COMMUNICATION FROM THE COMMISSION Results of the mid-term verification of additionality 2007-2013
Date: 2013-02-28
Institutions: European Commission
Subjects: EU Member State, EU control, Structural Funds, commitment of expenditure, economic and social cohesion, economic convergence, economic recession, principle of additionality, public expenditure

EUROPEAN 
COMMISSION 

Brussels, 28.2.2013  
COM(2013) 104 final 

COMMUNICATION FROM THE COMMISSION 

Results of the mid-term verification of additionality 2007-2013 

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COMMUNICATION FROM THE COMMISSION 

Results of the mid-term verification of additionality 2007-2013 

1. 

INTRODUCTION 

Additionality is a core principle of Cohesion Policy aiming to ensure its added value. 
It  means  that  the  EU Structural  Funds  complement  but  do  not  replace  equivalent 
public  expenditure  of  a  Member  State1.  Additionality  is  respected  if  the  average 
annual level of national expenditure in real terms in 2007-2013 is at least equal to the 
level  determined  at  the  beginning  of  the  period.  This  ensures  that  Cohesion  Policy 
has  a  genuine  impact  by  complementing  national  with  European  investments.  It 
remains a key element of the Commission's proposal for Cohesion Policy for 2014-
20 as it supports the preservation of growth-enhancing investments. 

In  the  programming  period  2007-2013,  the  Commission  verifies  the  respect  of 
additionality  in  the  convergence  regions  (including  phasing-out  regions)  of  20 
Member States2. The verification takes place in three stages:  

•  ex-ante when the level of public expenditure to be maintained in the convergence 

regions in 2007-13 (‘baseline’) is set3; 

•  mid-term  when  the  level  of  actual  public  expenditure  in  2007-10  is  determined 

and the baseline is reviewed; 

•  ex-post when the level of actual expenditure in 2011-2013 is determined and the 

respect of the baseline is verified. 

This Communication summarises the results of the mid-term verification carried out 
for the period 2007-10. It mainly covers the pre- and early years of the economic and 
financial  crisis,  when  many  Member  States  embarked  on  fiscal  stimulus.  Most 
Member States have moved to fiscal consolidation since then, which will likely have 
a significant impact on public investment and on additionality in the period 2011-13. 
It  is  therefore  likely  that  the  ex  post  verification  of  actual  expenditure  will  lead  to 
further adjustments. 

The mid-term verification has led to three main findings: 

First, the aggregate level of national structural spending in the convergence regions 
in 2007-10 was 7% higher than the level set ex-ante. This is related to the increase of 
public expenditure in certain Member States. Higher-than-expected public spending 
is  mainly  due  to  the  counter-cyclical  effort  of  some  governments  to  mitigate  the 
impact  of  the  crisis  or  to  strong  economic  expansion  in  some  countries  before  the 
crisis.  

Second,  ten  Member  States  asked  the  Commission  to  reduce  their  additionality 
baselines for 2007-13. For most this was a consequence of on-going or planned fiscal 

1 

2 

3 

For  the  definition  of  equivalent  public  expenditure,  see:  Commission  Methodological  Paper  giving 
Guidelines  on  the  calculation  of  public  or  equivalent  structural  expenditure  for  the  purpose  of 
additionality, Working Document No. 3, December 2006. 
See Article 15 of Regulation (EC) 1083/2006. The 20 Member States concerned are Belgium, Bulgaria, 
Czech  Republic,  Germany,  Estonia  Greece,  Spain,  France,  Italy,  Latvia,  Lithuania,  Hungary,  Malta, 
Austria, Poland, Portugal, Romania, Slovenia, Slovak Republic, and the United Kingdom. 
See Communication from the Commission: Report on ex ante verification of additionality in the regions 
eligible under the Convergence objective for the period 2007–2013, COM(2009)112 final. 

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consolidation, while for two it was a correction of the ex ante analysis (see sections 2 
and 3). The Commission considered all of these requests to be justified.  

Third, the mid-term verification has highlighted shortcomings in the current method 
for verifying additionality. This is why the Commission has proposed to reform the 
verification process in 2014-2020, aligning it with the new economic governance of 
the Union4. 

2. 

STRUCTURAL SPENDING IN CONVERGENCE REGIONS IN 2007-2010 

From  a  methodological  point  of  view,  determining  the  level  of  public  spending  for 
the  verification  of  additionality  in  2007-2010  was  a  challenging  exercise.  It  meant 
collecting  and  aggregating  ad  hoc  data  on  public  investment,  sector  by  sector,  at 
local,  regional  and  national  level.  The  Commission  checked  its  consistency  with 
public  investment  trends  observed  in  Eurostat  statistics,  in  particular  the  ESA-95 
system  of  accounts  and  the  Classification  of  the  Functions  of  Governments 
(COFOG), and organised a series of bilateral meetings with Member States to verify 
the  reported  expenditure  level.  To  address  these  problems,  the  Commission  has 
proposed  to  reform  the  verification  system  for  2014-2020,  as  outlined  in  the 
conclusion. 

The results of the mid-term verification are summarised in Table 1 which compares 
the  certified  level  of  average  annual  structural  expenditure  in  2007-2010  with  the 
level  agreed  ex-ante.  Despite  the  crisis,  annual  structural  spending  was  on  average 
7.3%  higher  than  initially  estimated  (EUR  102  billion  instead  of  EUR  95  billion5). 
This is explained by the fact that in the convergence regions of ten Member  States 
the level of structural expenditure was equal to or higher than the level agreed at the 
ex-ante  verification  (Belgium,  Bulgaria,  the  Czech  Republic,  Spain,  France,  Malta, 
Poland, Romania, Slovenia and the Slovak Republic).  

In  six  Member  States  (Germany,  Estonia,  Latvia,  Portugal,  Austria,  the  United 
Kingdom)  the  shortfall  was  modest  compared  to  their  initial  commitments.  Two 
Member  States  missed  their  ex-ante  commitment  by  more  than  10%  (Lithuania, 
Hungary),  whereas  two  other  Member  States  missed  it  by  more than 20% (Greece, 
Italy). With the exception of Germany, the rapid deterioration of the macroeconomic 
environment was the main reason for the lower than expected level of expenditure in 
the other Member States. 

4 
5 

See: http://ec.europa.eu/regional_policy/what/future/proposals_2014_2020_en.cfm 
Figures on structural spending are expressed in 2006 prices in line with the guidelines of the Working 
Document No. 3 of December 2006. 

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TABLE 1- Ex-ante reference level 2007-2013 and actual expenditure 2007-2010 

Reference level av. 2007-2013 

Expenditure av. 2007-2010 

Difference 

BE 

BG 

CZ 

DE 

EE 

GR 

ES 

FR 

IT 

LV 

LT 

HU 

MT 

AT 

PL 

PT 

RO 

SI 

SK 

UK 

Total 

1,128 

919 

2,549 

16,504 

1,316 

8,661 

13,973 

1,815 

20,613 

971 

755 

3,330 

107 

139 

7,940 

3,946 

4,773 

957 

876 

3,495 

94,765 

1,246  

1,444  

2,649  

16,452  

1,275  

6,719  

21,367  

2,271  

16,194  

902  

672  

2,867  

170  

138  

12,531  

3,624  

5,196  

1,121  

1,396  

3,465  

101,698  

10.5% 

57.2% 

3.9% 

-0.3% 

-3.1% 

-22.4% 

52.9% 

25.1% 

-21.4% 

-7.1% 

-11.1% 

-13.9% 

59.3% 

-0.9% 

57.8% 

-8.2% 

8.9% 

17.1% 

59.4% 

-0.9% 

7.3% 

Note: annual average in Million EUR (2006 prices) 

Greece has been hit hard by the crisis and has been stuck in a severe recession since 
the end of 2008. This has led to two adjustment programmes and financial assistance 
from euro area Member States and the International Monetary Fund. 

The reason for the lower public expenditure in Italy was that the  ex  ante level  was 
too  ambitious.  It  was  based  on  the  ‘Fondo  per  le  Aree  Sottoutilizzate’  investment 
programme  which  complements  EU  Structural  Funds  with  a  national  pillar  for 
regional  development  targeting  mainly  the  Mezzogiorno.  In  2008-2009  the 
investment programme had to be significantly downsized when the country faced the 
need for urgent fiscal consolidation in response to the crisis.  

The  main  underlying  reason  for  the  higher-than-expected  expenditure  in  Spain  was 
the economic recovery packages adopted in 2009 for local basic infrastructure (about 
EUR  7-8  billion)  and  sustainable  economy  (about  EUR  4-5  billion)  to  counter  the 
first  effects  of  the  crisis.  Similarly,  in  Slovakia  in  2009-2010,  the  government 
adopted  three  stimulus  packages  amounting  to  around  1%  of  GDP  to  encourage 
employment, to stimulate R&D and to support investment in energy efficiency. 

In  the  case  of  Poland,  a  combination  of  stimulus  measures  to  develop  human 
resources and basic infrastructure led to the higher-than-expected level of structural 
spending. Finally, the higher-than-expected expenditure level in Bulgaria was due to 
strong economic expansion before the crisis, with a significant increase in gross fixed 
capital formation. 

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3. 

REVISION OF THE TARGET LEVEL OF STRUCTURAL SPENDING IN 2007-2013 

During the mid-term verification, in line with the provisions of the Structural Funds’ 
regulation6,  ten  Member  States  (Czech  Republic,  Germany,  Estonia,  Greece,  Italy, 
Latvia,  Lithuania,  Hungary,  Portugal  and  the  United  Kingdom)  asked  the 
Commission  for  a  lower  level  of  public  expenditure  in  2007-2013  than  the  one 
agreed ex-ante. 

The Commission assessed these requests and in consultation with the Member States, 
decided to modify the level of structural expenditure taking into account the change 
in the economic situation since the start of the programming period. The Commission 
elaborated the following three options for a new reference level of public spending: 

(1) Maintain the share of GDP allocated to public investment: Under this option 
the new ‘reference level’ is equivalent, in terms of GDP share, to the one set at the 
ex-ante verification. The aim is to keep the level of public investment consistent with 
the  size  of  the  national  economy  (i.e.  GDP).  This  means  that  the  reduction  in  the 
‘reference level’ is acceptable if it is proportional to the decline in economic activity. 

(2) Keep the share of primary public revenue constant. A second option is to set 
the  new  reference  level  in  proportion  to  total  primary  revenue.  The  new  ‘reference 
level’  is  equivalent  to  the  one  set  at  the  ex-ante  verification  in  terms  of  the  total 
primary revenue of the General Government. The aim is to keep the level of public 
investment consistent with the financial resources of the public sector. 

(3) Take the level of public expenditure of the period 2000-2006 (2004-2006 for 
the  12  new  Member  States)  as  the  new  reference  figure.  This  option  allows 
Member States to set the new reference level in line with the public expenditure over 
the previous programming period. It addresses the concerns of those Member States 
that were too ambitious when setting their level of public expenditure for 2007-2013 
based on overly-optimistic economic forecasts. 

The  new  reference  levels  for  the  Czech  Republic,  Estonia,  Lithuania  and  Hungary 
are consistent with option (1). The new reference levels of the UK and of Latvia are 
coherent with option (2) and (3), respectively. 

In  the  remaining  four  Member  States,  the  revision  of  the  reference  level  took  into 
account a number of additional elements. In Germany, public expenditure on active 
labour market policy in the Eastern German convergence regions is decreasing faster 
than initally planned in line with a strong and unexpected decline in unemployment. 
The  Commission  accepted  this  reduction  since  labour  market  expenditure  remains 
constant on a per-capita basis. 

In the case of Greece and Portugal, the Commission ensured that the new levels of 
public  spending  to  be  maintained  in  2007-13  are  coherent  with  the  policy 
conditionality  of  the  Economic  Adjustment  Programmes  agreed  with  the  European 
Commission,  the  European  Central  Bank  and  the  International  Monetary  Fund.  In 
both  countries  these  Programmes  envisage  a  substantial  reduction  of  public 
expenditure  in  areas  eligble  for  Structural  Funds  support,  including  education, 
training, capital expenditure and spending by public firms. 

In Greece, public investment is expected to contract from 3.1% of GDP in 2007-2010 
to 2.2% per year over the period 2011-2013. In absolute terms this means an annual 
reduction of EUR 2.5 billion. 

6 

Article 15(4) of Council Regulation 1083/2006 

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In  Portugal,  public  investment  (gross  fixed  capital  formation  of  the  General 
Government) is expected to shrink from 3% of GDP in 2007-2010 to 2.1% per year 
in 2011-2013 in order to comply with the requirements of the Economic Adjustment 
Programme. This means an annual reduction of about EUR 1.8 billion. 

Italy's economy has been hit hard by the euro-area sovereign-debt crisis. In the last 
few  years,  to  counter  the  deterioration  of  the  general  government  debt,  the  Italian 
Government  has  adopted  sizable  budgetary  consolidation  measures.  They  consisted 
of  planned  savings  in  departmental expenditure  and  cuts  to  transfers  to  subnational 
governments.  The  latter  also  affected  fixed  capital  spending  which  is  expected  to 
decline  from  2.3%  to  1.5%  of  GDP  in  2007-2013.  As  a  result,  the  fiscal 
consolidation efforts seriously affected Italy’s capacity to maintain the level of public 
spending agreed for 2007-13. 

The  ex-ante  reference  level  and  the  new  one  are  presented  in  Table  2.  The  revised 
amount will constitute the new target level for verifying the respect of additionality. 
This will be checked ex post on 31 December 2016. 

TABLE 2: The new reference levels decided on the basis of Article 15 (4) 

Reference level average 2007-13 

New reference level av. 2007-2013 

Difference 

BE 

BG 

CZ 

DE 

EE 

GR 

ES 

FR 

IT 

LV 

LT 

HU 

MT 

AT 

PL 

PT 

RO 

SI 

SK 

UK 

Total 

1,128 

919 

2,549 

16,504 

1,316 

8,661 

13,973 

1,815 

20,613 

971 

755 

3,330 

107 

139 

7,940 

3,946 

4,773 

957 

876 

3,465 

94,765 

Note: annual average in Million EUR (2006 prices) 

1,128  

919  

2,271  

14,562  

1,276  

6,125  

13,973  

1,815  

13,860  

770  

598  

2,828  

107  

139  

7,940  

2,637  

4,773  

957  

876  

0.0% 

0.0% 

-10.9% 

-11.8% 

-3.0% 

-29.3% 

0.0% 

0.0% 

-32.8% 

-20.7% 

-20.8% 

-15.1% 

0.0% 

0.0% 

0.0% 

-33.2% 

0.0% 

0.0% 

0.0% 

3,072  

-11.3% 

80,624  

-14.9% 

took  place 

The new aggregate reference level for 2007-2013 (EUR 80.6 billion) is 15% lower 
than  the  one  set  at  the  ex-ante  verification  stage  (EUR  94.8  billion).  The  greatest 
reductions 
(-32.8%)  and  Greece  
(-29.3%),  followed  by  Lithuania  (-20.8%)  and  Latvia  (-20.7%).  Accordingly,  gross 
in  
fixed  capital  expenditure 
2007-2010  is  expected  to  decline  to  2.3%  of  GDP  in  2011-14,  i.e.  below  the  pre-
crisis level. 

in  EU27  which  equaled  2.7%  of  GDP 

in  Portugal 

(-33.2%), 

Italy 

It is important, to note, however, that the level of national public investment in most 
convergence  regions  remains  substantial.  On  average,  Member  States  invest  nearly 

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EUR  500  per  head  and  per  year  in  their  convergence  regions  in  2007-2013.  Public 
investment  per  capita  per  year  also  remain  significant  in  those  countries  where  the 
reference  level  has  been  reduced,  for  instance  EUR  959  in  Eastern  Germany,  EUR 
795 in the Mezzogiorno, EUR 600 in Greece, EUR 351 in Portugal and EUR 333 in 
Latvia. 

Re-establishing  sound  public  finances  through  fiscal  consolidation  is  an  important 
condition for sustaining long-term growth. But it will continue to affect the capacity 
of  Member  States  to  support  growth  in  the  medium  term  and  to  meet  their 
additionality commitments. Consequently, it is likely that the ex post verification for 
the 2011-13 period will result in further adjustments.  

4. 

CONCLUSION 

Additionality  is  a  corner  stone  of  Cohesion  Policy  ensuring  its  nature  as  an 
investment policy.  

For  the  first  time  since  additionality  verification  began,  the  EU  has  been  facing  a 
severe economic crisis. The budgetary and fiscal consequences of the crisis have led 
to a downward revision of the level of public spending in the convergence regions of 
a  number  of  Member  States.  However,  despite  the  necessary  fiscal  consolidation, 
many  countries  between  2007  and  2010  undertook  significant  per  capita  structural 
expenditure. Cohesion Policy accounts for a significant share of public investment in 
many  Member  States  and  remains  essential  for  preserving  sustained  levels  of 
investment to finance growth-oriented policies throughout Europe.  

On the basis of this report, the Commission will, in 2016, check ex post whether the 
Member  States  have  respected  the  principle  of  additionality  in  2007-2013.  At  this 
stage, the levels of structural expenditure will be analysed including the years 2011-
2013,  a  period  of  fiscal  consolidation  and  readjustment  of  expenditure  for  most 
Member States. This may require a further revision of the additionality targets. 

The mid-term verification of additionality has also revealed a number of weaknesses 
in  the  current  system.  Results  are  not  fully  comparable  across  Member  States.  The 
ad-hoc  verification  process  requires  considerable  resources  both  in  the  Member 
States and the Commission, and the verification system is not aligned with the EU’s 
new economic governance. 

To address this problem, the Commission has proposed to reform the verification of 
the additionality principle in 2014-2020. The aim is to establish a direct link between 
additionality  and  the  Stability  and  Growth  Pact  in  order  to  tackle  the  ‘trade-off’ 
between additionality and public deficit in a transparent and public framework and to 
render the verification system simpler, more comparable and less burdensome. Even 
though the range of investments under Cohesion Policy is not fully covered (notably 
regarding employment, education, training and social inclusion) the best solution is 
to use the information on public investment (Gross Fixed Capital Formation) of the 
Stability  and  Convergence  Programmes  (SCPs)  for  its  verification.  It  is  important 
that the proposed system is put in place to ensure the effectiveness and value added 
of Cohesion Policy in the next programming period. 

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