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Cohesion Policy: the reform in 10 points

Oct 14, 2013 | News

(14 October 2013) – Once the EU’s 2014-2020 budget is confirmed by the European Parliament and EU member states, Cohesion Policy will invest € 325 billion in regions and cities.

According to the European Commission, this will in turn leverage national and regional resources worth at least € 100 billion, for an overall expected investment of more than € 400 billion. Key elements of the reform, if confirmed by Parliament and Council, are:

1. Investing in all EU regions and adapting the level of support and the national contribution (co-financing rate) to their level of development: Less Developed regions (GDP < 75% of EU-27 average); Transition regions (GDP 75% to 90% of EU-27 average); More Developed regions (GDP > 90% of EU-27 average).

2. Targeting resources at key growth sectors: investments under the European Regional Development Fund (ERDF) will be concentrated on innovation and research, the digital agenda, support for small and medium sized businesses (SMEs) and the low-carbon economy depending on the category of region (Less Developed: 50%, Transition: 60%, and More Developed: 80%).

3. Progress towards these targets will mean additional funds (“performance reserve”) are made available to programmes towards the end of the period. Aims and targets should be published for more accountability.

4. Introducing conditions before funds can be channelled to ensure more effective investments. For example, “smart specialisation” strategies to identify particular assets, business friendly reforms, transport strategies, measures to improve public procurement systems or compliance with environmental laws are necessary preconditions.

5. Establishing a common strategy for more coordination and less overlap: a Common Strategic Framework provides the basis for better coordination between the European Structural and Investment Funds (ERDF, Cohesion Fund and ESF as the three funds under Cohesion Policy as well as the Rural Development and Fisheries funds). This also links better to other EU instruments like Horizon 2020 et le and the Connecting Europe Facility.

6. Cutting red tape and simplifying the use of EU investments: through a common set of rules for all ESI Funds as well as simpler accounting rules, more targeted reporting demands and more use of digital technology (“e-cohesion”).

7. Enhancing the urban dimension of the policy by earmarking a minimum amount of resources under the ERDF to be spent for integrated projects in cities – on top of other spending in urban areas.

8. Reinforcing cooperation across borders and making the setting up of more cross-border projects easier. Also to ensure macro-regional strategies like Danube and Baltic Sea are supported by national and regional programmes.

9. Ensuring that the wider economic environment does not erode the impact of EU investments. If necessary, the Commission can ask Member States – under the so-called “macro-economic conditionality” clause – to modify programmes to support key structural reforms or, as a last resort it can suspend funds if economic recommendations are repeatedly and seriously breached.

10. Encouraging the increased use of financial instruments to give SMEs more support and access to credit. Loans, guarantees and equity/venture capital will be supported by EU funds through common rules for all funds, a broadening of their scope and providing incentives (higher co-financing rates). The emphasis on loans rather than grants should improve project quality and discourage subsidy dependence.

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