (e.g. networking of the national CERT systems).
  • The “interconnection and interoperability of networks” level promotes the interconnection, interoperability and security of networks underpinning the operation of specific public interest applications and services.

The Community is taking additional back-up and coordinating measures with a view to creating the appropriate environment for the realisation of these projects. The actions will contribute to programme awareness, and to consensus development centred on European, national, regional and local activities designed to stimulate and promote the new services and applications. They will necessitate consultation with European standardisation and planning bodies, involving essentially:

  • strategic studies on the formulation of target specifications and the transition towards their application, in order to help players in the sector to make sound economic investment decisions;
  • definition of means of accessing broadband networks;
  • establishment of common specifications based on European and world standards;
  • intensification of public and private partnerships (PPP);
  • coordination of these activities with related Community and national programmes.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision 1336/97/EC 31.7.1997 OJ L of 11.7.1997
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Decision No 1375/2002/EC 19.8.2002 OJ L 200 of 30.7.2002

Connecting the infrastructure network

Connecting the infrastructure network

Outline of the Community (European Union) legislation about Connecting the infrastructure network

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Management of regional policy > Trans-european networks

Connecting the infrastructure network

To promote a pan-European transport networks partnership for co-ordinated transport planning, studying regulatory measures and facilitating financial arrangements.

2) Document or Iniciative

Communication from the Commission on connecting the Union´s transport infrastructure network to its neighbours: Towards a co-operative pan-European transport network policy [COM (97) 172 final – Not published in the Official Journal].

3) Summary

The Commission advocates a comprehensive approach to the pan-European network. It envisages a partnership on a European scale, the goal being the creation of a multimodal transport network across the European continent as a whole. Such a partnership should be based on the instruments available, and considered from three viewpoints:

  • the required investment volumes and their financing;
  • the regulatory and institutional framework;
  • an action plan to launch such a partnership.

As regards the required investment volumes and their financing, the Commission emphasises the outlay that will have to be provided in the candidate countries for accession, who are going to see an increase in the volume of trade and tourism.

Similarly, the new Member States, showing some readiness to open part of their infrastructure for pan-European transport corridors and areas, will be confronted with traffic growth which will create bottlenecks. Financial support for investments will therefore be necessary to cope with this.

Infrastructure investments are funded by national budgets and a variety of Community programmes. However, the rules in the INTERREG, TEN, PHARE, TACIS and MEDA budget lines are all different. It would therefore be a major step forward if a co-ordinated approach could be envisaged which could cover all pan-European transport corridors and areas. Such an approach would fit within a broader framework of co-ordination with the international financial institutions (IFIs).

In relation to the regulatory and institutional framework, the Commission would like to make coherent use of existing agreements and protocols (the Europe Agreements with the CECs, the Euro-Mediterranean Agreements and bilateral transport agreements with several States). It also intends to build on bodies already active, such as the European Conference of Ministers of Transport (ECMT) and the G24 Transport Working Group.

The communication presents an action plan for a pan-European transport networks partnership. It comprises five themes relating to co-ordinated transport planning:

  • pan-European transport corridors and areas are a long-term planning tool and a priority for investment;
  • the Trans-European Network approach must be extended to new Union members;
  • a common approach to the use of transport technology must be developed;
  • the following priorities were set by the Commission to promote the intelligent use of transport networks:
    – in the framework of G24, to launch the necessary work on GNSS with a view to extending its coverage to all neighbouring countries;
    – to promote the idea of an interoperable Control Command system on the pan-European rail transport corridors and areas;
    – to implement a coherent vessel surveillance system in all European waters;
    – to promote the standardisation of road traffic management systems beyond the Union´s borders;
    – to improve Air Traffic Management throughout the European Continent.
  • pan-European co-operation in R&D must be emphasised.

On finance, the Commission will initiate the necessary measures to ensure horizontal co-ordination and compatibility amongst the various budget instruments for transport networks investment. The Commission strongly recommends that support from national funds and programmes, and from the IFIs, should principally be given to infrastructure and network projects which contribute to implementing the pan-European transport corridors and areas.

Interoperability of the rail system within the EU

Interoperability of the rail system within the EU

Outline of the Community (European Union) legislation about Interoperability of the rail system within the EU

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Management of regional policy > Trans-european networks

Interoperability of the rail system within the EU

Document or Iniciative

Directive 2008/57/EC of the European Parliament and of the Council of 17 June 2008 on the interoperability of the rail system within the Community (Text with EEA relevance).

Summary

This directive establishes the conditions to be fulfilled to achieve interoperability * within the EU rail system at the design, construction, placing into service, upgrading, renewal, operation and maintenance stages. Its provisions comply with Directive 2004/45/EC on railway safety and the health and safety of workers.

The gradual implementation of interoperability of the rail system is pursued through the harmonisation of technical standards. Thus this directive covers:

  • essential requirements with regard to safety, reliability, human health, environmental protection, technical compatibility and operation of the system (Annex III);
  • the technical specifications for interoperability (TSIs) adopted for each subsystem or part of subsystem pursuant to this directive;
  • the corresponding European specifications.

The railway network * is broken down into subsystems of a structural nature (energy, control-command and signalling, rolling stock) or functional (operation and traffic management, maintenance and telematics applications). European Union (EU) countries may request that the Commission grant derogations and the Commission may decide to exclude certain measures from the scope of the directive for specific cases and for a set period *.

TSI projects shall be prepared by the European railway agency which will examine the subsystems in consultation with associations and the social partners. Next, the projects shall be submitted to the European Commission which will modify and adopt them, having regard to the right of scrutiny of the Parliament.

Interoperability constituents
* shall be subject to European specifications (such as European standards). They shall be subject to the procedure for “EC” declaration of conformity or suitability for use.

Authorisations for placing in service of vehicles shall be granted by the national safety authorities responsible for each network.

Context

This Directive is a recast of Directive 2001/16/EC applicable to the conventional rail system and Directive 96/48/EC on the trans-European high-speed rail system.

The pursuit of technical harmonisation aims at developing transport services in the EU and with third countries. It facilitates the integration of the market in equipment and services for the construction, renewal and operation of the rail system.

Key terms used in the Act
  • Interoperability: the ability of a rail system to allow the safe and uninterrupted movement of trains which accomplish the required levels of performance for these lines. This ability depends on all the regulatory, technical and operational conditions which must be met in order to satisfy the essential requirements.
  • Network: the lines, stations, terminals, and all kinds of fixed equipment needed to ensure safe and continuous operation of the rail system.
  • Specific case: any part of the rail system which needs special provisions in the TSIs (temporary or definitive) because of geographical, topographical or urban environment constraints or those affecting compatibility with the existing system. This may include in particular railway lines and networks isolated from the rest of the Community, the loading gauge, the track gauge or space between the tracks and vehicles strictly intended for local, regional or historical use, as well as vehicles originating from or destined for third countries.
  • Interoperability constituents: any elementary component, group of components, subassembly or complete assembly of equipment incorporated or intended to be incorporated into a subsystem. The concept covers both tangible objects and intangible objects (such as software).

References

Act Entry into force Transposition in the Member States Official Journal
Directive 2008/57/EC

19.7.2008

19.7.2010

OJ L 191 of 18.7.2008

Subsequent amendments and corrections to Directive 2008/57/EC have been incorporated into the basic text. This consolidated version is for reference purposes only.

Related Acts

Commission Regulation (EU) No 201/2011 of 1 March 2011 on the model of declaration of conformity to an authorised type of railway vehicle [Official Journal L 57 of 2.3.2011].

Commission Decision 2009/107/EC of 23 January 2009 amending Decisions 2006/861/EC and 2006/920/EC concerning technical specifications of interoperability relating to subsystems of the trans-European conventional rail system [notified under number C(2009) 38] (Text with EEA relevance) [Official Journal L 45 of 14.2.2009].

Second progress report on economic and social cohesion

Second progress report on economic and social cohesion

Outline of the Community (European Union) legislation about Second progress report on economic and social cohesion

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Review and the future of regional policy

Second progress report on economic and social cohesion

1) Objective

To update the data on economic and social cohesion presented in the first progress report of January 2002, to give a summary of the debate concerning the future of regional policy after 2006 and to indicate how the Structural Funds will support the future Member States as from their accession.

2) Document or Iniciative

Commission Communication of 30 January 2003 – Second progress report on economic and social cohesion [COM(2003) 34 final – Not published in the Official Journal].

3) Summary

1. Every three years, the Commission produces a “report on the progress made towards achieving economic and social cohesion” and on the manner in which the Community policies have contributed to it (Article 159 of the Treaty establishing the European Community). The second report on economic and social cohesion, published in January 2001, had two objectives:

  • to analyse the development of economic and social cohesion in a Union of 27 Member States;
  • to start a debate on the future of European cohesion policy.

2. Since then, the European Commission has published, in January 2002, a first progress report which updates the data collected in the Second Cohesion Report for a Europe of 25 and gives an initial assessment of the debate. In January 2003, the Commission presented a second progress report. Taking account of the most recent data on the gross domestic product (GDP) and the unemployment rate, this report deals again with the two topics discussed in the previous reports. Moreover, it indicates how the Structural Funds will intervene during the two-year-period following enlargement (2004) and the end of the current programming period (2006).

SITUATION AND TRENDS

3. Despite the fact that economic growth slowed down significantly in 2001, the general trend towards economic convergence is confirmed in the current European Union. The “cohesion countries” (Spain, Greece, Portugal and Ireland, which are eligible for the Cohesion Fund) continue to catch up with their the other Member States. The GDP of Ireland has risen from 64 % of the Community average in 1988 to 118 % in 2001. While regional disparities remain unchanged on the European level, they have grown within the Member States. Moreover, statistics show that the economic catching up is a long-term process.

4. In terms of employment, a slower growth in 2001 within the Europe of 15 combined with a constant decrease in employment for five years in the candidate countries is causing a widening of regional disparities. Three million new jobs will be needed if the average level of employment in the future Member States is to be aligned on that of the EU of 15. The level of education will rise in the enlarged Union. Employment is going to increase in the agricultural sector, stagnate in industry and decrease in services.

5. In a Union of 25, three groups of countries can be distinguished:

  • the eight poorest future Member States whose per capita GDP is approximately 40 % of the average in the Community of 25: Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Czech Republic, Slovakia;
  • an intermediate group involves countries between 71 % and 92 % of the Community’s average GDP: Cyprus, Spain, Greece, Portugal, Slovenia;
  • the rest of the existing Member States with an average per capita GDP close to 115 % of the average EU.

6. With enlargement, the regional disparities will nearly double. Forty-eight regions in the existing Member States (18 % of the total population, i.e. 68 million inhabitants) have a per capita income less than 75 % of the Community average. In a Union of 25, the number of such regions will be 67 (25 % of the population, i. e. 116 million persons), two-thirds of which are situated in the new Member States. Only 30 regions in the current Member States (12 % of the population, i.e. 47 million) would remain under the threshold of 75 % and would thus be considered as “less-favoured areas”. According to the figures of 2000, the 18 regions which would lose their status by simple “statistical effect” are the following: Brandenburg, Mecklenburg-Vorpommern, Dresden, Halle, Magdeburg and Thüringen (Germany); Burgenland (Austria); Itä-Suomi (Finland); Asturias, Murcia and Ceuta y Melilla (Spain); Basilicata (Italy); Madeira (Portugal); Hainaut, Namur (Belgium); Merseyside, West Wales, South Yorkshire (United Kingdom). Nevertheless, the data to be used in 2006 are not yet available and this list has a merely indicative character.

New indicators and studies carried out

7. New indicators on technological progress confirm that southern European countries are lagging behind in terms of technological innovation. Finland, Sweden and Germany file double the number of patents per million inhabitants than the European average, whereas in Ireland, Italy, Spain, Greece and Portugal it is fewer than half the European average. Disparities are even more serious in the leading-edge technologies sector: expenditure related to research and development exceeds the threshold of 3 % of the GDP in 17 regions, out of which ten in Germany, two in Finland, two in France, and one each in the United Kingdom, Austria and Sweden. Among the candidate countries, the highest investment in this field is in the Czech Republic and Slovenia.

8. The results of the Commission study (pdf ) on the economic impact of Objective 1 between 2000 and 2006 are encouraging. The allocated funding steps up significantly the economic growth of the regions receiving assistance, but it also has a “knock-on effect”, with one quarter of the expenditure benefiting other areas in the European Union.

9. Other studies deal with the territorial and human factors of cohesion: two of them give an overview on the situation of island and mountain areas, two others analyse the role of individuals in regional development and the emergence of a knowledge and know-how based economy. The first results of the study on islands are as follows: 10 million Europeans live in 286 European islands, out of which 9,5 million in the Mediterranean (Sicily, Crete, the Balearics and Corsica); 87 % of the EU island population is covered by Objective 1; islands with the smallest population (less than 5000 inhabitants) face most difficulties.

DEBATE ON THE FUTURE OF COHESION POLICY

The issues most widely discussed

10. The main discussion topics concerning the future of the regional policy are the following:

  • priority to the least developped regions;
    To define these regions, it is widely accepted to use the criterion of 75 % of the Community’s average GDP applied at NUTS II level given its transparency and simplicity of calculation. Additional criteria may apply together with the inclusion of specific areas (islands, outermost regions, very sparsely populated regions) in this category.
    For the 18 regions concerned by the “statistical effect”, a fair arrangement is necessary.
  • aid outside regions whose development is lagging behind should continue;
    A thematic approach could be applied throughout the territory. A territorial approach could focus on areas suffering from special handicaps (urban areas, rural areas, areas dependent on fishing or cross-border areas). Zoning no longer seems to be appropriate.
  • the exchange of experience and cooperation has a beneficial impact;
    At cross-border level, a legal instrument may be necessary.
  • the simplification of procedures for policy implementation is broadly agreed upon;
  • a greater contribution from other Community policies to economic and social cohesion is desirable.

Within the institutions

11. The Council welcomed the first progress report on economic and social cohesion. The delegations of Member States felt that aid to the least developed regions should remain a priority, but the eligibility criteria of this assistance as well as its use should be discussed. Community assistance in other regions remains necessary and should concentrate on measures offering high Community value added. In terms of financial effort for the future cohesion policy, the Spanish presidency (1st half of 2002) thought the threshold of 0,45 % of Community GDP to be a good reference point, other delegations, on the other hand, will take position on the issue at a later stage. Furthermore, voices calling for a certain “renationalisation” of the regional policy do not seem to have gained ground.

12. During their meeting of 7 October 2002, the Ministers responsible for regional policy expressed their wish for a greater simplification and decentralisation of responsibilities as regards all aspects of financial management and control of European programmes. Enlargement will aggravate tensions between the double need for a more decentralised implementation, on the one hand, and the need for more effective control of financial flows on the other. This development must be carried out in the light of Article 274 of the EC Treaty which gives the Commission responsibility for budgetary execution.

13. On 6 November 2002, the European Parliament adopted an opinion on the first progress report. It supports the Commission’s position on the following points: the maintenance of a strong cohesion policy based on partnership, the threshold of minimum financial effort (0,45 % of the Community GDP), aid to areas with specific handicaps and greater cross-border cooperation. It also refers to the need to take account of other indicators (than per capita income) to determine the eligibility under the Structural Funds, to simplify the procedures and to strengthen the administrative capacity of the candidate countries. It asks the Commission to set out a time frame to ensure that programming for the period 2007-13 can be implemented from 1 January 2007 and to make concrete proposals on the future of Objective 2 and the Community Initiatives.

14. The European Economic and Social Committee has issued two opinions in favour of maintaining a strong regional policy after 2006 [“EU’s Economic and Social Cohesion Strategy” – Official Journal C 241, 07.10.2002]. In agreement with the Parliament, the Committee is in favour of raising the threshold, which is set at 0,45 % and adopting an open method of coordination to deal with the economic and social problems which the Objective 2 regions are encountering.

15. In its opinion of 10 October 2002 on the first progress report [Not published in the Official Journal], the Committee of the Regions underlines as well the importance of assistance for less-developed regions, the coordination of Community policies and the simplification of procedures. It stresses the need to introduce a transitional support period for regions affected by the “statistical effect” of enlargement.

At the seminars of the Commission

16. The seminar on the Community added value of regional policy took place on 27 and 28 May 2002. It brought together more than 600 participants from the Member States and candidate countries. Priority to regions whose development is lagging behind, maintenance of aid outside these regions, simplification of procedures and the importance of cross-border cooperation were widely agreed upon. In the perspective of a regional policy within an enlarged Union, the role and responsibility of the Commission would have to be clarified, in particular through the elaboration of tripartite contracts between the Commission, the Member States and the regions.

17. Six hundred people involved in the URBAN II programme gathered in London on 8 and 9 July 2002 and noted the important contribution of this Community Initiative to urban development. It encourages a high degree of partnership and constant learning through visible interventions in the field. Local parties underlined the need to continue and step up assistance to cities, in particular in the following fields: housing, exchange of experience and networking.

18. Within the framework of the International Year of the mountains, a seminar on “Community policies and the mountain areas”, held on 17 and 18 October 2002 in Brussels, brought together 500 participants from the Member States, candidate countries and elsewhere. The seminar reiterated the need for specific projects and the added value of cross-border cooperation.

2004-2006: PREPARATION FOR ENLARGEMENT

19. The Copenhagen European Council concluded the accession negotiations, thus paving the way to the accession of ten new Member States from 1 May 2004. The successful integration of these States into the enlarged Union is from now on an a key political priority. The Fifteen have thus allocated EUR 21,7 billion as additional resources for 2004-2006, though this amount is still inferior to the ceiling fixed in 1999 at the European Council in Berlin under Agenda 2000.

20. As identified in the regular reports of October 2002 on the preparation of the candidate countries, the most important problems concern the administrative capacity to absorb the funds provided and the implementation of financial control procedures. A final overall assessment of the preparation of the 10 future Member States is to take place six months before the actual enlargement. From now on, the future Member States have to overcome their weaknesses and finalise the programmes that they will implement from the first day of accession under the Structural and Cohesion Funds. They are also going to participate in the Community Initiatives INTERREG III and EQUAL.

21. Conscious of the challenge of enlargement concerning regional policy, the Commission will elaborate, taking account of the proposals emerging from the debate, its overall proposals together with a draft of financial perspective for a cohesion policy after 2006. These will be included in the Third Cohesion Report foreseen for the last quarter of 2003.

22. For more information on the Cohesion Reports consult:

  • SCADplus factsheet on the second report on economic and social cohesion;
  • SCADplus factsheet on the first progress report on economic and social cohesion;
  • SCADplus factsheets on the third report on economic and social cohesion: the socio-economic situation of the Union and the impact of European and national policies, proposals for regional policy after 2006.

4) Implementing Measures

5) Follow-Up Work

On 2 and 3 July 2003 the Committee of the Regions delivered its opinion on the second report [Official Journal C 256 of 24.10.2003].

On 16 and 17 July 2003 the Economic and Social Committee delivered its opinion on the second report [Official Journal C 234 of 30.09.2003].

Third report on economic and social cohesion: the socio-economic situation of the Union and the impact of European and national policies

Third report on economic and social cohesion: the socio-economic situation of the Union and the impact of European and national policies

Outline of the Community (European Union) legislation about Third report on economic and social cohesion: the socio-economic situation of the Union and the impact of European and national policies

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Review and the future of regional policy

Third report on economic and social cohesion: the socio-economic situation of the Union and the impact of European and national policies

Document or Iniciative

Commission communication – third report on economic and social cohesion [COM(2004) 107 final – Not published in the Official Journal].

Summary

The policy on economic and social cohesion is producing positive effects in those areas of the European Union facing difficulties. However, large socio-economic disparities persist between Member States and between regions. These disparities in levels of wealth and degrees of dynamism arose from structural deficiencies in certain key areas for competitiveness such as investment in physical infrastructure, in innovation and in human resources. Member States and regions therefore need support from Community policies to overcome their handicaps, develop their strong points and evolve in an increasingly competitive environment.

The enlargement of the European Union to 25 Member States on May 1 represents a challenge without precedent for the European Union. In particular, it jeopardises the current balance of regional policy. The third report on economic and social cohesion sets out concrete proposals for regional policy after 2006. The Commission bases its proposals on the socio-economic situation of the Union and on an analysis of the impact of regional policy, other Community policies and national policies.

SOCIO-ECONOMIC SITUATION OF THE EUROPEAN UNION

Economic growth

Since 1994, disparities in income between Member States and between regions have been decreasing. Gross domestic product (GDP) and productivity have been increasing more quickly in the four countries eligible for the Cohesion Fund (Spain, Greece, Ireland and Portugal) than in the rest of the European Union. The increase has been particularly high in Spain and Ireland and more modest in Portugal and Greece. Nevertheless, major differences still exist between States. In Greece and Portugal, the per capita GDP is still around 70 % of the Community average. One thing however is certain: the contribution made by the Structural Funds to growth in the four cohesion countries (1.5 % in Spain, 2 % in Greece, almost 3 % in Ireland and more than 4.5 % in Portugal). Over the last decade, trade between these four countries and the rest of the Union more than doubled. On average, almost a quarter of structural expenditure returns to the rest of the Union in the form of imports, with Germany being the principal beneficiary.

Within Member States, the regions whose development is lagging behind, eligible for Objective 1, have enjoyed annual growth of 3 % compared with slightly more than 2 % for the Union as a whole. However, the catching-up process varies widely from one region to another. Outside the four cohesion countries, weak growth in the national economy is slowing down that of Objective 1 regions. While the growth in GDP in the new German Länder is equal to the Community average, that of the regions of the Italian Mezzogiorno is lower. This is also true for the old industrial regions. Although not Objective 1 regions, the regions of north-east England, the regions of northern Germany and the very sparsely populated regions of northern Sweden have seen their annual per capita GDP increase less than the Community average since 1994.

Employment and social cohesion

There are still wide regional disparities in employment levels. Employment has increased over the past ten years in the cohesion countries, significantly in Spain and Ireland, to a lesser extent in Portugal and in Greece. Only 43 % of those of working age were in work in the regions of southern Italy in 2002. In the ten new Member States, economic restructuring of agriculture and traditional industries is increasing unemployment and 56 % of those of working age are in work as against 64 % in the current Member States of the Union.

In 2000, approximately 55 million people were at risk of poverty, i.e. 15 % of the European population. Poverty particularly affects elderly people (more than 65 years old), single parents, the long-term unemployed, ethnic minorities and the disabled. The countries of southern Europe, the United Kingdom and Ireland are particularly badly affected and the numbers concerned in many of the new Member States are above the Community average.

Over the coming decades, the progressive ageing of the population will gradually reduce the working population, with a serious impact on growth potential. Between now and 2010, this will begin to affect Germany, the four southern Member States and the majority of the new Member States. By 2025, there will be on average less than three people of working age for each elderly person. Faced with the prospects for population structure, steady economic growth, high employment and a reduction in the number of people retiring are vital. Immigration should also provide an important source of additional labour.

Narrowing disparities in regional competitiveness factors

The challenge for cohesion policy is to invest in the competitiveness factors so that Member States and regions can overcome their structural problems. The principal competitiveness factors that have been identified are:

  • physical infrastructure: transport and telecommunication networks.
    Since 1994, transport links both within the cohesion countries and between those countries and the rest of the Union have been improving. In 1991, the density of the motorway network in those countries was 20 % less than the Community average. With Structural Fund support, it has exceeded the average by 10 % since 2001, with Spain and Portugal being the principal beneficiaries. In Objective 1 regions as a whole, the motorway density is only 80 % of the Community average and much less than that (20 % less) in the new Member States. As for the railways, although the network throughout the Union has been modernised, there is still a major discrepancy between the dynamic regions and those whose development is lagging behind. In the new Member States, road construction is accelerating the transfer of passengers from rail to road. Considerable investment will be required to bring railways up to standard.
    In telecommunications, the number of fixed telephone lines in relation to population remains much lower in both the cohesion countries and the new Member States. This is tending to be offset by a rise in mobile phone use. Broadband access, essential for the use of high-speed Internet and the development of new information and communications technologies (NICT), shows wide disparities across the Union. These reflect relative levels of prosperity;
  • human resources: the adaptability and skills of the workforce.
    As regards investments in human resources, large structural weaknesses remain both in the Union of Fifteen and in the new Member States. The proportion of people with education beyond basic schooling remains very low in Objective 1 regions, especially in Spain, Italy and Portugal, the exception being the new German Länder. This proportion is markedly above the European average in the new Member States. On the other hand, in these countries, the average number of young people who complete university studies is below the average in the Union of Fifteen. This is also the case in Objective 1 regions, despite the clear progress that has been made. The situation is similar as regards continuing training;
  • innovative capacity.
    Innovation is one of the keys to regional competitiveness. However, innovative capacity varies greatly from one region to another in the same Member State, within the Union of Fifteen and within the Union of Twenty-five. Eight of the 213 European regions account for a quarter of total R&D expenditure;
  • sustainable development.
    There is a substantial need for investment in the environment in the cohesion countries and the need is even greater in the accession countries. The main areas concerned are water treatment, waste management and the control of emissions.

THE IMPACT AND ADDED VALUE OF STRUCTURAL POLICIES

The budget for regional policy over the period 2000-06 is EUR 215 billion. The sums transferred to Objective 1 regions represent an important proportion of the wealth of the cohesion countries. They amount to 0.9 % of national GDP in Spain and more than 2.5 % in Greece and Portugal. This funding has a genuine leverage effect on public investments. The increase in investment achieved is estimated at 3 % in Spain, 4 % in the new German Länder, 7 % in the Italian Mezzogiorno and 8-9 % in Greece and Portugal. In most cases, there has also been a similar knock-on effect on private financing, as the figures for Austria, Germany, the Netherlands and Belgium testify. Private investment nevertheless remains weak in France, the United Kingdom and the cohesion countries. Structural Fund support is also supplemented by European Investment Bank (EIB) loans, particularly in the areas of transport and the environment. Since 2000, they have totalled EUR 20 billion a year. More than half has gone to Objective 1 regions and EUR 3 billion to the new Member States

Over the period 1994-99, 82 regions in the twelve Member States received aid under Objective 2. This Objective supports the conversion of regions with serious natural or structural handicaps. More than half of the expenditure was concentrated on the conversion of old industrial sites and on business services. To a lesser extent, funds went to developing human resources and providing aid for R&D. Community support permitted the creation of 700 000 jobs, the modernisation of 300 000 small and medium-sized enterprises (SMEs) and the conversion of 115 million square metres of industrial waste land. In ten years, unemployment fell slightly more in Objective 2 regions than in the rest of the European Union.

Several spheres of activity show the value added by regional policy

As regards agriculture and rural development, the Structural Funds have maintained economic activities in the countryside. They have encouraged the economic diversification of rural areas through agritourism and environmental protection activities. The fisheries sector is concentrated in a limited number of regions in the European Union and structural measures aim in particular to stimulate their economic conversion.

During the 1994-99 period, the European Social Fund (ESF) provided support for the development of human resources amounting to a third of overall Structural Fund investment. Assistance under Objective 3 was aimed at integrating young people, the long-term unemployed and other social categories at risk of exclusion into employment. It was also targeted on promoting equal opportunities between women and men. The most successful measures were those combining guidance, training and assistance with finding a job. In addition, the ESF provides finance for adapting employment, education and training systems. Since 2000, it has provided EUR 60 billion for the national plans implemented as part of the European Employment Strategy (EES).

Cooperation and networking – two success stories

The four Community Initiatives allow the adoption of innovative regional development strategies. The cooperation between regions and networking achieved through them represent an important value added of structural policy:

  • over the period 2000-06, INTERREG III is providing EUR 5 billion to support cross-border and trans-national cooperation and the exchange of experience between European regions. Border regions will play an increased role in the enlarged Union;
  • URBAN II is providing support for innovative projects in 70 towns and cities. The emphasis is on boosting the economy of urban areas in crisis;
  • the aim of EQUAL is to combat all forms of discrimination and inequalities in the labour market. A heavy emphasis is placed on cooperation, the exchange of experience and best practice;
  • LEADER+ provides assistance in rural areas. With an annual budget of EUR 300 million, the Initiative provides assistance to SMEs and supports the development of tourism.

New pilot innovative actions were launched in 2001. With a budget of around EUR 400 million, they are increasing regional competitiveness through innovation, disseminating technology and promoting sustainable development. Three quarters of all the regions have now applied for these programmes.

Structural Fund management is improving, but further progress can still be made

The management of regional policy is based on four general principles:

  • programming involves planning expenditure over a number of years. It has brought more stability and consistency but, on the other hand, the time taken to adopt programming documents has increased;
  • the partnership during the drawing up and the implementation of programmes has been strengthened.
    This mobilises a series of players: the regional and local authorities, the private sector, the social partners and civil society. An effective partnership improves the targeting and evaluation of projects and the dissemination of information;
  • the concentration of funding means that financial support is directed towards those regions that need it most. It has been increased, although evaluations show that assistance is too thinly spread;
  • additionality means that Community financing for a project is additional to other public and private financing.
    This rule is generally respected under Objective 1. It is more difficult to verify for Objectives 2 and 3.

Improving the efficiency of programmes remains a major challenge. On the ground, the local players have criticised the delay in adopting rules, which put pressure on the utilisation of financing. Thus, only a third of Objective 1 projects were completed in time and another third were completed over a year late. In addition, two thirds of projects exceeded their budget. By requiring the utilisation of funding within two years of programming, the “N+2” rule tightens discipline. What is more, a financial incentive has been introduced for the 2000-06 period in the form of a mid-term performance reserve. It rewards 90 % of the programmes on the basis of criteria such as the rate of financial absorption and sound management.

Monitoring is an essential part of the system for implementing the Structural Funds, but it has not been as effective as expected because of the difficulty in collecting information. Programme evaluation is carried out in three phases: before implementation, at mid-term and at the end of the period. A greater involvement of all those involved will permit a further improvement in the analyses made.

THE IMPACT OF OTHER COMMUNITY POLICIES

Unlike structural policy, the main aim of the following Community policies is not to combat regional disparities but they do have a strong regional impact:

  • enterprise, innovation and education policies.
    Community enterprise, innovation and education policies are aimed at strengthening the competitiveness of EU producers. Regions are far from having equal innovation capacity, as the disparities in the take-up of Community financing for research testify. To remedy this problem, the Innovation Relay Centres and the Innovating Regions in Europe network aim to disseminate a culture of innovation. In addition, the sixth action programme for R&TD is in part aimed at improving links between research centres in the more dynamic parts of the EU and those in peripheral areas. In the field of education, the ‘Education and Training 2010’ programme aims to ensure a high level of life-long education and training;
  • social and employment policy.
    In March 2001, the Lisbon European Council defined a comprehensive strategy aimed at ensuring long-term economic growth, full employment, social cohesion and sustainable development. The European Employment Strategy provides support to Member States to reform their labour markets. As regards social integration, exclusion must be combated at all levels. The Union’s commitment to equality between men and women is part of a comprehensive approach. Measures aim, in particular, to attract women into employment, encourage them to stay in the labour market and make it easier to reconcile a working career with family responsibilities;
  • transport, energy, telecommunications and the trans-European networks.
    Liberalising the markets for transport, telecommunications and energy has led to increased efficiency and lower prices. It has also, however, brought the risk that particular social groups or regions could be excluded. The European Union has therefore established public service obligations, or ‘ services of general economic interest ‘(SGEI), which guarantee access to essential services of reasonable quality and at affordable prices. At the same time, the trans-European networks (TENs) in transport, energy and telecommunications have increased the accessibility of the more remote regions. The networks planned to link the European Union of Fifteen to the new Member States will have the same effect;
  • the environment, agriculture, rural development and fishing.
    The Sixth Environmental Action Programme aims to combat the negative effects of growth and the exhaustion of natural resources. For the 2000-06 period, aid for rural development is higher for Objective 1 regions (56 % of expenditure) than in the rest of the Union. This aid is supporting the emergence of a European agricultural sector based on quality, the enhancement of the countryside and the rural heritage and the economic diversification of rural areas. After 2007, expenditure under the common agricultural policy (CAP) will decrease, in particular with a fall in price support and an emphasis on rural development. In the fisheries sector, Community policy aims to conserve fish stocks and restructure the industry. The recent emergency measures will have serious economic and social consequences in some Spanish and Portuguese regions. Of the new Member States, Poland and the three Baltic States have a fisheries sector;
  • competition policy.
    If granted in strict compliance with European competition law, state aid contributes to cohesion by influencing the geographical distribution of economic activity. Since 1997, total national expenditure on state aid has decreased sharply. In 2001, state aid in the form of assistance to Objective 1 and Objective 2 regions accounted for 9 % and 6 % respectively of total state aid. It nevertheless remains greater in the relatively prosperous Member States than in the cohesion countries. In the context of enlargement, it will play a major role. Future reforms of the rules will aim at less but better targeted assistance.

THE IMPACT OF NATIONAL POLICIES

Public expenditure by the Member States amounts on average to 47 % of the GDP of the European Union, while the budget allocated to cohesion policy is less than 0.4 %. The policies of the Member States provide, in particular, income support and basic services: education, medical care, social welfare. On the other hand, public investment in human and physical capital accounts for on average only slightly more than 2 % of Community GDP. Expenditure on business support services, higher education, innovation and R&D is even lower. In relation to the sums allocated to structural expenditure by Member States, therefore, the budget for cohesion policy does not seems so small, especially as spending is concentrated in the regions which are most in need of assistance.

In the Member States, public expenditure on income support is in general much higher in the less prosperous regions because of the lower level of income. Government revenue, on the other hand, is proportional to income, in the main because most taxes in the Member States are levied centrally either on income or expenditure. Then redistribution mechanisms reduce disparities in the revenue available to regions. The general trend is now towards devolving responsibility for public services to regional and local level without a similar trend in respect of raising the money to fund these services. The main exception is Italy, where responsibility for raising revenue is being increasingly devolved to the regions without an increase in regional transfers.

Foreign direct investment (FDI) can potentially play a key role in reducing regional economic disparities. It is not only a source of income but facilitates the transfer of technology. However, foreign investors are not necessarily attracted to places where the need is greatest. Berlin apart, only 2 % of FDI in Germany has been in the new Länder and only 4 % of FDI in Italy has benefited the regions of the Mezzogiorno. Foreign investment is mainly concentrated in dynamic urban areas. In the new Member States, most investors are attracted to the capital cities. In 2001, two thirds of FDI in Hungary was in Budapest. The same holds for Prague in the Czech Republic and Bratislava in Slovakia.

For further information, consult the INFOREGIO website of the Directorate-General for Regional Policy:

  • the full text of the third report on economic and social cohesion;

Related Acts

Second progress report on economic and social cohesion [COM(2003) 34 final – Not published in the Official Journal].

See the specific SCADplus web page

First progress report on economic and social cohesion [COM(2002) 46 final – Not published in the Official Journal].

See the specific SCADplus web page

“Unity, solidarity, diversity for Europe, its people and its territory” – Second report on economic and social cohesion [COM(2001) 24 final – Not published in the Official Journal].

See the specific SCADplus web pages: an assessment, conclusions and recommendations, 10 questions for debate

Third Report on economic and social cohesion: proposals for regional policy after 2006

Third Report on economic and social cohesion: proposals for regional policy after 2006

Outline of the Community (European Union) legislation about Third Report on economic and social cohesion: proposals for regional policy after 2006

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Review and the future of regional policy

Third Report on economic and social cohesion: proposals for regional policy after 2006

Document or Iniciative

Commission Communication – Third Report on economic and social cohesion [COM(2004) 107 final – Not published in the Official Journal].

Summary

The policy on economic and social cohesion has positive effects on the areas of the EU in difficulty but major socio-economic disparities between the Member States and between the regions persist. These gaps in wealth and dynamism arise from structural deficiencies in certain key factors for competitiveness such as investment in physical infrastructure, innovation and human resources. The Member States and the regions therefore require support from the Community policies to overcome their handicaps, build on their comparative advantages and make better progress in an increasingly competitive environment.

PROPOSALS FOR A REFORMED COHESION POLICY

On 10 February 2004, the Commission adopted a budget proposal for the European Union enlarged to 27 Member States (the 15, the 10 new Member States, Bulgaria and Romania) for 2007-2013. In this communication on the financial perspective, it argues that the cohesion policy should have a single budget line with increased resources. The Third Report on cohesion follows this approach, noting the challenge which enlargement represents for cohesion policy. For the first time, the Commission makes concrete proposals derived from the debate on the future of the regional policy after 2006. In financial terms, it proposes a budget for 2007-2013 equivalent to 0.41 % of the Gross Domestic Product (GDP) of the Union of 27, or 336.3 billion for that period. The Commission is basing its proposals on the socio-economic situation of the Union and the study of the impact of the regional policy, the other European policies and national policies.

Enlargement completely changes the Union’s socio-economic situation

Enlargement on 1 May 2004 will increase the population of the European Union by 20 % and its area by about a quarter but GDP by only 5 %. Regional disparities will double. Per capita wealth in a Union of 25 will fall by about 12.5 % and the proportion of the population living in regions whose development is lagging behind will increase from 20 % to 25 %. At the same time, the disadvantaged regions of the present Union will not disappear and will require continuing support.

The European Union has entered a phase of economic restructuring as a result of the globalisation of trade, the introduction of the knowledge economy and an aging population. Furthermore, the economic situation has deteriorated over the last three years and unemployment has increased.

In March 2000, the Lisbon European Council set the European Union the goal of becoming the most competitive and dynamic area of the world. A strong knowledge-based economy will stimulate job creation and promote social and environmental policies offering sustainable development and social cohesion. The European Councils in Nice and Göteborg applied this across-the-board objective through sectoral strategies in the fields of social integration and sustainable development respectively. In addition, cohesion policy helps achieve the Lisbon objective. The reform of this policy should continue this process.

What Community support for the new Member States between 2004 and 2006?

The ten new Member States will receive Community support as soon as they join. Between 2000 and 2006, they will receive 3 billion in structural assistance under the pre-accession financial instruments ISPA (transport and the environment) and SAPARD (agriculture and rural development) and the Phare programme (improving administrative capacity). Following their accession, the new Member States together with Bulgaria and Romania will receive 1.6 billion per year in aid through Phare until 2006.

For the new Member States, 2004-06 will be a transitional period which will allow them to become accustomed to managing the Structural Funds in accordance with the current rules. They will receive support from those Funds totalling 21.8 billion. The measures will concentrate on a limited number of priorities: infrastructure, human resources and productive investment.

A revised cohesion policy for 2006-2013

The future regional policy will have a limited number of key topics: innovation and the knowledge economy, the environment and risk prevention, access and public services. To achieve them there will be three Community priorities replacing the current breakdown among Objective 1, Objective 2 and Objective 3:

  • The “convergence” Objective will support growth and job-creation in regions whose development is lagging behind.
    It will concern NUTS II regions whose per capita GDP is less than 75 % of the average in the Union of 25. It will receive about 78 % of the budget for the future regional policy and until 2013 will also provide transitional support to the regions currently eligible but which will no longer satisfy this criterion for purely statistical reasons. Since the GDP of the Union of 25 will be lower than that of the Union of 15, some regions currently eligible under Objective 1 will no longer meet this eligibility criterion.
    The European Regional Development Fund (ERDF) will part-finance the modernisation of basic infrastructure (transport, telecommunications and energy), the economic diversification of territories and the protection of the environment (treatment of water and waste, prevention of natural and technological hazards). The European Social Fund (ESF) will expand its role as the main Community financial instrument for the European Employment Strategy (EES) which helps the Member States to reform their labour markets.
    Only those Member States with a GDP of less than 90 % of that of the Community will also be able to benefit under the Cohesion Fund for investment in transport and the environment. The relative weight of this Fund will increase because it will distribute one third of the aid for the ten new Member States.
  • The “Regional competitiveness and employment” Objective will help make the economic fabric more dynamic in accordance with the Lisbon and Nice objectives.
    The Commission is proposing a twin-track approach, at both regional and national level. Regional programmes will help anticipate economic change better. Supported exclusively by the ERDF, they will concern the regions currently eligible under Objective 1 and which will naturally cease to be so eligible and the regions which do not come under the convergence programmes.
    National programmes will improve implementation of the EES. Supported exclusively by the ESF, they will concentrate on three priorities: the adjustment of the working population to changes in work (life-long learning), promoting employment and combating early departure from the labour market (active aging, greater participation by women), employment of categories in difficulty (the disabled, ethnic minorities).
    This Objective will have some 18 % of total funding, divided equally between the ERDF and the ESF. The funding will be divided among the Member States using economic, social and territorial criteria fixed at European level.
  • Territorial cooperation will promote the balanced development of the territory.
    Based on the acknowledged experience of the INTERREG III Initiative, the Commission is proposing a new Objective for cross-border, transnational and interregional cooperation which will receive 4 % of the funding for the future regional policy.
    All the NUTS III regions on internal and external frontiers, whether on land or sea, will be able to cooperate with their neighbours, particularly on the key topics of the Lisbon and Göteborg agenda.
    The Commission wants to set up two new legal instruments for cooperation: the “cross-border regional collectivity” on internal frontiers and a “new neighbourhood instrument” on the Union’s external frontiers. These instruments will cope with the legal and administrative problems which this type of cooperation poses.

Natural handicaps exacerbate development problems. The future cohesion policy will therefore pay particular attention to certain areas. Measures for urban areas will be fully incorporated into the regional programmes so that more towns and cities can receive support than did under the URBAN II Community Initiative. Under the future “Convergence” Objective, the Commission will set up a specific programme for the seven outermost regions (Guadeloupe, Martinique, French Guiana, Réunion, the Canary Islands, the Azores and Madeira). Many islands, mountain areas and thinly populated regions suffer from particularly severe access problems, of which account will be taken in the allocation of resources to the “Regional competitiveness and employment” Objective through the determination of regional criteria and an increase in the maximum rate of Community finance. In addition, the instruments providing aid for rural development and fisheries will be simplified and clarified. The LEADER+ Initiative, which supports innovative development strategies in rural areas, will be fully incorporated into general programming.

The complementarity of regional policy with the other Community policies is a key factor in economic and social cohesion. The innovation policy, education and training, equal opportunities for men and women and public procurement all have a territorial impact and coherence between competition and cohesion is a vital element. Regions whose development is lagging behind will remain eligible for state aid, as will the outermost regions for a transitional period. For the other regional programmes, the Commission is proposing to scrap the current system with its detailed map of areas eligible at sub-regional level. There will be consistency at the level of the priorities to be financed.

Reforming the management of the Structural Funds

The procedures for managing regional policy affect its efficiency. They impose uniform and tough rules. Programming, the partnership, part-financing and evaluation will remain the general principles of the future regional policy. Possible improvements to increase the utilisation of appropriations include:

  • A strategy increasingly based on the Union’s priority objectives.
    This strategy will be based entirely on the objectives set at Lisbon, Nice and Göteborg. It will also increase consistency with the main thrusts of economic policy (BEPG 2003). Each year, the European institutions will consider the progress made on the basis of a report from the Commission.
  • Simplified management increasingly based on subsidiarity.
    In programming terms, each Member States will prepare a policy document on its development strategy to serve as a basis for the adoption of the regional and national programmes. The programme complement and management by measures will disappear. The number of Funds is limited to three (ERDF, ESF and the Cohesion Fund) and each programme will be financed by one Fund only. For investments in the fields of transport and the environment, a single programming system will link the ERDF and the Cohesion Fund.
    Expenditure will be governed by rules on eligibility. Payments will be made at the level of each priority and not at the level of the measures. The system of payments on account and reimbursements will continue, as will automatic decommitment under the “N+2 rule”, which requires appropriations to be used within two years of programming.
    The extent to which the Commission is involved in inspections will depend on the Community part-financing. Under certain thresholds, the national system will suffice. However, to discharge its responsibilities for the implementation of the budget, the Commission will apply the closure of accounts procedures and financial correction mechanisms. There will also be heavier penalties and more rapid recovery of funds in the event of irregularities or fraud.
    The principle of additionality, under which Community resources must be over and above national resources, remains one of the key principles of the cohesion policy. The Commission will ensure that it is applied to programmes under the “Convergence” Objective.
    Finally, improved cooperation among the Member States, the local authorities, the social partners and civil society will consolidate the partnership. A greater role for the European Investment Bank (EIB) will improve the mobilisation of modern forms of financing, such as venture capital.
  • The concentration of resources will benefit the poorest Member States and regions, particularly in the new Member States.
    The Commission is proposing to abandon the present system of micro-zoning. For the “Regional competitiveness and employment” Objective, concentration will be at the levels of financial intensity through the introduction of minimum thresholds and of the three priorities announced: innovation and the knowledge economy, access and public services, preservation of the environment and hazard prevention.
  • Higher priority for results and quality.
    Evaluation before, during and after programmes is a vital element of their quality. The Commission is also proposing a Community performance reserve to reward the best performing Member States and regions. It hopes that the Member States will do likewise in order to cope rapidly with sectoral or local crises.
    The communication on the financial perspective proposes the establishment of a special instrument, the growth adjustment fund to permit a rapid reaction to economic recessions and trade crises. The Commission is proposing resources of 1 billion for this instrument from appropriations left unused by the ERDF and the ESF.

The Commission is basing its proposals on the socio-economic situation of the Union and the study of the impact of the regional policy, the other Community policies and the national policies. See the relevant SCADPlus factsheet.

For further information, consult the INFOREGIO website of the Directorate-general for regional policy:

  • the whole of the Third Report on economic and social cohesion;

Related Acts

Second progress report on economic and social cohesion [COM(2003) 34 final – Not published in the Official Journal].

See the relevant SCADPlus factsheet

First progress report on economic and social cohesion [COM(2003) 46 final – Not published in the Official Journal].

See the relevant SCADPlus factsheet

“Unity, solidarity, diversity for Europe, its peoples and its territory” – Second Report on economic and social cohesion [COM(2001) 24 final – Not published in the Official Journal].

See the relevant SCADPlus factsheets: progress and assessment; conclusions and recommendations; 10 questions for discussion.

Third progress report on cohesion – towards a new partnership for growth, jobs and cohesion

Third progress report on cohesion – towards a new partnership for growth, jobs and cohesion

Outline of the Community (European Union) legislation about Third progress report on cohesion – towards a new partnership for growth, jobs and cohesion

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Review and the future of regional policy

Third progress report on cohesion – towards a new partnership for growth, jobs and cohesion

Last updated: 24.10.2005

Fourth progress report on cohesion: The Growth and Jobs Strategy and the Reform of European cohesion policy

Fourth progress report on cohesion: The Growth and Jobs Strategy and the Reform of European cohesion policy

Outline of the Community (European Union) legislation about Fourth progress report on cohesion: The Growth and Jobs Strategy and the Reform of European cohesion policy

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Regional policy > Review and the future of regional policy

Fourth progress report on cohesion: The Growth and Jobs Strategy and the Reform of European cohesion policy

Document or Iniciative

Communication from the Commission of 12 June 2006 – The Growth and Jobs Strategy and the Reform of European cohesion policy – Fourth progress report on cohesion [COM(2006) 281 – Not published in the Official Journal].

Summary

This fourth progress report on economic and social cohesion follows on from the publication of the third progress report in May 2005. It concerns inter alia:

  • the cohesion programmes implemented in the new EU Member States following the May 2004 enlargement;
  • preparations for the 2007-2013 programming period, in particular the Interinstitutional Agreement signed in May 2006 by Parliament, the Council and the Commission on the Financial Perspectives for 2007-2013;
  • the relaunch of the Lisbon Strategy in 2005.

ECONOMIC AND SOCIAL DISPARITIES

In 2005 the EU economy was characterised by continued moderate growth. In the period 2000-2004, the average growth of the gross domestic product (GDP) of the 25 EU Member States (EU-25) was little more than 1.5% per year. However, the Commission anticipates that growth will pick up and exceed 2% across the EU between 2005 and 2007.

Disparities

With regard to disparities between Member States in terms of GDP, the report notes that the new Member States are growing faster than most of the EU-15 countries. However, convergence is still a long-term perspective.

In 2004, the average overall employment rate reached 63.3% (64.7% in the EU-15 and 56.0% in the EU-10). In order to reach the Lisbon Strategy’s employment rate target of 70% by 2010, 24 million new jobs would be needed in the EU-27 (EU-25 plus Romania and Bulgaria), which represents an increase of almost 12% on current employment levels.

Trends in disparities

This Communication gives an overview of the disparities between objectives and the disparities within each objective for the regions to be targeted by cohesion policy for the period 2007-2013 .

Disparities between objectives

The 100 Convergence regions (regions where GDP per capita is less than 75% of the EU average, 2000-2002) are characterised by low levels of GDP and employment, as well as high unemployment. Their total share in EU-27 GDP in 2002 was only 12.5%, although they account for 35% of the population.

Disparities within each objective

Under the Convergence objective, there are several regions with GDP per capita below 25% of the EU average in 2002, all of which are in Romania and Bulgaria.

The employment rate in the 155 regions covered by the new Regional Competitiveness and Employment (RCE) objective is 10 percentage points higher than in the Convergence regions.

In 2002, 10% of the EU-27 population living in the most prosperous regions accounted for over 19% of total GDP for the EU-27, compared with only 1.5% for the 10% of the population living in the least wealthy regions.

Research and development (R&D) and Information and communication technologies (ICT)

R&D is a key factor in determining a region’s innovative capacity. 35 regions, which account for 46% of total R&D expenditure in the EU-27, have R&D intensities exceeding the Lisbon target for an EU-wide average of 3% of GDP. In 47 regions (3.5% of GDP in the EU-27) R&D expenditure is below 0.5% of GDP.

Across the EU as a whole, almost half of all households had Internet access in 2005. There are marked differences between Member States, with penetration rates exceeding 70% in the Netherlands, Denmark and Sweden, whereas they are around 20% in Lithuania, the Czech Republic, Hungary, Slovakia and Greece. In today’s Objective 1 regions, only around one third of all households have Internet access.

POLITICAL BACKGROUND

Financial resources

With regard to the execution of the budget in 2005, a total of 27.1 billion was committed under the European Regional Development Fund (ERDF), the Cohesion Fund and the pre-accession fund designated for candidate countries (ISPA), and 11.2 billion for the European Social Fund (ESF). For the four Structural Funds, Cohesion Fund and ISPA taken together, payments made in 2005 reached more than 33 billion.

Based on the conclusions of the European Council in December 2005 and the adoption of the Interinstitutional Agreement of May 2006, the cohesion policy budget for the period 2007-2013 will amount to 308 billion (0.37% of the gross national investment (GNI) of the EU-27). The new Member States would receive 51.3% of total cohesion policy resources (an increase of almost 165% compared with the period 2004-2006).

Cohesion Policy 2007-2013 and the Growth and Jobs Strategy

In July 2005 the Commission published a Communication on the Community Strategic Guidelines for cohesion policy in 2007-2013, which:

  • provide a framework for the new programmes to be supported by the ERDF, the ESF and the Cohesion Fund;
  • reflect the role of cohesion policy as the principal instrument for contributing to growth and employment, in accordance with the renewed Lisbon agenda.

Cohesion policy is a key instrument in contributing to the Growth and Jobs Strategy, as:

  • cohesion policy represents one third of the Community budget;
  • strategies designed at local and regional levels must also form an integral part of the effort to promote growth and jobs;
  • the December 2005 European Council proposed that quantitative expenditure targets should be set for the new cohesion policy programmes for 2007-2013 so that a certain percentage of the funds will be used for purposes clearly linked to the Growth and Jobs Strategy (“earmarking” – 60% for the Convergence objective and 75% for the RCE objective).

Innovations in the new programmes

For the new programmes, specific initiatives have been launched to promote financial engineering for start-ups and micro-enterprises, combining technical assistance and grants with other instruments. There are three such initiatives:

JASPERS (Joint Assistance in Supporting Projects in European Regions), a new technical assistance partnership between the Commission, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD);

JEREMIE (Joint European Resources for Micro to Medium Enterprises), a new initiative in partnership with the European Investment Fund (EIF) in order to improve access to finance for business development;

JESSICA (Joint European Support for Sustainable Investment in City Areas), enhanced cooperation between the Commission, the EIB, the CEDB (Council of Europe Development Bank) and other International Financial Institutions (IFIs) on financial engineering for sustainable urban development.

As a complement to the Strategic Guidelines, the Commission will present a Communication on the contribution of urban areas to growth and jobs in the regions.

Related Acts

Council Decision 2006/702/EC of 6 October 2006 on Community strategic guidelines on cohesion [Official Journal L 291 of 21.10.2006].

Communication from the Commission of 25 January 2006 to the Spring European Council – Time to move up a gear: The new partnership for growth and jobs [COM(2006) 30 final – Not published in the Official Journal]. 
This annual activity report (AAR) contains several recommendations regarding cohesion policy.

Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) [Official Journal L 277 of 21.10.2005].