Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Cohesion Policy: investing in the real economy
Date: 2008-12-16
Institutions: European Commission
Subjects: EU Member State, EU action, EU programme, development policy, economic and social cohesion, economic growth, economic recession, investment

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.12.2008 
COM(2008) 876 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Cohesion Policy: investing in the real economy 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Cohesion Policy: investing in the real economy 

1. 

INTRODUCTION 

In  the  context  of  the  global  financial  crisis  and  the  current  economic  slowdown,  the  EU's 
Cohesion Policy makes an important contribution to the European Economic Recovery Plan1. 
As  the  Community's  largest  source  of  investments  in  the  real  economy  Cohesion  Policy 
provides considerable support to public investment, including at regional and local level. It is 
the most important expression of European solidarity and targets support to European citizens 
most  in  need.  Over  the  period  2007-13,  Cohesion  Policy  will  invest  EUR  347  billion  to 
strengthen growth and contribute to economic and social cohesion.  

Cohesion  Policy  is  designed  to  deliver  smart  investments.  Within  its  total  allocation,  more 
than 65% or EUR 230 billion is “earmarked” for investment2 in the four priority areas of the 
Union's renewed Lisbon growth and jobs strategy - people, business, infrastructure and energy 
and  research  and  innovation.  Cohesion  Policy  nurtures  coherent  development  strategies  and 
contributes  to  economic  growth  and  social  development  over  the  medium  term.  It  also 
provides a stable, secure, targeted source of financing that can be used to stimulate economic 
recovery.  This  focus  and  stability  is  essential  for  building  trust,  restoring  confidence  and 
facilitating investment. 

Although  the  full  extent  of  the  recession  is  not  clear  yet,  it  is  likely  that  the  effects  will  be 
widely  felt.  In  some  Member  States  unemployment  is  already  on  the  rise  and  business 
indicators show steep negative trends. Differentiated impacts on Member States and regions 
will be mirrored by unequal impacts on individuals. In times of economic adversity the most 
vulnerable, such as the socially excluded and the unemployed, are most affected. 

In such times the public sector has an essential role to play in assuring solidarity and restoring 
confidence,  notably  through  providing  much  needed  public  investment  to  boost  internal 
demand  in  the  short  term  and  put  the  economy  on  a  sustainable  development  path  in  the 
medium  term.  This  is  where  Cohesion  Policy  can  play  an  important  role.  Recognising  that 
pressure  on  national  budgets  may  slow  down  the  rate  of  planned  investment,  the 
implementation  of  Cohesion  Policy  funds  and  priorities  should  be  accelerated  and  even 
frontloaded  to  give  a  timely  boost  to  the  economy  and  provide  support  to  people  hit  by  the 
crisis. Cohesion Policy programmes have the potential and the necessary flexibility to ensure 
that  targeted  assistance  can  be  delivered  now  to  address  priority  needs  and  to  accelerate 
spending in the areas with most growth potential. 

Macroeconomic stability and structural reforms are a precondition for the success of Cohesion 
Policy  along  with  an  appropriate  institutional  framework.  Total  public  investment  planned 

1 
2 

COM(2008) 800, 26.11.2008, The European Economic Recovery Plan. 
COM(2007)  798,  11.12.2007,  Member  States  and  Regions  delivering  the  Lisbon  strategy  for  growth 
and jobs through EU Cohesion Policy, 2007-2013. 

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over  the  period  2007-13  accounts  on  average  for  almost  6%  of  expected  GDP3.  In  some 
Member States the relative contribution of Cohesion Policy in total public investment will be 
over 50%. Appropriate modulation of the timing of Cohesion Policy funding could provide an 
important  financial  stimulus  in  the  short-term  while  maintaining  focus  on  medium  to  long 
term growth capacity of the Member States economies. 

Member  States  and  regions  that  succeed  in  rapidly  delivering  the  objectives  of  the 
programmes can mitigate the economic slow down, in particular in those convergence regions 
that  benefit  from  higher  levels  of  support.  For  all  programmes,  maintaining  the  agreed 
priorities on growth and jobs can contribute to realising a quicker recovery when the current 
economic  shock  begins  to  recede.  Given  the  complementarities  between  Cohesion  Policy 
priorities  and  the  objectives  of  EU  sectoral  policies,  the  speedy  implementation  of  the 
programmes takes on an added importance for long term competitiveness. 

Presented in support of the European Economic Recovery Plan this Communication has the 
objectives  of  emphasising  the  importance  for  the  real  economy  of  the  investments  planned 
through  Cohesion  Policy  and  elaborating  a  range  of  measures  proposed  to  accelerate  the 
contribution of Cohesion Policy investment. 

2. 

THE  ENHANCED  RELEVANCE  OF  COHESION  POLICY  INVESTMENT  IN  THE  REAL 
ECONOMY 

In the current economic situation investments can give short term stimulus while maintaining 
a  focus  on  persistent  long-term  challenges  in  the  real  economy:  investments  in  priority 
infrastructures  and  energy,  in  the  productive  capacity  of  business  and  in  human  capital 
potential. That focus on sustainable investments remains crucial. 

2.1. 

People 

The  Recovery  Plan  promoted  a  major  "European  employment  support  initiative"  and 
proposed  to  simplify  criteria  for  the  European  Social  Fund  (ESF)  and  step  up  advance 
payments from early 2009. If agreed, Member States have earlier access to up to EUR 1.8 bn 
to respond to the short- term priorities described below. It is estimated that some 1.5 million 
unemployed people could receive earlier support through this quick cashflow. 

•  Activation  and  active  inclusion  within  flexicurity  strategies:  The  main  idea  behind 
flexicurity  is  to  protect  employment  and  long-term  employability  rather  than  particular 
jobs.  The  core  objectives  of  the  concept,  i.e.  adaptation  to  change  and  easing  transition 
between  jobs,  are  particularly  relevant  in  the  current  economic  circumstances.  Several 
Member  States  are  already  putting  in  place  flexicurity  strategies  and  all  of  them  have 
committed themselves to use the Cohesion policy to improve employability. 

A combination of contractual flexibility and strengthened active labour market policies can 
provide a rapid policy response. The most disadvantaged workers are often first hit by an 
economic downturn and they will find it hardest to get back to work. Policy makers need to 
strengthen  active  and  preventive  labour  market  measures  to  guard  against  long  term 
unemployment,  with  a  special  emphasis  on  vulnerable  groups  notably  older  workers,  the 

3 

See forthcoming Commission's communication on the ex-ante assessment of the additionality principle 
2007-2013. 

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low skilled, or minorities. The ESF can quickly intervene to ease transitions by providing 
specialised  training,  personal  job  counselling,  apprenticeship,  subsidised  employment  as 
well  as  grants  and  small  credits  for  self-employment  and  business  start-ups.  EUR  21.7 
billion are already available for improving such access to employment, in addition to EUR 
10  billion  that  are  foreseen  to  improve  the  active  inclusion  of  less  favoured  persons.  To 
reduce  the  effects  of  the  crisis  and  promote  social  inclusion,  actions  supporting  the  less 
favoured people could be put at the forefront of ESF interventions. 

Successful  transitions  after  job  losses  depend  also  on  fast  and  quality  delivery  of 
employment  services.  Cohesion  Policy  contributes  EUR  2.2  billion  for  strengthening 
labour  market  institutions  and  more  could  be  needed  soon.  In  the  cases  of  negative 
employment  forecasts,  Member  States  should  further  strengthen  the  role  of  their  Public 
Employment  Services  as  key  actors  for  the  effective  targeting  of  active  labour  measures 
and better matching between skills and jobs. 

An effective response to the employment and social impact of the crisis, and more broadly 
the  effective  implementation  of  flexicurity  related  labour  market  reforms,  will  only  be 
possible  with  the  active  participation  of  the  social  partners.  The  ESF  provides  financial 
support to strengthen social dialogue and for joint actions undertaken by social partners. 

•  Matching  skills  to  labour  market  needs:  Skills  mismatches  in  the  labour  market  are  a 
growing  concern  in  most  Member  States  and  the  financial  turmoil  will  increase  labour 
market disequilibria over the short-term. While the medium and longer term objectives in 
this area should not be neglected, it is important to also focus on instant skills upgrading, 
particularly in sectors with labour shortages. Acquiring new competences may serve as an 
important  proactive  tool  to  maintain  and  increase  employment  security  as  well  as  to  be 
better protected against job losses. 

A  massive  effort  of  skills  upgrading  at  all  levels  of  qualifications,  the  development  of 
human capital, and effective investment in education will be essential to set the EU back 
on the road to recovery, to confront demographic change and to benefit from the transition 
to  an  energy  efficient,  low-carbon  economy.  Recognising  the  important  economic  return 
on  investment  from  education,  resources  from  the  ESF  dedicated  to  improving  human 
capital in 2007-2013 programming period have been increased to some EUR 25 billion. In 
addition, EUR 13.5 billion from Cohesion policy is foreseen to support the adaptability of 
workers,  enterprises  and  entrepreneurs,  which  also  includes  development  of  systems  for 
anticipating  economic  change  and  future  requirements  in  terms  of  jobs  and  skills.  Such 
anticipation of future skills needs is crucial, not least to prepare for the economic upturn. 
The New Skills for New Jobs initiative4 will contribute to this aim. 

Member States are therefore encouraged to: 

–  Invest  in  the  relevant  flexicurity  components  in  particular  through  reinforced  activation 

schemes to ensure rapid reintegration of redundant workers to the labour market; 

–  Refocus, if needed, ESF programmes for the groups most affected by the crisis; 

–  Maintain investments in increasing the quality of education and raise of overall skill levels, 

in particular for the low skilled and disadvantaged groups; 

4 

COM(2008) 868, 16.12.2008. 

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–  Use  Cohesion  policy  to  improve  the  mechanisms  of  anticipation  and  matching  of  skills 

with existing and anticipated job vacancies. 

2.2. 

Business 

Securing healthy innovative and dynamic businesses is naturally a key for recovering from the 
economic downturn and one of the biggest challenges in today's global economy. SMEs are 
most  vulnerable  as  credit  becomes  less  available.  The  increased  scarcity  of  credit  can  be 
understood as resulting initially from the crisis in the banking sector but more importantly it 
will  be  exacerbated  by  greater  risk  aversion  in  credit  institutions.  Lower  demand  will  lead 
companies to reduce their activities and invest less, in particular in innovation which is largely 
based on long-term "intangible" investment.  

•  Access to finance is naturally of greatest importance in a situation where it becomes more 
difficult  for  businesses,  in  particular  start-ups  and  SMEs,  to  find  finance  in  a  risk-averse 
financial environment. The Commission has been actively supporting the use of revolving 
instruments  such  as  debt,  equity  and  guarantees  in  a  complementary  way  under  both  the 
EU's  Competitiveness  and  Innovation  Framework  Programme  and  Cohesion  Policy.  In 
order to increase the leverage of EU investments for the current programming period the 
Commission  and  the  European  Investment  Fund  (EIF)  launched  JEREMIE  ("Joint 
European  Resources  for  Micro  to  Medium  Enterprises"),  targeting  new  business  creation 
and  SME  expansion.  Moreover,  as  the  financial  crisis  and  the  economic  downturn  limit 
public budget resources, we need now, more than ever, a shift away from traditional grant-
only financing models to repayable instruments.  

•  Micro credit: The Commission has been paying increasing attention to the crucial role of 
micro-enterprises and forms of finance tailored to their needs5. On 10 September 2008 the 
Commission  and  the  EIB  Group  launched  JASMINE  "Joint  Action  to  Support  Micro-
Finance  Institutions  in  Europe"  to  channel  various  forms  of  technical  and  financial 
assistance to primarily help non-bank micro-credit providers to improve the quality of their 
operations,  to  expand  and  to  become  sustainable.  The  project  will  include  a  preparatory 
phase  of  three  years  from  2009-2011  with  the  estimated  total  budget  of  some  EUR  50 
million. 

•  Business support measures: Cohesion Policy has allocated some EUR 55 billion between 
2007 and 2013 to business support, of which a large share addresses support to innovation 
directly in SMEs, including cluster support. Many of the programmed activities are in line 
with  more  immediate  actions  needed  to  respond  to  the  current  economic  situation,  by 
focusing in particular on key long term challenges for business in the real economy. These 
priorities include exploiting the potential of ICT applications, low carbon technologies and 
eco-friendly products, production techniques and energy efficient processes. 

•  Capacity  Building:  Effective  public  policies  require  a  competent  and  efficient 
administration,  impartial  and  client  oriented.  Especially  during  an  economic  downturn, 
strengthening  institutional  and  administrative  capacity  that  aims  at  creating  a  stable 
business  environment  will  underpin  structural  adjustments  and  foster  growth  and  jobs. 
Reducing  regulatory  and  administrative  burdens  on  businesses  contributes  to  increasing 

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COM(2007) 708, 13.11.2007, “A European initiative for the development of micro-credit in support of 
growth and employment”. 

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productivity  and  strengthening  competitiveness.  EUR  2  billion  from  the  ESF  support 
institutional  capacity  building  and  administrative  reform.  Actions  in  this  field  can 
significantly  reduce  administrative  burdens  on business  and  help  more  people  to  become 
entrepreneurs.  This  includes  also  the  possibility  of  ensuring  starting  up  a  business 
anywhere  in  the  EU  within  three  days  at  zero  costs  and  via  a  single  access  point. 

Member States are therefore encouraged to: 

–  Seek  to  secure  investments  in  the  long  term  competitiveness  of  enterprises,  particularly 

SMEs, and accelerate such investments where possible. 

–  Reinforce support to those who loose their jobs in the current crisis, including with small 
grants  or  credits  to  set-up  their  own  enterprise,  by  providing  entrepreneurial  and  basic 
management skills. 

–  Quickly increase recourse to the JEREMIE initiative and accelerate its implementation by 

signing holding fund agreements with the EIF and / or other financial institutions.  

–  Take  advantage  of  the  synergies  between  the  financial  instruments  for  SMEs  funded  by 

Cohesion Policy and the Competitiveness and Innovation Framework Programme. 

–  Improve the national environments to allow the development of micro credit initiatives and 
take  advantage  of  the  technical  assistance  support  offered  for  micro  credit  initiatives 
through the JASMINE facility.  

–  Maintain  commitments  to  institutional capacity building as this will positively impact on 
creating a business friendly environment and accelerate the modernisation of their public 
administrations. 

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The Commission: 

–  Will  substantially  increase,  with  the  EIF,  the  availability  of  financial  and  technical 

assistance to help develop access to finance instruments. 

–  Has proposed amendments to regulatory provisions to improve the environment for setting 

up JEREMIE type instruments.  

2.3. 

Infrastructure and energy 

Pressing  ahead  with  investment  in  Europe's  energy,  transport  and  ICT  infrastructure  and 
networks  becomes  even  more  important  when  faced  with  the  prospect  of  recession.  Falling 
behind  on  planned  investments  in  this  area  would  have  negative  economic  impacts  in  the 
short term and risk undermining long term prospects for future growth. For instance recession 
could  exacerbate  the  disadvantage  of  those  regions  which  have  a  less  developed  energy 
infrastructure and the security supply risks in already precarious regions. Good infrastructure 
policy  and  a  focus  on  improving  energy  efficiency,  renewable  energies  production  and 
sustainable  transport  will  help  Europe  to  weather  the  current  economic  storm.  It  also 
addresses  other  challenges:  reducing  greenhouse  gas  emissions,  protecting  industry  and 

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consumers against fuel price volatility and improving local environments. Such support also 
offers opportunities to ensure employment, protecting jobs and businesses. 

•  Transport:  To  support  the  development  of  sustainable  transport  infrastructure,  Cohesion 
Policy will dedicate some EUR 38 billion to Trans-European Networks (TEN-T) projects 
over the period 2007-13 and will provide financing for secondary connections to improve 
access to the TEN-Ts. Cohesion Policy programmes also plan to invest in environmentally 
sustainable transport systems, including clean urban transport.  

•  Energy:  As  emphasised  in  the  European  Economic  Recovery  Plan,  the  current  financial 
crisis increases the need to modernise Europe's energy sector and diversify supply sources 
to guarantee ample and affordable energy in a volatile world market. The enlarged EU has 
inherited  poor  East-West  and  South-North  energy  connections  which  undermine  security 
of supply and solidarity in the whole internal energy market. To help address this problem 
Cohesion  Policy  is  supporting  priority  TEN-E  projects  with  EUR  675  million  for  the 
period 2007-13 and will devote EUR 4.8 billion to the development of renewable energies, 
including  support  for  decentralised  energy  production  and  district  heating.  The  EUR  4 
billion  mentioned  in  the  European  Economic  Recovery  Plan  for  investment  in  energy 
interconnections will be additional and complementary to Cohesion Policy allocations. 

•  Improving  energy  efficiency  will  prove  decisive  for  European  competitiveness  and 
represents  a  win-win  option  in  the  fight  against  climate  change.  Investing  in  energy 
efficiency  measures  brings  immediate  benefits:  reducing  costs  for  households  and 
businesses;  creating  growth  and  jobs  and  encouraging  transition  towards  a  low  carbon 
economy. Under Cohesion Policy for 2007-13, some EUR 4.2 billion is already allocated 
to support a wide range of energy efficiency improvements. 

•  High-speed  internet  to  all  EU  citizens:  Within  the  relevant  Cohesion  Policy  programmes 
EUR 2.2 billion has already been allocated to ICT infrastructures for the 2007-2013 period. 
The  EUR  1  billion  for  high  speed  internet  referred  to  in  the  Recovery  Plan  shall  be 
additional and complementary to those allocations.  

•  Skills  for  the  low  carbon  economy:  The  move  to  the  low  carbon  society  will  need  to  be 
accompanied by identification and provision of new skills for new jobs, including "green-
collar" jobs. The human capital components of the Cohesion Policy programmes should be 
used to underpin Member States' efforts in this field. 

To improve and accelerate the preparation under Cohesion Policy of major projects in these 
and  other  priority  areas  the  Commission  and  the  European  Investment  Bank  (EIB),  have 
developed  JASPERS  –  "Joint  Assistance  in  Supporting  Projects  in  European  Regions'6.  It 
provides assistance to managing authorities in the EU12 to prepare major projects in priority 
EU infrastructure investments.  

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JASPERS is a technical assistance facility of the Commission, the EIB, the EBRD and KfW offering 
assistance at all stages of project preparation. 

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A  separate  initiative  of  the  Commission,  the  EIB  and  the  Council  of  Europe  Bank  (CEB) 
JESSICA – "Joint European Support for Sustainable Investment in City Areas" - is designed 
to accelerate and enhance sustainable investments in energy efficiency, urban transport, ICT 
infrastructures, regeneration, etc. in the urban context. 

In relation to infrastructure and energy the Member States are therefore encouraged to: 

–  Maximise the use of national and regional programmes to ensure continued increase in the 

use of renewable sources. 

–  Maximise the use of national and regional programmes to ensure a high degree of energy 
efficiency is designed into new buildings and implemented into the existing building stock 
("retrofitting"), including in the case of low-income households. 

–  Make use of the funds to re-train and up-skill workers for newly emerging jobs in the low- 

carbon economy. 

–  Make  full  use  of  the  JASPERS  facility  to  prepare  strategic  infrastructures  and  make  the 

best use of Cohesion Policy assistance in favour of major projects. 

–  Take full advantage of the possibilities offered by JESSICA in relation to integrated urban 

development funding. 

–  Take  advantage  of  the  synergies  in  the  development  of  different  infrastructures  and 
between the various sources of Community financing (Cohesion Policy , TEN-T, TEN-E, 
the  Seventh  Research  and  Technological  Development  Framework  Programme, 
Competitiveness and Innovation Framework Programme and EIB) and the EBRD. 

; 

The Commission proposes the following:  

–  The  capacity  of  the  JASPERS  technical  assistance  will  be  increased  by  25%  from  2009. 
This  would  provide  a  significant  contribution  in  speeding  up  the  preparation  of  major 
projects.  To  facilitate  this  increase  the  Commission  will  work  closely  with  its  other 
partners in the JASPERS facility. 

–  The amendment of the European Regional Development Fund (ERDF) to allow support to 
energy  efficiency  improvement  and  renewable  energies  in  housing  in  favour  of  low-
income households in all Member States. 

–  The amendment to regulatory provisions to improve the environment for in-kind national 

financing of JESSICA instruments. 

2.4. 

Research and Innovation 

Planned investments under Cohesion policy in the knowledge economy – estimated at EUR 
86  Billion  or  25  %  of  the  total7  -  should  remain  a  priority  in  spite  of  the  current  economic 
downturn.  As  private  capital  investments  in  R&D  are  strongly  linked  to  general  economic 
output,  maintaining  stability  in  public-sector  spending  and  creating  a  strong  European 

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SEC(2007) 1547, 14.11.2007, Regions delivering innovation through Cohesion Policy. 

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Research Area are particularly important to ensure adequate focus of the economy on research 
and innovation, laying the foundations for long term growth. Europe cannot afford to be risk-
averse regarding investment in new knowledge production and innovation, particularly at this 
time.  

Strong  European  R&D  and  innovation  in  all  sectors  will  be  vital  for  realising  the  Lisbon 
growth  and  jobs  objectives  and  to  finding  sustainable  solutions  to  pressing  environmental 
issues such as the climate change and energy challenges. Cohesion Policy has set out stable 
conditions  for  continued  funding  of  R&D  and  Innovation  strategies.  In  recognition  of  the 
central  importance  of  increased  investment  in  R&D  and  the  focus  given  in  the  Cohesion 
Policy  Strategic  Guidelines,  Cohesion  Policy  investments  in  these  areas  are  planned  to 
increase sharply for 2007-2013 for all Member States.  

From  past  experience  it  is  clear  that,  to  succeed,  research  and  innovation  policy  measures 
need to be targeted on focused priority actions and pursued with consistency. The efforts to 
maintain the planned level of investment will be of crucial importance if Europe is to succeed 
in improving its capacity to innovate in the broadest sense, including in bringing new products 
and services to the market. Maintaining national commitments to R&D and innovation may 
be challenging in the face of the current credit crunch and squeeze on public finances but the 
public  sector  must  play  a  leading  role  to  ensure  a  stable  investment  climate  for  R&D  and 
Innovation and be best prepared for the next upturn.  

Member States are therefore called upon to: 

–  Continue  to  support,  through  their  Cohesion  Policy  programmes,  investments  in  R&D 
capacity  building  research  infrastructure,  small-scale  industry-led  R&D  infrastructures  in 
knowledge intensive clusters and human capital in areas with significant growth potential 
(such as in ICT, energy efficiency and low carbon energy technologies); 

–  Exploit to the full synergies between the various sources of Community, public and private 
funding of research and innovation activities to ensure priorities in these areas continue to 
be funded.  

3. 

PROPOSALS AND RECOMMENDATIONS 

The comprehensive European Economic Recovery Plan proposed by the Commission makes 
the case for a major fiscal stimulus combining national and Community actions. Recognising 
that  in  the  current  economic  situation,  both  private  finance  and  public  budgets  are  likely  to 
come  under  pressure  a  set  of  measures  linked  to  accelerating  Cohesion  Policy  investments 
have  been  put  forward  to  exploit  the  focus  and  stability  of  this  policy.  Those  measures 
involved  a  combination  of  legislative  proposals,  which  the  Commission  has  proposed  for 
speedy adoption by the relevant institutions, and initiatives to use existing instruments to the 
full. 

The proposals for targeted legislative amendments8 can be characterised as follows:  

8 

COM(2008)  803,  proposal  to  amend  Regulation  (EC)  No  1083/2006  on  the  ERDF,  the  ESF  and  the 
Cohesion Fund.   

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•  Measure  to  improve  cash  flow  of  the  public  authorities  charged  with  delivering  the 
national and regional programmes. These provisions include an additional tranche of pre-
financing  in  2009  and  measures  that  could  accelerate  the  reimbursement  of  expenditure 
incurred under major projects and within the framework of state aid schemes; 

•  Clarification of provisions facilitating the launch of financial engineering instruments with 

a view to accelerating the use of access to finance measures; 

•  Simplification in relation to broadening the use of flat rates and lump-sums costs to allow 

public authorities to more quickly prepare projects and measures;  

•  Expand the possibilities for support to investments in energy efficiency improvement and 

renewable energy in housing in favour of low income households in the EU 27.  

Complementary to the proposed legislative changes the Commission proposes the following 
principles  and  actions  to  guide  Member  States  to  fully  exploit  existing  possibilities  and 
prepare to make use of the proposed legislative amendments. 

•  Directing action to smart investments: Under the present exceptional circumstances, the 
Member  States  and  the  Commission  can  examine  possible  changes  to  the  objectives  and 
priorities of the operational programmes to further increase focus on investments in areas 
of immediate growth potential and/or urgency. For example, investing in energy efficiency, 
clean technologies, environmental services, infrastructure and interconnections, broadband 
networks, forecasting and matching of skills with future labour market needs, or opening 
up  new  finance  for  SMEs  (i.e.  research  intensive  and  innovative  SMEs).  Within  the 
existing programmes, Member States, working closely with the Commission, are invited to 
give immediate priority to such productivity-enhancing investments.  

•  Exploiting the possibilities for innovative finance for SMEs: The potential of JEREMIE 
type  instruments  providing  SMEs  with  access  to  finance  should  be  fully  exploited. 
Member states are invited to participate actively in the networking platform to be launched 
by the Commission in co-operation with the EIF in 2009.  

•  Exploiting existing opportunities: The strategic approach and broad scope of the existing 
programmes already offers important flexibilities. In principle it is possible for programme 
managers  to  adjust  the  relative  pace  of  spending  and  implementation  across  the  different 
priorities  and  categories  of  beneficiaries  or  replace  interventions  with  complementary 
measures. The Commission will do all it can to assist Member States and encourages full 
use of the flexibility within the limits of the legal framework. 

•  Speeding  up  programmes:  To  accelerate  implementation  of  the  programmes  the 
Commission  encourages  the  Member  States  to  finalise  the  definition  of  their  national 
management  and  control  systems  in  line  with  the  relevant  regulatory  provisions  and 
principles.  That  will  allow  the  speeding  up  the  interim  financial  transactions  in  general 
while respecting the principle of sound financial management. 

•  Maintaining public investment: In the face of challenges to ensure sufficient co-funding, 
Member  States  can  vary  the  Community  and  national  contributions  when  it  comes  to 

COM(2008) 838, Proposal to amend Regulation (EC) No 1080/2006 on the ERDF 
COM(2008) 813, Proposal to amend Regulation (EC) No 1081/2006 on the ESF. 

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individual projects inside a programme: for example some operations could be financed at 
100% by Cohesion Policy funds in 2009. Such frontloading would need to be balanced by 
operations funded only nationally or at higher rates of national funding by the end of the 
programming period. 

The Member States are encouraged to: 

–  Exploit  all  possibilities  to  accelerate  needed  interventions  that  figure  in  the  agreed 

objectives of the programmes. 

–  Mobilise  the  existing  and  proposed  additional  advance  in  2009  to  pre-finance  priority 

interventions and jump start the 2007-2013 programmes.  

–  Examine whether urgent programme modifications are needed to accelerate early delivery 

beyond the flexibilities already available. 

–  Use  their  national  strategic  reports9,  due  by  end-2009,  as  an  opportunity  to  report  on  the 
early results in delivering the new round of programmes. Those reports take on an added 
importance  in  the  light  of  the  new  economic  conditions.  Where  necessary  they  could 
present  more  reflected  and  fundamental  proposals  for  the  strategic  revision  of  the 
programmes and their objectives as more clarity about the effects of the current recession 
develops.  

. 

The Commission will work with Member States to examine: 

–  Possible early changes to the Operational Programmes with a view to address new needs, 

simplify delivery and speed up implementation of established priorities; 

–  Possible  early  changes  to  the  Operational  Programmes  with  a  view  to  introducing 
financing  for  energy  efficiency  and  renewable  energy  investment  in  housing  in 
programmes in the EU-15 and reinforcing such investments in the EU 12. 

–  Finally, the Commission will quickly examine requests for short extensions of the closure 
deadline  for  the  2000-2006  programmes  in  order  to  allow  the  maximum  use  of 
commitments  already  made  and  to  relieve  difficulties  arising  from  raising  capital  in  late 
2008.  

4. 

CONCLUSION 

Cohesion Policy is providing an important input to the real economy through delivery of the 
EU’s  growth  and  jobs  and  sustainable  development  agendas.  With  significant  financial 
investment  and  decentralised  management  focused  on  improving  public  policy  making, 
accountability and control, Cohesion Policy provides vital support for growth and jobs at local 
and  regional  level,  where  the  effects  of  the  financial  and  economic  crisis  will  be  felt  by 
Europe's  citizens.  Cohesion  Policy  is  already  targeted  to  support  the  Member  States  and 

9 

Under Articles 29 of EC Regulation (EC) No 1083/2006 those reports should address issues such as the 
contribution  of  the  programmes  to  the  objectives  of  Cohesion  Policy  and  the  promotion  of 
competitiveness and job creation as well as addressing the socio-economic situation. 

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regions with the greatest need in order to reduce disparities, promote growth and strengthen 
EU economic and social cohesion. 

In the light of the economic downturn, putting into place the legislative and other measures 
set out in this Communication will make an important contribution to the European Economic 
Recovery  Plan.  Accelerating  and  frontloading  Cohesion  Policy  investments  can  have  the 
positive  effect  of  creating  demand  in  key  sectors  of  the  economy  and  could  provide  an 
important  financial  stimulus  in  the  short  term  while  providing  assistance  to  those  directly 
affected.  Maintaining  focus  on  the  "earmarked"  Lisbon  investment  priorities  is  crucial  as 
these priorities can contribute to quicker recovery and address long-term challenges such as 
improving cometitiveness and adapting to a low-carbon economy. 

The  speedy  delivery  of  these  measures  will  require  a  close  cooperation  between  the  other 
European  Institutions,  the  Member  States,  the  stakeholders  in  the  programmes  and  the 
European Commission. 

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