REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS My region, My Europe, Our future: The 7th report on economic, social and territorial cohesion
Date: 2017-10-09
Institutions: Directorate-General for Regional and Urban Policy, European Commission
Subjects: EU employment policy, EU regional policy, economic and social cohesion, economic development, energy policy, environmental protection, gross domestic product, investment policy, regional aid, regional disparity

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.10.2017  COM(2017) 583 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS My region, My Europe, Our future: The 7th report on economic, social and territorial cohesion {SWD(2017) 330 final}  
 
 
INTRODUCTION 

This report fulfils two requirements : 

(1)  It  reports  on  how  cohesion  has  evolved  in  EU  regions  over  the  recent  past  and 
assesses the impact on this of national policies, cohesion policy and other EU policies as 
required  by  the  Treaty  on  the  Functioning  of  the  European  Union1.  The  accompanying 
Staff  Working  Document  (SWD)  consists  of  6  chapters:  on  economic  development, 
social  inclusion,  sustainable  development,  improving  institutions,  national  policies  and 
cohesion,  and  the  impact  of  cohesion  policy.  The  impact  of  other  EU  policies  is 
considered in the first four chapters. 

(2)  It  reviews  the  measures  linking  the  effectiveness  of  the  European  Structural  and 
Investment (ESI) Funds to sound economic governance, as required by the Regulation on 
Common Provisions with regard to the Structural Funds2. This review is summarised in 
Section 9 below and set out in full in Section 5.3 of the SWD.  

1.  REGIONAL DISPARITIES ARE NARROWING AGAIN 

After the double dip recession in 2008 and 2011, the EU economy is now growing again. 
The crisis seriously affected almost all Member States. It halted the long-term reduction 
in  disparities  in  GDP  per  head  between  Member  States.  With  the  beginning  of  the 
recovery, however, these disparities have started to shrink again with growth everywhere, 
and higher rates in countries with lower levels of GDP per head. 

The first signs of narrowing disparities are also evident at regional level across the EU. 
From  2008  onwards,  regional  disparities  in  employment  and  unemployment  rates 
widened along with those in GDP per head. In 2014, disparities in employment started to 
narrow,  followed  by  disparities  in  GDP  per  head  in  2015.  Nevertheless,  many  regions 
still have a GDP per head and an employment rate below pre-crisis levels. 

Between  2000  and  2015,  GDP  per  head  in  many  less  developed  regions  converged 
towards  the  EU  average  through  faster  productivity  growth,  but  they  lost  employment. 
The  manufacturing  sector  in  these regions  has  for the most  part  performed  well, which 
has helped firms to compete both inside the Single Market and globally. To ensure that 
their  convergence  continues,  these  regions  will  have  to  move  up  the  value  chain  to 
activities  with  a  higher  skill,  technology  and  innovation  content,  especially  because 
globalisation  and  technological  change3  could  quickly  undermine  their  economic 
performance. 

(Hereinafter referred to as 'the Treaty'), see Article 175. 

1  
2  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 
laying down common provisions on the European Regional Development Fund, the European Social 
Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European 
Maritime  and  Fisheries  Fund  and  laying  down  general  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund,  the  Cohesion  Fund  and  the  European  Maritime  and 
Fisheries Fund (…) (OJ L 347, 20.12.2013, p. 320), see Article 23. 

3  European  Commission  'Reflection  Paper  on  Harnessing  Globalisation'  -  COM(2017) 240  final, 

10.5.2017. 

1 

 
 
                                                 
The regions with GDP per head well above the EU average have grown faster than the 
less developed ones through a combination of both productivity and employment growth. 
As  most  of  the  higher  GDP  per  head  regions  contain  a  national  capital  or  a  large  city, 
they  benefit  from  agglomeration  economies  while  a  bigger  labour  market  makes  for  a 
better matching of skills. The concentration of activities attracts specialised services and 
suppliers. Infrastructure investment in transport and ICT generates higher returns, while 
the spatial proximity of firms produces more innovation and knowledge spillovers. These 
benefits  can  be  extended  by  improving  links  between  large  cities  and  their  rural 
hinterland  or  between smaller cities, where  the sharing  of specialised  services  can  give 
rise to economies of scale. 

Several  of  the  regions  with  a  GDP  per  head  close  to  the  EU  average,  however,  seem 
stuck in a ‘middle-income trap’. On average, GDP per head fell between 2000 and 2015 
relative  to  the  EU  average  in  many  of  these  regions  (see  Maps  1  and  2).  Their 
manufacturing sector is smaller and weaker than in regions with both a lower and higher 
GDP  per  head.  Their  costs  tend  to  be  too  high  to  compete  with  the  former  and  their 
regional  innovation  systems  not  strong  enough  to  compete  with  the  latter.  To  improve 
their performance, multiple changes need to happen at the same time: a stronger export-
orientation, a shift into new sectors and activities, a boost to research and innovation, an 
increase  in  education  and  training  and  an  improvement  in  the  business  environment. 
Globalisation has caused substantial job losses in many of the regions, but the provision 
of training alone to workers laid-off does not ensure new job creation and the structural 
transformation needed. 

2.  EMPLOYMENT  HAS  RECOVERED,  BUT  UNEMPLOYMENT  IS  STILL  ABOVE  ITS  PRE-

CRISIS LEVEL 

In 2016, the employment rate of those aged 20-64 in the EU exceeded the pre-crisis level 
for the first time. At 71%, it is 1 percentage point higher than in 2008 but still well below 
the 75% target for 2020 set by the Europe 2020 strategy. The situation, however, varies 
markedly across the EU. 

The unemployment rate across the EU has fallen from a high of 10.9% in 2013 to 8.6% 
in 2016 and 7.7% in 2017, still above the 7% it was in 2008. In some countries, the rate 
is lower than in 2008, but in others it is still at least 5 percentage points higher. Regional 
disparities  in  unemployment  rates  had  not  narrowed  up  to  2016,  but  they  had  largely 
ceased to widen. However, in particular people under 25 still face problems getting a job 
(see Map 3). 

Although there was some move towards the Europe 2020 targets between 2010 and 2015, 
the rate of progress is not enough to achieve them by 2020. The more developed regions 
are  closest  to  achieving  them,  but  less  developed  regions  made  more  progress  towards 
them up to 2015. The transition regions (those in between) made almost no progress up 
to then and will be overtaken by the less developed regions by 2020 if the trends persist. 
Rural areas are furthest from meeting the EU targets, but they made more progress than 
the cities, towns and suburbs up to 2015.  

2 

 
Map 1 Change in GDP per head index, 2000-2008 

Map 2 Change in GDP per head index, 2009-2015 

3 

 
 
 
 
Map 3 Population aged 15-24 not in employment, education or training, 2016 

3.  SOME REGIONS HAVE RAPID POPULATION GROWTH WHILE OTHERS DEPOPULATE  

For  the  first  time,  deaths  outnumbered  births  in  the  EU  in  2015,  which  strengthens  the 
impact  of  migration  and  mobility  on  regional  population.  The  big  differences  in 
unemployment  and  income  across  the  EU  encourage  people  to  move  to  find  better  job 
opportunities and/or escape unemployment and poverty. Movements have predominantly 
been  from  the  EU-13  to  the  EU-15  and  within  the  EU-13  from  rural  regions  to  capital 
and  other  large  cities.  In  several  regions,  this  has  led  to  rapid  changes  in  population, 

4 

 
 
 
which  has  put  pressure  on  public  infrastructure  and  services  either  to  up  or  downscale 
them.  

In the recent past, the EU has also seen a rapid increase in people applying for asylum, 
reaching  1.2  million  first-time  applications  in  both  2015  and  2016.  Ensuring  that  all 
refugees or migrants legally residing in the EU are effectively integrated is important for 
cohesion  and  future  prosperity.  Improving  their  skills  to  help  them  find  a  job,  helping 
them  to  set  up  a  business,  providing  them  with  better  access  to  finance  and  tackling 
discrimination are all key achieving this. 

Map 4 Change in population in NUTS 3 regions, 2005-2015 

5 

 
 
4.  CITIES COMBINE OPPORTUNITIES WITH CHALLENGES 

Despite  the  growing  concentration  of  jobs  in  cities,  the  share  of  low  work  intensity 
households is the highest in EU-15 cities. The risk of poverty or social exclusion in the 
EU has fallen back to its pre-crisis level. In the EU-13, it is even lower than before the 
crisis, but in the EU-15 it remains higher than before in cities, towns and suburbs. This 
highlights the fact that pockets of poverty4 exist even in relatively well-off cities. 

Cities are more efficient in terms of energy and land-use5 and offer the possibility of a 
low-carbon  lifestyle.  At  the  same  time,  air  pollution  with  all  its  damaging  effects  on 
human health remains a concern in many European cities.  

Integrated  strategies  can  make  a  big  impact  in  cities.  For  example,  improving  urban 
transport  can  reduce  congestion,  make  firms  more  productive  and  connect  deprived 
neighbourhoods.  Institutes  of  higher  education  can  help  to  integrate  migrants,  promote 
innovation and provide skills missing in the local labour market.  Nature based solutions, 
such as urban green spaces can improve quality of life, air quality and bio-diversity.  

5. 

INVESTMENTS IN INNOVATION, SKILLS AND INFRASTRUCTURE ARE INSUFFICIENT 

Overall, innovation in the EU remains highly concentrated in a limited number of regions 
(see Map  5). In  north-western  Member States, good interregional connections, a highly 
skilled  labour  force  and  an  attractive  business  environment  have  allowed  neighbouring 
regions to benefit from their proximity to the regions concerned. In southern and eastern 
Member  States,  the  innovation  performance  is  weaker  and  regions  close  to  centres  of 
innovation — mainly the capitals — do not benefit from their proximity. This calls for 
policies  that  connect  firms,  research  centres  and  specialised  business  services  across 
regions. Investing more in skills could help to improve economic growth by  narrowing 
the skills gap and help to reduce poverty, youth unemployment and social exclusion. 

Public investment in the EU is still below its pre-crisis level with major gaps in some of 
the countries most affected by the crisis. More investment will be needed to complete the 
trans-European Transport network (TEN-T) and the connections to this. Basic broadband 
services are accessible to all households in the EU, but next generation access — which 
is much faster — is only available to 40% of rural residents compared to 90% of urban 
ones. 

4  European Commission 'Reflection Paper on the Social Dimension of Europe' - COM(2017) 206 final, 

26.4.2017. 

5  European Commission and UN-Habitat: The State of European cities report, 2016. 

6 

 
                                                 
Map 5 Regional innovation performance, 2017 

6.  MORE  INVESTMENTS  NEEDED  IN  ENERGY  EFFICIENCY,  RENEWABLES  AND  LOW-

CARBON TRANSPORT TO REDUCE GREENHOUSE GAS EMISSIONS 

Substantial progress has been made in limiting energy consumption and greenhouse gas 
emissions.  Most  Member  States  have  either  reached  or  are  close  to  reaching  their 
national  2020  targets  for  greenhouse  gas  emissions  and  renewable  energy.  This  in  part 
has been facilitated by the crisis reducing economic activity. The current recovery may, 
therefore, put these achievements in jeopardy. Reaching the more ambitious  EU targets 
of a 40% reduction of greenhouse gas emissions and 27% share of renewable energy by 

7 

 
 
 
2030  will  require  greater  effort.  The  recent  climate  agreement  (COP21)  also  commits 
governments to assessing every 5 years whether more ambitious targets are needed. 

To  reach  the  EU  target  for  reducing  greenhouse  gas  emissions,  there  is  a  need  to  shift 
towards  more  energy  efficient  and  cleaner  transport  and  to  make  more  efficient  use  of 
existing  transport  infrastructure.  Roads  remain  the  predominant  mode  of  transport  for 
both  passengers  and  freight  and  more  needs  to  be  done  to  increase  the  use  of  rail  and 
waterways as well as public transport6. 

Climate  change  will  have  significant  effects  on  many  EU  regions.  It  will  give  rise  to 
changes  in  the  environment  which  will  often  be  costly  to  adapt  to  and  which  will 
necessitate substantial investment to make regions more resilient to the consequences. 

The state of the environment in the EU has improved in recent years7. Nevertheless, key 
environmental objectives such as renewable energy, energy efficiency, air quality and in 
some Member States waste water treatment remain unfulfilled. 

7.  COOPERATING AND OVERCOMING OBSTACLES ACROSS EU BORDERS 

The EU has always supported territorial cooperation which has played a crucial role both 
in  mitigating  the  adverse  effects  of  internal  borders  and  in  providing  Europeans  with 
innovative  solutions  as  regards  research,  environmental  issues,  transport,  education, 
energy, healthcare, security and training. Territorial cooperation can also help countries 
and  regions  to  identify  solutions  to  common  problems  including  those  linked  to  new 
global challenges. 

Cooperation  programmes  have  contributed  to  enlarging  the  knowledge-based  economy 
across Europe by increasing R&D capacity and transfers of know-how between regions, 
stimulating investment in SMEs and diversifying local economies. They have improved 
accessibility  across  borders, 
joint  management  of  natural  resources  and 
environmental protection. 

the 

However,  despite  the  elimination  of  many  institutional  and  regulatory  barriers,  borders 
continue to represent obstacles to the  movement of goods, services, people, capital and 
ideas.  Removal  of  such  barriers  could  boost  economic  growth  and  improve  access  to 
services  in  the  regions  concerned,  but  it  would  also  help  European  economies  to  fully 
reap the benefits of integration8. 

8. 

IMPROVING  THE  QUALITY  OF  GOVERNMENT  AND  IMPLEMENTING  STRUCTURAL 
REFORMS WOULD BOOST GROWTH 

Low  quality  of  government  hinders  economic  development  and  reduces  the  impact  of 
public  investment,  including  that  co-financed  by  cohesion  policy  (see  Chapter  4). 
Government  efficiency  differs  between  Member  States.  There  are  also  significant 

6  European  Commission:  ''Assessment  of  the  progress  made  by  Member  States  in  2014  towards  the 

national energy efficiency targets for 2020' - COM(2017) 56 final, 1.2.2017. 
7  European Environmental Agency: State of the Environment and Outlook, 2015. 
8 

Politecnico di Milano (2017) Quantification of the effects of legal and administrative border obstacles 
in land border regions. 

8 

 
                                                 
disparities within a number of them (see Map 6). Improving institutions would amplify 
the impact of cohesion policy. 

Structural  reforms  that  improve  competition,  the  business  environment,  education  and 
skills9, labour markets and social protection systems can have major benefits in terms of 
productivity  and  employment  growth.  This  is  particularly  relevant  for  regions  and 
countries  where  productivity  has  barely  improved  over  the  past  decade10.  Reforms 
requiring mainly regulatory and administrative changes with no investment, however, are 
currently not linked to cohesion policy. 

According  to  the  Doing  Business  report11  there  are  marked  differences  between  how 
business-friendly Member States are. The state of the business environment can also vary 
within countries due to differences in the efficiency of local authorities. 

Open  and  transparent  public  procurement  is  essential  to  promote  development  and 
reward  the  most  efficient  firms.  However,  the  use  of  open  procedures,  the  intensity  of 
competition  and  the  speed  of  decision-making  as  well  as  the  risk  of  corruption  varies 
markedly between regions. 

To  boost  economic  development  and  the  impact  of  cohesion  policy  in  EU  regions,  the 
efficiency  and  transparency  of  public  institutions  as  well  as  the  effectiveness  of  justice 
systems need to be improved. Reforms are also needed to reduce regulatory obstacles and 
improve the functioning of the labour market. 

9  European Commission 'A new skills agenda for Europe' - COM(2016) 381 final, 2.6.2016. 
10  European Commission ‘Competitiveness in low-income and low-growth regions - The lagging regions 

report' - SWD(2017) 132 final, 10.4.2017. 

11  World Bank. 2017. Doing Business 2017: Equal Opportunity for All. 

9 

 
                                                 
Map 6 European Quality of Government Index, 2017 

9.  NATIONAL PUBLIC INVESTMENT HAS NOT YET FULLY RECOVERED 

The  EU  economy  is  gradually  recovering  from  a  protracted  period  of  crisis  which 
featured a significant reduction in investment in many Member States and regions. Total 
investment as a share of GDP fell and has hardly grown since. 

As  the  EU  economy  has  recovered,  government  debt  in  Member  States  has  started  to 
decline from a peak of 87%, but is still well above its level in 2007 of 58%. As a result of 
pressure on public finances, public investment in the EU fell from 3.4% of GDP in 2008 
to  2.7%  in  2016.  In  a  number  of  Member  States,  the  reduction  in  growth-friendly 
expenditure has  been  substantial.  Since  most  of  these  Members  States have  a  GDP  per 

10 

 
 
head  below  the  EU  average,  the  reduction  could  put  at  risk  disparities  across  the  EU 
narrowing in the future. 

Public investment was at the core of the negotiations on the current legal framework of 
the ESI Funds. One of the major objectives was to improve the consistency between the 
Funds  and  European  economic  governance  with  the  aim  of  ensuring  that  the 
effectiveness  of  expenditure  financed  by  them  is  underpinned  by  sound  economic 
policies.  

For this reason, Article 23 of Regulation (EU) No 1303/2013 provides the Commission 
with  (i)  the  power  to  request  changes  in  programmes  to  address  economic  policy 
priorities  recommended  by  the  Council  and  (ii)  the  obligation  to  suspend  the  funds  in 
cases  of  non-effective action  by  the  Member  State  to  address  an  excessive  government 
deficit or excessive macroeconomic imbalance. The SWD assesses the application of this 
article  and  explains  why  a  legislative  proposal  to  modify  it  is  at  this  stage  not  deemed 
necessary by the Commission (see Chapter 5). 

10.  COHESION POLICY’S KEY ROLE IN PUBLIC INVESTMENT REDUCED THE IMPACT OF 

CRISIS 

Cohesion  policy  is  the  EU’s  main  investment  policy,  providing  funding  equivalent  to 
8.5% of government capital  investment in the EU, a  figure which  rises to  41 % for the 
EU-13 and to over 50 % for a number of countries (see Graph 1). 

This investment adds value at the European level by contributing to: 

  The  Treaty  objective  of  reducing  disparities,  notably  in  terms  of  income  per 
head  and  living  standards  as  well  as  social  inclusion  and  employment 
opportunities. 

  European  public  goods  such  as  innovation  and  digital  infrastructure,  skills, 
addressing  climate  change,  disaster  risk  reduction,  energy  and  environmental 
transition, healthcare and social investment, public and smart transport. 

  Spillovers benefits to non-cohesion countries from the increased trade generated 

and from cross-border, transnational and inter-regional programmes. 

The strong EU added-value of cohesion policy was emphasised by many of the speakers 
at the Cohesion Forum in June 2017 who stressed that it helped less developed regions to 
catch up and all regions to invest in EU priorities and address new challenges. 

The  impact  of  Cohesion  Policy  on  the  EU  economies  is  significant  and  the  effects  of 
investments  build  up  over  the  long  term.  For  the  EU-12  countries  (i.e.  excluding 
Croatia), the QUEST model estimates that investment for the 2007-2013 period increased 
their GDP by 3% in 2015, and by a similar amount for the 2014-2020 period12 in 2023. 

12  This time for the EU-13, i.e. including Croatia. 

11 

 
                                                 
Figure 1 Cohesion policy funding as an estimated share of public investment, 2015-
2017 

Source: Eurostat and REGIO  

This has contributed to a significant convergence of GDP per head in these countries13. In 
the  EU-12,  this  increased  from  54%  of  the  EU  average  in  2006  to  67%  in  2015. 
Moreover,  the  2007-13  programmes  led  directly  to  the  creation  of  1.2  million  jobs  in 
supported enterprises. 

The  non-cohesion  countries  also  benefit  from  spillovers  generated  by  investments  in 
cohesion  countries  both  directly  (through  selling  investment  goods)  and  indirectly 
(through higher income and therefore increased trade). By 2023, 2007-2013 programmes 
are estimated to add 0.12% to GDP in non-cohesion countries, a quarter of which is due 
to spillovers from spending in cohesion countries. This effect is particularly pronounced 
for Austria and Germany because of their close trading links.  

The  2014-2020  programmes  plan  to  support  1.1  million  SMEs,  leading  directly  to  the 
creation  of  a  further  420 000  new  jobs14.  The  programmes  plan  to  help  more  than  7.4 
million unemployed people to find a job and to help another 2.2 million people within six 
months  of  completing  training  co-funded  by  the  programmes.  In  addition,  the 
programmes will help over 8.9 million people gain new qualifications.  

13  In purchasing power standards. 2006 was chosen as the baseline year, since it was the year preceding 
the 2007-2013 programmes, as well as the year preceding the accession of Bulgaria and Romania. 2015 
was the latest year for these data series at the time of publication. 

14  The  number  of  new  jobs  of  this  period  is  lower  compared  to  last  period  because  a)  innovative, 
sustainable  and  high  added  value  jobs  are  targeted  and  b)  the  number  at  the  end  of  the  period  is 
typically considerably higher than the number estimated at the start of the period. See Communication 
'Strengthening Innovation in Europe's Regions Strategies for resilient, inclusive and sustainable growth' 
- COM(2017) 376 final, 18.7.2017. 

12 

0%10%20%30%40%50%60%70%80%90%PortugalCroatiaLithuaniaPolandLatviaHungarySlovakiaBulgariaRomaniaEstoniaCzechRepublicGreeceMaltaSloveniaCyprusSpainItalyEstimated share of the European cohesion policy on public investment, 2015-2017 
 
                                                 
Significant  funding  is  being  invested  in  the  digital  economy,  where  EUR  16  billion  is 
earmarked  for  the  development  of  e-government,  ICT  services  and  applications  for 
SMEs, high speed broadband, smart grids and intelligent energy distribution systems, and 
large scale data centres. Such investment is expected to provide 14.5 million additional 
households with broadband access. 

Cohesion  policy  is  making  a  substantial  investment  in  environmental  protection  and 
energy efficiency. An extra 17 million people are planned to be connected to wastewater 
treatment facilities, and 3.3 million more to smart grids, while 870 000 households will 
be helped to reduce their energy consumption. 

Moreover, investment in transport will remove bottlenecks, reduce travel times and lead 
to more urban trams and metros. The programmes plan to renovate more than 4 600 km 
of  TEN-T  railway  lines,  construct  2 000 km  of  new  TEN-T  roads  and  construct  or 
improve 750 km of tram and metro lines. 

Cohesion  policy  is  also  making  a  substantial  investment  in  social  infrastructure.  Some 
6.8  million  children  will  gain  access  to  new  or  modernised  schools  and  childcare 
facilities and 42 million people to improved healthcare services. 

Territorial  cooperation  programmes  are  expected  to  see  240 000  people  participate  in 
cross-border mobility initiatives and 6 900 businesses and 1 400 research institutions in 
research projects. 

Several  measures  to  improve  the  quality  of  investments  have  been  introduced  for  the 
2014-2020 period: 

  Ex  ante  conditionalities,  which  are  preconditions  attached  to  the  programmes 
and  which  tackle  the  major  systemic  bottlenecks  hindering  effective  public 
investment.  These  have  led  to  the  speeding  up  of  ongoing  reforms  and  the 
initiation  of  additional  reforms.  They  have  also  strengthened  the  administrative 
capacity  to  implement  EU  rules  relating  to  public  procurement,  state  aid, 
environmental legislation and anti-discrimination15. 

  Smart specialisation, which is the most comprehensive decentralised, innovation 
and  industrial  policy  in  Europe  today.  It  brings  together  the  key  players  —  the 
research  community,  business,  higher  education,  public  authorities  and  civil 
society — to target support in line with local potential and market opportunities. 
The goal is to achieve critical mass, innovation and a move up the value chain. 
  A  stronger  focus  on  results,  which  means  that  programmes  must  set  specific 
objectives,  translated  into  clear  result  indicators  with  targets  and  benchmarks. 
Regular reports show whether the programmes are achieving their goals and key 
indicators can be tracked online on an open data platform to check their progress. 
There  is  also  a  performance  reserve  which  can  be  released  if  pre-set  targets  are 
met. 

The funding allocated to projects selected by the 2014-2020 programmes up to July 
2017,  amounts  to  39%  of  the  total  available.  Though  this  is  similar  to  the  previous 
period, implementation has been slow which suggests that simplification and capacity 
concerns need to be further addressed. It is still too early to monitor progress towards 

15  European Commission 'The Value Added of Ex ante Conditionalities in the European Structural and 

Investment Funds' - SWD(2017) 127 final, 31.3.2017. 

13 

 
                                                 
achieving  targets  which  will  only  become  apparent  once  more  projects  have  been 
completed.  

11.  COHESION POLICY AND THE FUTURE OF EUROPE 

The White Paper on the Future of Europe16 launched a debate on which direction the EU 
should  take  in  the  coming  years.  Together  with  its  5  reflection  papers,  it  covers  three 
main linked questions relating to cohesion policy:  

1)  Where should it invest?  
2)  What should the investment priorities be?  
3)  How should the policy be implemented? 

These  questions  are  summarised  below  in  relation  to  the  challenges  identified  in  the 
present report. Two important agreements  which cohesion policy needs to take account 
of  are  the  COP21  agreement  on  climate  change  and  the  UN  Sustainable  Development 
Goals for 2030. 

The Commission’s reflection paper on the future of EU17 finances poses the question of 
whether  cohesion  policy  should  invest  outside  less  developed  regions  and  cross-border 
ones.  

From its inception, cohesion policy has had a particular focus on less developed regions 
and  territorial  cooperation.  It  has  also  invested in  other  areas  that  are mentioned  in  the 
Treaty,  such  as  areas  undergoing  industrial  transition,  rural  areas  and  the  outermost 
regions. It has invested too in areas of high unemployment and deprived urban areas. For 
the last two programming periods, Cohesion Policy has covered all regions. 

The present report shows that the impact of globalisation, migration, poverty and a lack 
of  innovation,  climate  change,  energy  transition  and  pollution  is  not  limited  to  less 
developed regions. 

Future  funding  for  cross  border  cooperation  should  continue  to  focus  on  areas  of 
particular EU value added and resolve cross-border problems, such as gaps and missing 
links  in  different  policy  fields,  including  transport.  Finally,  the  pooling  of  joint  public 
services  in  neighbouring  border  regions  and  institution-building  needs  could  also  be 
taken into account18. 

The reflection paper on EU finances states, more generally, that all EU funding needs to 
focus  on  areas  where  the  highest  EU  value-added  can  be  achieved.  Social  inclusion, 
employment, skills, research and innovation, climate change, energy and environmental 
transition are identified as the areas which cohesion policy needs to focus on. In addition, 
the reflection paper highlights other areas where cohesion policy has a positive impact, 
such  as  support  for  SMEs,  healthcare  and  social  infrastructure,  transport  and  digital 

16  European Commission 'White paper on the Future of Europe Reflections and scenarios for the EU-27 

by 2025' - COM(2017) 2025 final, 1.3.2017. 

17  European  Commission  'Reflection  paper  on  the  future  of  EU  finances'  -  COM(2017) 358  final, 

28.6.2017. 

18  European Commission 'Boosting growth and cohesion in EU border regions' - COM(2017) 534 final, 

20.9.2017. 

14 

 
                                                 
infrastructure.  Last  but  not  least,  it  underlines  the  need  to  address  migration  and 
globalisation.  

Both  the  reflection  paper  and  the  present  report  argue  that  poor  institutional  quality 
reduces competitiveness, the impact of investment and economic growth. Improving the 
quality of government, implementing structural reforms and strengthening administrative 
capacity  should  be  further  emphasised.  They  stress  that  the  link  with  economic 
governance and  the  European  Semester  may  need  to  be  strengthened  to  ensure  that  the 
system  is  simpler,  transparent  and  provides  positive  incentives  to  implement  concrete 
reforms  to  foster  convergence.  This  may  require  new  approaches,  for  example  through 
better coordination of available instruments and closer involvement of the Commission. 
The  lagging  regions  initiative19  contained  several  successful  elements  which  could  be 
extended.  The  need  to  improve  institutions  is  also  demonstrated  by  calls  to  make  the 
disbursement of EU funds conditional on legislation and institutions adhering to common 
EU values.  

In  addition  to  the  issues  raised  above  about  the  territorial  coverage  and  investment 
priorities,  the  reflection  paper  considers  a  number  of  options  to  improve  the 
implementation of cohesion policy:  

 

 

 

 

 

 

A single set of rules for existing funds, would ensure more coherent investment 
and  make  it  easier  for  beneficiaries.  Coherence  could  also  be  improved  by  a 
single  rule  book  for  cohesion  policy  and  other  funding  instruments  with 
programmes  or  projects  of  the  same  type.  This  should  lead  to  stronger 
complementarity  between  cohesion  policy  and  innovation  or  infrastructure 
funding. 

The system of allocation of the funds could be revised by adding criteria linked to 
the  challenges  the  EU  faces,  from  demographics  and  unemployment  to  social 
inclusion and migration, from innovation to climate change. 

The  levels  of  national  co-financing  for  cohesion  policy  could  be  increased  to 
better align them for different countries and regions and to increase the sense of 
ownership in the policy. 

An unallocated proportion of funding could make cohesion policy more flexible 
and able to respond to new challenges more quickly.  

Faster  implementation  and  a  smoother  transition  between  programming  periods 
could  be  achieved  by  changes,  such  as  stricter  decommitment  rules,  shortening 
procedures for closing programmes and speeding up the processes for appointing 
the management authorities and for programming and making them more flexible.  

Complementarity  between  financial  instruments  could  be  enhanced.  Upstream 
coordination,  the  same  rules  and  clearer  demarcation  of  interventions  could 
ensure complementarity between the European Fund for Strategic Investment, the 
new  pan-European  Venture  Capital  Fund  and  the  loan,  guarantee  and  equity 
instruments managed by Member States under cohesion policy.  

19  European  Commission  'Competitiveness  in  low-income  and  low-growth regions: The  lagging regions 

report' - SWD(2017) 132 final, 10.4.2017. 

15 

 
                                                 
 

Finally,  the  policy  has  become  increasingly  complex  to  manage.  Therefore,  a 
much more radical approach to simplifying implementation is needed. 

Next, cohesion policy stakeholders and the general public will be invited to participate in 
the public consultation as part of the impact assessment. In May 2018, the Commission 
plans  to  adopt  the  proposal  for  the  multi-annual  financial  framework,  followed  by  the 
proposals for cohesion policy post 2020.  

16