COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL A modernised Cohesion policy: The mid-term review
Date: 2025-04-01
Institutions: Directorate-General for Regional and Urban Policy, European Commission
Subjects: Cohesion Fund, EU regional policy, adaptation to climate change, common security and defence policy, competitiveness, economic and social cohesion, energy transition, housing policy, investment promotion

EN 

  EN 

   EUROPEAN COMMISSION  Strasbourg, 1.4.2025  COM(2025) 163 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL A modernised Cohesion policy:         The mid-term review  
 
 
A modernised Cohesion policy: 
The mid-term review  

The Treaties of the EU1 establish the promotion of solidarity and cohesion, and in particular 
the reduction of disparities between the levels of development of regions, as a core objective 
of  the  Union.  The  political  and  economic  relevance  of  cohesion  policy  has  only  increased 
over time, in tune with the progress of European integration, notably the establishment of the 
Single Market. The 2010 report on the Single Market indicated that “market integration could 
be  a  win-win  process  only  when  complemented  by  action  at  EU  level  to  correct  structural 
imbalances at subnational level”. Despite strong and sustained efforts over several decades, 
the objectives of cohesion and of reducing regional disparities across Europe are today facing 
important challenges. The Letta Report highlighted the emerging perception of the negative 
distributional effects of the Single Market and that “if left unaddressed, this perception could 
erode  the  public  and  political  support  that  is  vital  to  the  continued  success  of  the  Single 
Market”.  

As  a  radically  transformed  global  environment  brings  with  it  asymmetric  effects  on  people 
and territories, the costs of adjustment may fall disproportionally on certain EU regions and 
economic sectors, thus potentially widening territorial, social and economic disparities. 

The  Political  Guidelines  2024-2029  set  out  by  President  von  der  Leyen,  drawing  on 
consultations  with  the  European  Parliament  and  the  European  Council’s Agenda  for  2024-
2029,  lay  out  the  core  new  political  priorities  for  the  Union  to  address  these  challenges, 
including: 

•  A  new  plan  for  Europe’s  sustainable  prosperity  and  competitiveness,  including  a 

Clean Industrial Deal 

•  A new era for European Defence and Security 
•  Supporting people, strengthening our societies and our social model 
•  Sustaining our quality of life: food security, water and nature 
•  Enhancing the EU’s preparedness and readiness for future crises. 

Cohesion policy has the inherent flexibility to contribute significantly to the above new 
and vital priorities, while delivering on the core objective of reducing disparities that is 
central to the European project.  

The Commission proposes, in partnership with national, regional and local authorities, to use 
the  mid-term  review  (MTR)  of  cohesion  policy  to  maximise  its  contribution  to  the  current 
and emerging political priorities of the Union and increase its impact on economic, social and 
territorial cohesion. 

To  facilitate  the  process,  the  Commission  proposes  targeted  amendments  to  the  regulatory 
framework of the cohesion policy funds2 to (i) align investment priorities with the evolving 
economic,  societal  and  geopolitical  context  as  well  as  with  our  climate  and  environment 
objectives  and  (ii)  introduce  greater  flexibility  and  incentives  to  facilitate  the  rapid 
deployment of resources and accelerate the implementation of the programmes.  

1   Article 3 of TEU and Article 174 of TFEU. 
2   Regulations (EU) 2021/1056, (EU) 2021/1058 and, adopted separately, (EU) 2021/1057. 

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1.  Cohesion Policy 2021-2027: State of Play 

Notwithstanding the launch of the negotiations on the 2021-2027 programming period early 
in  2019,  and  the  Member  States’  ambitions  to  have  programmes  ready  for  adoption  by  the 
end  of  2020,  implementation  started  effectively  in  2023,  more  than  a  year  later  than 
envisaged.  

This  was  due  to  a  combination  of  factors,  notably  the  late  adoption  of  the  regulations 
governing  the  policy  and  the  need  to  address  successive  crises,  including  the  COVID-19 
pandemic, the war against Ukraine  and the resulting energy crisis, and the priority given to 
implementing  the  instruments  of  Next  Generation  EU,  in  particular  the  Recovery  and 
Resilience Facility (RRF), which had shorter deadlines. Moreover, these factors strained the 
capacities of Member State authorities to design and quickly deliver investments.  

The  level  of  payments  under  the  2021-2027  programming  period  is  similar  to  that  at  the 
equivalent  stage  after  the  adoption  of  the  regulatory  framework  for  the  2014-2020 
programming  period3  but  there  is  less  time  left  to  fully  absorb  the  resources  of  the  current 
cycle4.  

Cohesion policy has shown its ability to deploy substantial means at regional and local level 
and was an important vehicle of the EU’s response to the COVID-19 pandemic5. It was then 
called again to respond to the fallout from Russia’s war of aggression against Ukraine (with 
the Cohesion’s Action for Refugees in Europe – CARE6 and FAST-CARE7, as well as SAFE8 
to  support  SMEs  and  vulnerable  households  facing  high  energy  costs).  When  floods  swept 
across  Europe,  increasing  in  intensity  and  size,  cohesion  policy  responded  by  proposing 
RESTORE9.  

At the same time, the fact that a significant share of the cohesion policy envelope budget has 
not  been  contracted  yet  provides  an  opportunity  to  use  the  flexibility  and  breadth  of 
cohesion policy to refocus the programmes towards the urgent new challenges facing the 

3   In  December  2024,  the  net  interim  payment  rate  was  equal  to  4.2%  of  the  total  envelope  2021-2027 
envelope, which is slightly higher than the payment rate in June 2017 (3.6%) which was when the equivalent 
time had lapsed following the adoption of the cohesion policy regulations.   

4   In the 2014-2020 MFF cycle, managing authorities had time until 3 years after the end of the cycle (i.e. 2023) 
to submit claims, while in  the 2021-2027 cycle  they have time until 2 years after the end of the cycle  (i.e. 
2029). 

5   Through the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative 

Plus, as well as REACT-EU. 

6   Regulation  (EU)  2022/562  of  the  European  Parliament  and  of  the  Council  of  6  April  2022  amending 
Regulations  (EU)  No  1303/2013  and  (EU)  No  223/2014  as  regards  Cohesion’s  Action  for  Refugees  in 
Europe (CARE) (OJ L 109, 8.4.2022, p. 1). 

7   Regulation  (EU)  2022/2039 of  the  European  Parliament  and  of  the  Council  of 19  October  2022  amending 
Regulations  (EU)  No  1303/2013  and  (EU)  2021/1060  as  regards  additional  flexibility  to  address  the 
consequences of the military aggression of the Russian Federation FAST (Flexible Assistance for Territories) 
– CARE (OJ L 275, 25.10.2022, p. 23). 

8   Supporting  Affordable  Energy  measures  under  Cohesion  policy,  as  part  of  REPowerEU.  Regulation  (EU) 
2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023  amending  Regulation  (EU) 
2021/241 as regards REPowerEU chapters in recovery and resilience plans and amending Regulations (EU) 
No 1303/2013, (EU) 2021/1060 and (EU) 2021/1755, and Directive 2003/87/EC (OJ L 63, 28.2.2023, p. 1). 
9   Regulation (EU) 2024/3236 of the European Parliament and of the Council of 19 December 2024 amending 
Regulations (EU) 2021/1057 and (EU) 2021/1058 as regards Regional Emergency Support to Reconstruction 
(RESTORE). 

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European  Union  stemming  from  an  evolving  global  environment.  Moreover,  it  allows  for 
targeted  changes  to  the  rules  of  cohesion  policy  to  enable  Member  State  authorities  to 
respond more quickly to urgent investment needs.  

It  is  thus  necessary  to  examine  all  possibilities  to  both  adjust  the  focus  and  improve  the 
effectiveness of the measures, while accelerating the implementation of the programmes. 

2.  Using the mid-term review to respond to emerging challenges 

In  recent  years,  geopolitical  dynamics  have  been  marked  by  profound  uncertainty, 
necessitating  a  fundamental  re-evaluation  of  the  EU’s  strategic  autonomy,  resilience  and 
preparedness.  These  shifts  are  unfolding  alongside  the  green,  social  and  technological 
transitions, which are rapidly reshaping the world around us. The challenges posed by these 
simultaneous  transformations  were  comprehensively  analysed  in  the  Draghi  report  on  the 
“Future of European Competitiveness”, published in September 2024. The report underscores 
the  urgent  need  to  close  the  innovation  gap,  strengthen  economic  competitiveness  with 
decarbonisation  as  growth  opportunity,  and  reduce  external  dependencies  by  diversifying 
supply  chains  and  investing  in  climate  resilience,  domestically  produced  green  energy  and 
critical sectors. 

In  response,  several  major  initiatives  have  already  been  launched  to  enhance  the  EU’s 
economic  resilience  and  strategic  autonomy.  These  include  “REPowerEU”  which  was  the 
Commission’s response to the socio-economic hardships and global energy market disruption 
caused  by  Russia’s  was  of  aggression  against  Ukraine  and  the  “Strategic  Technologies  for 
Europe Platform” (STEP), which aims to strengthen Europe’s technological leadership. These 
complement  interventions  already  underway  via  cohesion  policy  programmes  and  the 
“Recovery  and  Resilience  Facility”  (RRF),  to  support  structural  changes  in  Member  States 
and  regions  as  well  as  to  enhance  their  resilience.  Member  States  could  benefit  from 
additional  resources  to  introduce  REPowerEU  chapters  in  their  Recovery  and  Resilience 
Plans (RRPs), with the aim to boost reforms and investments that diversify the EU’s energy 
supplies, accelerate the green transition and support vulnerable households. The Preparedness 
Union  Strategy  adopted  on  26  March  2025  will  further  contribute  to  strengthen  the  EU’s 
resilience. 

As  the  EU’s  main  investment  instrument  within  the  Multiannual  Financial  Framework 
(MFF), cohesion  policy  plays a crucial role in  supporting these priorities. It  drives targeted 
investments that contribute to economic, social and territorial cohesion while at the same time 
addressing emerging challenges.  

However, the regulatory framework governing the 2021-2027 cohesion policy funds was 
drafted, negotiated and adopted in 2019-2021 and programmes were adopted before the 
series of major geopolitical  and economic events that have reshaped some of the EU’s 
strategic political priorities. 

Similarly,  the  Partnership  Agreements  and  the  national  and  regional  cohesion  policy 
programmes were developed and approved within this same timeframe, hence reflecting the 
priorities  set  at  the  time  and  based  on  economic  fundamentals  that  have  changed 
significantly  due  to  unanticipated  exogenous  shocks  such  as  the  energy  crisis  and  the 
evolving global trade and security environment.  

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Against  this  backdrop,  and  based  on  the  Political  Guidelines  2024-2029,  since  December 
2024  the  European  Commission  has  initiated  an  extensive  consultation  with  Member 
States, regions and local authorities  with a view to obtaining their input on their political 
priorities and how cohesion policy could be adjusted to better respond to them. Discussions 
were  held  both  in  Member  States  and  in  Brussels  with  representatives  of  national 
governments,  regions,  including  outermost  regions,  cities  and  non-urban  areas  such  as 
islands.  Furthermore,  the  Commission  engaged  with  the  European  Parliament  and  the 
European Committee of the Regions10. 

The consensus from these consultations was that the mid-term review can be used to (i) 
bring  the EU’s  new priorities already  within the 2021-2027  cohesion programmes  and 
(ii) accelerate investment through simplification.  

To  achieve  these  dual  objectives,  targeted  amendments  are  required  to  the  Regulations 
governing  the  cohesion  policy  funds  that  are  in  the  legislative  proposal  accompanying  this 
Communication.  These  amendments  and  the  new  opportunities  they  create  for  cohesion 
policy actors to align their programmes with the new priorities are described in the following 
sections  of  this  Communication.  The  focus  of  these  amendments  is  on  policy  areas  that 
were  highlighted  as  the  most  pressing  by  several  stakeholders  during  the  above-
mentioned consultations.  

In addition to describing the proposed regulatory amendments, the sections below highlight 
other  ways  in  which  Member  States  can  maximise  the  impact  of  their  cohesion  policy 
investments in achieving our common priorities.   

Closing the innovation gap, strengthening competitiveness and decarbonisation 

The Competitiveness Compass recently adopted by the Commission sets the direction for the 
next  five  years  to  reignite  economic  dynamism  in  Europe.  The  Compass  should  therefore 
inform the discussion on the MTR of Cohesion policy by refocusing programmes adopted in 
2022 and based on the regulatory priorities negotiated and agreed between 2019-2021 on the 
urgent challenges of today, namely closing the innovation gap, decarbonising the economy to 
increase  competitiveness  and  decrease  dependencies,  and  investing  in  new  growth  sectors, 
considering the economic fabric of regions.  

It  is  therefore timely for Member States and regions to  examine what  more can be done  to 
close  the  innovation  gap,  and  to  accelerate  the  technological  readiness,  the  projection  on 
international markets and the competitive position of SMEs. 

Global dynamics and the industrial transitions hit some regions harder than others. Regions 
that  are  overly  dependent  on  one  industry,  possibly  an  energy  intensive  industry,  whose 
innovation  ecosystem  is  tailored  and  locked-in,  face  multi-faceted  challenges  to  transition 
towards growth and prosperity.  

10  In  particular,  Executive  Vice-President  Fitto  engaged  in  an  exchange  of  views  with  the  European 
Parliament’s  Committee  of  Regional  Development  (REGI)  on  the  future  of  cohesion  policy  on 27  January 
2025 and participated in the plenary session of the Committee of the Regions on 20 February 2025. 

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For instance, automotive, construction and manufacturing industries in many regions need to 
transform, deploying low-carbon technologies, more circular processes and digitalising their 
processes to remain competitive.  

In  the  2021-2027  period,  almost  EUR  34  billion  of  Cohesion  funding  helps  develop  and 
enhance  research  and  innovation  capacities,  the  uptake  of  advanced  technologies,  and 
specialised skills.  

Similarly,  the  digitalisation  of  public  services  and  the  integration  of  Artificial  Intelligence 
(AI) in the public and private sectors are levers for competitiveness. Cohesion policy already 
provides significant support to the digital transition with projects of EUR 31 billion, such as 
the  Internet  of  Things,  edge  computing,  Artificial  Intelligence,  robotics  and  augmented 
reality, or eGovernment and eHealth.  

Finally,  access  to  secure  and  sustainable  sources  of  critical  raw  materials  and  net  zero 
technologies  is  essential  for  the  competitiveness  of  all  downstream  industries.  The 
Commission selected on 25 March 2025 the first list of Strategic projects under the Critical 
Raw Materials Act. Such projects become eligible under STEP.  

Given that the challenges for competitiveness affect all regions in the EU,  the Commission 
proposes that ERDF/CF support for projects within the scope of STEP is made possible 
in all regions, including in the more developed regions of Member States of the Union with 
GDP  per  capita  above  the  EU-27  average.  Furthermore,  the  Commission  proposes  that  the 
ceiling set at 20% of the ERDF allocation for reprogramming towards STEP is removed. The 
deadline for submitting STEP amendments is  extended  by up to two months after the entry 
into force of the regulatory changes proposed together with this Communication.  

It  is  important  to  recognise  and  strengthen  the  role  of  large  enterprises  in  regional 
development, as they steer research, innovation, knowledge, and technology transfer towards 
other  companies  in  their  value  chain.  Cohesion  policy  already  allocates  EUR  9  billion  to 
large enterprises and steady progress is visible with more than a quarter of planned resources 
allocated to individual R&I projects in large enterprises. Ten Important Projects of Common 
European  Interest  (IPCEI)  have  been  financed  so  far  across  Europe.  This  includes,  for 
instance, hydrogen projects in Estonia, Netherlands and Poland, or microelectronics projects 

5 

 
 
in Greece, Poland and Italy. The Commission supports Member States in identifying support 
for future potential IPCEI projects. 

With  the  objective  to  maximise  the  impact  of  EU  support  to  boost  growth  and 
competitiveness, and insofar Union State aid rules as set out in Articles 107 and 108 TFEU 
and  in  applicable  guidelines  are  complied  with,  the  Commission  proposes  to  expand  the 
scope of support for productive investments in enterprises other than SMEs under the 
ERDF  in  cases  where  the  financial  resources  are  used  for  (1)  supporting  investments 
contributing  to  the  objectives  of  STEP,  (2)  enhancing  the  industrial  capacities  to  foster 
defence capabilities, (3) contributing to a European defence project of common interest, or 
(4)  facilitating  industrial  decarbonisation,  such  as  for  energy  intensive  industries  or  in  the 
automotive  industry.  Investments  in  projects  directly  participating  in  an  IPCEI  as  approved 
by the Commission pursuant to Article 107(3), point (b), TFEU, in line with Communication 
C(2021) 8481 in enterprises other than SMEs may also be supported. Support for enterprises, 
other  than  SMEs,  is  also  facilitated  under  the  Just  Transition  Fund  by  not  requiring  a  gap 
analysis.  

Europe’s  competitive  strength  lies  in  its  people.  Our  human  capital  is  key  to  the  EU’s 
prosperity,  its  economic  resilience  to  increasing  our  productivity  growth,  and  to  fostering 
cohesion.  The  Union  of  Skills11  has  among  its  objective  the  provision  of up  and  reskilling 
opportunities,  inter  alia,  through  the  establishment  and  roll  out  of  Individual  Learning 
Accounts.  The  Commission  will  develop  a Skills  Guarantee pilot.  This  scheme  will  offer 
workers involved in restructuring processes, or at risk of unemployment, the opportunity to 
develop  further  their  careers  in  another  company  or  another  sector.  In  this  context  and  in 
order to facilitate industrial adjustment linked to the decarbonisation of production processes 
and  products,  the  European  Social  Fund  Plus  (ESF+),  further  to  the  already  existing 
possibilities  for  support,  is  modified  through  a  separate  legislative  proposal  to  facilitate 
the  skilling,  job  maintenance  and  job  creation  throughout  this  process  by  providing 
flexibilities to implementation. 

To  further  enhance  the  leverage  of  InvestEU,  the  EU  flagship  programme  to  boost 
investments in critical industries, and further the transfer possibilities already provided by the 
legislation, the Commission proposes to make possible the transfer of resources from the 
ERDF and the Cohesion Fund to InvestEU Member State compartments, for implementing 
a  new  InvestEU  financial  instrument  for  the  achievement  of  cohesion  policy  objectives,  as 
included in the proposal for an amendment of the InvestEU Regulation12.  

In addition, projects directly participating in an approved IPCEI may experience delays when 
Member  States  choose  to  fund  such  projects  through  cohesion  funds.  The  application 
procedure for ERDF funding, in particular the organisation of and application in calls comes 
on  top  of  the  selection  procedure  for  IPCEI  projects  (also  involving  open  calls)  that  is 
organised on national level for the selection of beneficiaries of State aid pursuant to Article 
107(3),  point  (b),  TFEU.  Therefore,  it  is  proposed  that  Member  States  are  allowed  in  line 
with State aid rules to grant support from ERDF and ESF+ to projects directly participating in 
an  IPCEI  approved  by  the  Commission  pursuant  to Article  107(3),  point  (b), TFEU  and  to 
Communication C(2021) 8481. 

11  COM(2025) 90 final. 
12  COM(2025) 82 final. 

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Besides  what  becomes  possible  through  legislative  changes,  the  Commission  urges 
Member States and regions, when reprogramming under the MTR, to: 

• 

increase  support  to  STEP,  on  top  of  EUR  6  billion  of  Cohesion  funding  already 
redirected towards investment in Europe’s strategic sectors and technologies; 

•  be more selective in granting aid to firms. When funding to  SMEs is  too  broadly 
distributed,  its  impact  can  be  diluted.  More  selectivity  allows  to  better  support  the 
modernisation  and  diversification  of  regional  economies  by  linking,  for  example, 
support to SMEs in promising industrial sectors to investments in R&I,  the adoption 
of  digital  technologies,  by  strengthening  local  clusters  and  local  parts  of  EU  value 
chains  promoting  circular  processes,  or  by  making  a  better  use  of  innovative  public 
procurement; 

• 

focus  on  breakthrough,  innovative  companies,  to  enable  the  diffusion  of 
innovation, advanced decarbonised manufacturing capacities,  clean technologies, the 
uptake  of AI,  helping  those  companies  that  contribute  to  Europe’s  strategic  sectors 
and  value  chains,  such  as  artificial  intelligence,  semiconductor  and  quantum 
technology,  advanced  materials,  decarbonisation,  biotech,  defence,  or  space 
technologies.  This  should  include  making  full  use  of  the  opportunities  for  budgetary 
transfers and to support Seals of Excellence and STEP seals awarded by the European 
Innovation Council which selects high potential startups and SMEs in these areas. 

•  enhance support to digital capacities such as AI, cloud and giga-factories to enable 
companies  to  have  access  to  cutting-edge  service  infrastructures  necessary  for 
innovation and competitiveness. 

•  recognise and strengthen the role of large enterprises in regional development, as 
they  steer  research,  innovation,  knowledge,  and  technology  transfer  towards  other 
companies in their value chain.  

•  provide  financing  to  strategic  projects  selected  under  other  EU  instruments, 
which  do  not  have  sufficient  financing  to  support  them  all  and  may  be  taken  up  by 
cohesion policy programmes when they are mature enough to ensure implementation 
within the time framework of the policy and when they serve the industrial strategy of 
the country and/or region. It is the case, for example, of the projects selected under the 
Innovation Fund, or of Important Projects of Common European Interest (IPCEI), or 
of Strategic projects under the Critical Raw Materials Act, the Critical Medicines Act 
and the Net Zero Industry Act.  Member States  and regions  should strive to simplify 
and fast-track financing  procedures under  cohesion rules  for such projects that have 
already undergone stringent assessment procedures. 

•  Support the scaling up of innovative SMEs into Small Midcaps. 

•  Ensure  that  investments  with  cohesion  funding  increase  climate  resilience,  also  in 
line  with  the  Preparedness  Union  Strategy  and  the  concept  of  preparedness  and 
security by design that should be embedded into all EU policies. 

Defence and Security  

The new geopolitical environment calls for a strong focus on the resilience of our economies, 
preparedness  and  our  defence  capabilities  as  well  as  reducing  our  dependencies.  The 
European Union must now make crucial decisions to increase its support for the development 

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of its defence capabilities and the competitiveness of the EU defence industry. This effort will 
enable the Union to address the urgency of supporting Ukraine while ensuring the continent’s 
long-term security. 

The  Commission  has  proposed  to  the  European  Council  an  immediate  response  —  the 
REARM  Europe  plan13  —  which  could  reach  at  least  EUR  800  billion  over  the  next  four 
years  for  defence  investment,  including  the  expenditure  financed  by  the  EUR  150  billion 
from  SAFE. Among  these  levers,  the  Union  budget  can  further  contribute  to  this  collective 
effort.  In  this  respect,  the  Commission  announced  that  it  would  put  forward  proposals  to 
make existing EU instruments more flexible to allow greater defence investment.  

investments  support  dual-use 

Cohesion policy is already funding security and defence-related investments contributing 
to  regional  development.  These 
technologies  and 
infrastructure to enhance military mobility, as well as the defence industry as such, through 
funding  of  military  technology  innovation,  production  capacity  enhancement,  and  supply 
chain infrastructure as well as projects to address energy supply bottlenecks and projects for 
the  supply  of  energy  infrastructure14.  Defence  industries  often  create  research  and 
development and industrial ecosystems which benefit Europe’s regions and communities. The 
territorial  focus  of  the  policy  is  particularly  relevant  to  foster  regional  synergies  and 
alignment with local strengths, responding to a very diverse European defence ecosystem.  

National,  regional  and  local  authorities  can  voluntarily  use  the  mid-term  review  of 
cohesion  policy  to  allocate  funds  within  their  current  programmes  towards  emerging 
priorities,  including  strengthening  defence  capabilities.  In  line  with  the  conclusions  of  the 
European  Council  of  6  March  2025,  to  provide  additional  possibilities  and  incentives  to 
Member States wishing to invest in their defence capabilities consistent with cohesion policy 

13  White Paper for European Defence Readiness 2030 - JOIN(2025) 120 final.  
14  Cohesion  funds  also  contribute  through  a  broad  range  of  investments  to  the  EU’s  internal  security,  thus 

promoting a comprehensive and mainstreamed approach to security and the preparedness. 

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objectives,  the  Commission  proposes  to  create  two  new  specific  objectives  within  the 
existing  scope  of  the  European  Regional  Development  Fund  (ERDF)  and  Cohesion  Fund 
support. These specific objectives also help Eastern border regions.  

-  The  first  new  objective  allows  Member  States  to  voluntarily  reprogramme,  under 
their  2021-2027  programmes  under  the  Investments  for  Jobs  and  Growth  goal, 
amounts for enhancing productive capacities in enterprises in the defence sector 
without restriction in terms of geography or size of the enterprise, while ensuring 
full respect of State aid  rules, which remain applicable. This will reinforce Europe’s 
overall defence and preparedness capacities, in line with the cohesion policy’s overall 
objectives of narrowing economic, territorial and social disparities across the EU.  

-  The second new specific objective related to defence contributes to building resilient 

defence or dual use infrastructure to foster military mobility in the Union.  

In  light  of  the  European  Council’s  call  to  accelerate  the  mobilisation  of  financing  for 
investments  in  the  Union’s  defence,  the  Commission  proposes  that  investments  in  this 
priority  which  are  supported  by  a  reallocation,  benefit  from  pre-financing  of  30%  in 
2026 and an EU co-financing rate of 100%. 

The right skills are crucial to an effective defence capacity. The Union of Skills sets out 
actions  to  address  skills  gaps  and  shortages  in  Europe;  its  Pact  for  Skills,  notably,  has 
established a large-scale partnership on the defence ecosystem15. Through skills forecasting, 
it  supports  collective  anticipation  of  the  skills  gaps  Europe  will  face,  taking  into  account 
industry skills needs and demographic skills forecasts for the next five to ten years. It aims to 
upgrade  upskilling  and  reskilling  programmes  to  make  them  more  attractive  by  better 
engaging  and  developing  talent  and  improving  the  retention  of  skilled  individuals.  In  this 
context,  the  ESF+  will  also  facilitate  the  development  of  skills  in  the  defence  industry  by 
providing further flexibilities to implementation with the addition of a third new priority 
to the ESF+ Regulation as put forward in a separate legislative proposal. The ESF+ shall 
mobilise all instruments available in support of this, including support to Vocation Education 
and Training (VET) and for the life-long learning. 

Furthermore,  the  Commission  will  propose  in  a  forthcoming  legislative  proposal  to 
amend the STEP Regulation and related legislation covering several EU programmes to 
add  a  fourth  STEP  sector  targeting  defence  that  could  be  supported  by  existing  EU 
instruments, notably Horizon Europe and the Digital Europe Programme. 

Finally,  Member  States  are  also  encouraged  to  use  the  possibility  foreseen  in  the  current 
legal  framework  of  voluntarily  transferring  resources  allocated  to  them  in  shared 
management to directly managed programmes with defence and security objectives. In 
this  context,  transfers  to  the  Connecting  Europe  Facility  (CEF)  Military  Mobility  envelope 
would  ensure  coordinated  interventions  along  the  military  mobility  corridors  highlighted  in 
the  White  Paper  on  Defence.  The  CEF  Regulation  will  be  amended  in  order  to  reflect  the 
same advantageous pre- and co-financing rates. 

15  https://pact-for-skills.ec.europa.eu/about/industrial-ecosystems-and-partnerships/aerospace-and-defence_en 

9 

 
 
 
Affordable housing 

Housing is not just a basic need – it is a fundamental right. In her Political Guidelines 2024-
2029, President von der Leyen stressed that “we urgently need to address the housing crisis 
facing  millions  of  families  and  young  people”  and  that  there  is  a  significant  and  growing 
investment  gap  in  social  and  affordable  housing.  This  is  key  for  supporting  people, 
strengthening our societies and our social model, while promoting Europe’s competitiveness 
and protecting our democracy. 

Since the end of the financial crisis, demand for housing has increased while supply of new 
and  renovated  housing  has  not  grown  at  a  similar  pace.  This  has  resulted  in  significant 
increases of both housing prices and rents in general but in a more acute way in some regions 
and cities. At the same time, wages have not increased at as much as the cost of housing. This 
uneven evolution has created a widening gap between the availability of affordable housing 
and the needs of the population16.  

While the issue varies in severity from country to country and region to region, its impact is 
widespread. High housing costs force many households to allocate a disproportionate share of 
their income to rent or mortgages, leaving less for other necessities like food, healthcare, and 
education – with a risk of falling into poverty. In 2023, one out of three households that are at 
risk  of  poverty  spent  40%  or  more  of  the  household  disposable  income  on  housing.  In 
addition, concerted actions to create more affordable and sustainable housing will also help 
people  facing  the  serious  situation  of  energy  poverty.  In  2023,  10.6%  of  Europeans  were 
unable to keep their homes adequately warm. At the same time, people need housing that is 
climate resilient. 

The  lack  of  sufficient  affordable  housing  puts  an  increasing  number  of  households  under 
severe  difficulties,  but  it  also  has  a  competitiveness  angle.  Indeed,  European  companies  in 
some areas start to have problems to attract workers because the costs of housing and living 
in those areas are disproportionately high as compared to income. 

High prices are also putting public services in certain cities under pressure due to difficulties 
in  attracting  essential  public  workers  (teachers,  nurses,  police,  etc.).  Lack  of  affordable 
housing  could  have  wider  social  effects,  such  as  preventing  young  couples  from  settling 
down  and  starting  a  family,  or  prospective  students 
lacking  affordable  student 
accommodation to choose alternative career paths. To support Member States in addressing 
these  issues,  the  Political  Guidelines  proposed  a  coordinated  approach,  to  be  set  out  in  a 
‘European  Affordable  Housing  Plan’.  The  European  Parliament  established  in  January 
2025 a Special Committee on the Housing Crisis in the European Union whose objective is to 
examine  the  root  causes  of  the  housing  crisis  and  put  forward  policy  recommendations  on 
possible  solutions  to  be  developed  at  EU  level.  These  recommendations  will  be  taken  into 
consideration when putting forward the European Affordable Housing Plan. 

As  part  of  this  overarching  initiative,  the  Commission  committed  to  enabling  Member 
States  to  double  the  planned  cohesion  policy  investments  in  affordable  housing. 
Cohesion  policy  already  contributes  to  improving  the  EU’s  housing  sector  with  EUR  7.5 
billion  allocated  in  the  2021-2027  programming  period,  notably  to  energy  and  resource 
efficient buildings and social housing, and more than half of the allocation is already awarded 

16   https://unece.org/sites/default/files/2025-02/ECE-HBP-225_Housing%20Affordability_E_web.pdf 

10 

 
 
to projects. Given the magnitude and the urgency of the needs and the high uptake of support 
by  Member  States  so  far,  the  effort  to  double  cohesion  policy’s  support  to  affordable 
housing must start with the mid-term review.  

Accordingly,  the  Commission  proposes  legislative  changes  to  address  the  growing 
investment gap by widening the possibilities for Member States to reprogramme under 
their  2021-2027  programmes  towards  investments  that  promote  access  to  affordable 
housing. Investments under the New European Bauhaus should make full use of these new 
possibilities provided.  

The  corresponding  additional  specific  objectives  related  to  affordable  housing  will  be 
included  under  three  policy  objectives  thus  allowing  flexibility  for  Member  States  and 
regions  depending  on  their  programming  structures  and  the  focus  of  the  housing 
interventions.  

To ensure an adequate incentive to Member States to increase funding to affordable housing 
within the available cohesion funds allocations, the Commission proposes that investments 
reallocated towards this priority area benefit from pre-financing of 30% in 2026 and an 
increased EU co-financing rate of 100%.  

The  Commission  services  have  also  prepared  jointly  with  the  European  Investment  Bank 
(EIB)  a  model  financial  instrument  for  combining  cohesion  policy  funding  with  resources 
from  the  EIB  and  other  international  financial  institutions,  national  promotional  and 
commercial  banks  to  support  investments  in  affordable  housing.  This  model  financial 
instrument can increase substantially the impact of cohesion policy resources on the supply of 
affordable  housing  by  leveraging  private  and  concessional  financing,  providing  a  further 
incentive to national and regional authorities to contribute to the target of doubling cohesion 
policy’s contribution to affordable housing in the 2021-2027 programming period.  

In  summary,  the  Commission  urges  Member  States  and  regions,  when  reprogramming 
under the MTR, to: 

-  double  the  funding  allocated  in  the  programmes  to  affordable  housing  in  the 

2021-2027 cycle;  

- 

leverage  such  funding  through  financial  instruments,  including  through  the 
forthcoming pan-European Investment Platform for affordable and sustainable 
housing;  

-  accelerate and streamline permitting and planning rules at local and city level to 
accelerate delivery and ensure that investments can yield results in a fast way which 
then lead to  long-term sustainable benefits, for  example  for  low-income tenants  and 
first-time buyers or accommodation for students.  

- 

support housing projects consistent with the New European Bauhaus initiative. 

Water resilience 

Water is a vital resource for the security of our food, energy and economic systems, yet both 
at  EU  and  global  level,  water  resources  are  facing  mounting  pressures  from  pollution, 
biodiversity loss and climate change, which are already taking a toll on water resources.  

11 

 
Protecting and restoring water and marine ecosystems is essential to ensure water quality and 
water  quantity.  Healthy  water  ecosystems,  green,  blue  and  grey  water  infrastructure  and 
water  management  systems  are  critical  infrastructures  and  paramount  also  for  our 
competitiveness, quality of life, security and defence capabilities, in the same way as energy 
infrastructure. Our water systems are at risk of more frequent and severe floods and droughts, 
as  well  as  malicious  attacks,  including  cyberattacks.  Lack  of  effective  water  infrastructure 
and insufficient water resilience may undermine EU’s food security and food production. The 
EU must protect these ecosystems and infrastructures by scaling up investments and consider 
water supply and infrastructure through the lens of ensuring access to and supply of water to 
our citizens and societies in all circumstances. 

The EU has established a strong legal framework for the sustainable and secure management 
of  water,  but  further  progress  in  implementation  is  essential  and  more  decisive  action  is 
urgently  needed.  Water  resilience  requires  a  shift  from  reactive  crisis  management  to 
proactive, risk-based management and increased preparedness. 

In  the  2021-2027  period,  almost  EUR  13  billion  are  being  invested  in  water  services  and 
improved wastewater collection and treatment in cohesion policy programmes. But additional 
efforts from the public and private sectors are needed to ensure sufficient progress.  

Therefore, to properly emphasise the importance and focus of investments in water resilience, 
the  Commission  proposes  to  include  a  specific  objective  related  to  promoting  secure 
access to water, sustainable water management and water resilience.  

To  ensure  an  adequate  incentive  to  Member  States  to  increase  funding  to  water  resilience 
within  the  available  cohesion  funds  allocations,  the  Commission  proposes  that  pre-
financing for such investments in this priority which are supported by a reallocation, is 
increased to 30% in 2026 and that those investments benefit from an increased EU co-
financing rate of 100%.  

Furthermore,  the  Commission  urges  Member  States  and  regions,  when  reprogramming 
under the MTR, to: 

-  build  a  water  resilient  society,  through  increased  restoration  of  water  bodies, 
deployment of nature-based solutions to reduce floods risk and increase the capacity 
of  ecosystems  to  store  water,  improved  control  of  water  abstractions  and  increased 
water  efficiency,  increased  digitisation  of  water  infrastructure  and  water  reuse, 
mitigation of drought  and desertification impacts  as well as of (cyber)security risks, 
pollution  reduction,  including  achieving  compliance  with  the  EU  water  acquis 
including the Urban Wastewater Treatment Directive.  

Energy transition 

Another area where cohesion policy investments contribute to EU priorities is climate action 
and climate transition, where the policy invests more than EUR 110 billion.  

The Commission  presented in  the Competitiveness  Compass, the Clean  Industrial Deal  and 
the Affordable Energy Action Plan a concrete path  for Europe to  regain  its competitiveness 
and secure sustainable prosperity, with decarbonisation and circularity as drivers of growth. 

12 

 
Cohesion funds can already support investments  in climate objectives, but efforts should be 
further accelerated in order to ensure that decarbonisation is a driver for growth for European 
industries and the prosperity of Europeans. In light of the significant investment needs of the 
clean  transition,  Member  States  need  to  continue  investing  in  the  transition  in  line  with 
existing climate expenditure targets. 

Sizeable  support  is  being  provided  to  projects  in  the  fields  of  energy  efficiency,  renewable 
energy, urban transport infrastructure and railway investments that will directly contribute to 
reducing  emissions  in  the  EU.  Cohesion  policy  invests,  for  example,  EUR  24  billion  in 
energy efficiency, including a sizeable share in the housing sector. 

Investments  in  clean,  affordable  energy  sources,  and  investments  in  using  energy  more 
efficiently are crucial for the transition to a decarbonised economy and for Europe’s capacity 
to  compete globally, as  the energy price weighs  heavily on industrial  costs. The 2021-2027 
programmes already plan investments for more than EUR 15 billion.  

In this vein,  and to  accelerate the decarbonisation of industry that is necessary for reaching 
the EU climate objectives, the Commission proposes to enlarge the scope of support from 
the ERDF to decarbonisation projects. This is particularly important for projects selected 
under  the  Innovation  Fund  established  by  the  Emissions  Trading  System  (ETS)  that 
have been awarded a ‘Sovereignty Seal’. 

To  properly  emphasise  the  importance  and  focus  of  investments  in  enhancing  energy 
security,  and  accelerating  the  energy  transition  and  also  to  boost  clean  mobility,  the 
Commission  proposes  to  include  a  specific  objective  related  to  promoting  energy 
interconnectors  and  related  transmission  infrastructure,  and  the  deployment  of 
recharging infrastructure from ERDF and Cohesion Fund resources. 

The Commission proposes that pre-financing for such investments in this priority which 
are supported by a reallocation is increased to 30% in 2026 and that those investments 
benefit from an increased EU co-financing rate of 100%.   

This  enhanced  investment  effort  will  enable  energy-intensive  sectors  to  access  more  stable 
and  diverse  energy  sources  in  a  less  fragmented  internal  energy  market,  buttressing  their 
the  ERDF’s  support  for 
sustainability  and  competitiveness.  Moreover,  expanding 
decarbonisation  projects  will  allow  energy-intensive  industries  to  prioritise  high-impact 
innovations  aligned  with  EU  climate  objectives.  As  regards  recharging  infrastructure,  the 
support  will  complement  the  Alternative  Fuel  Infrastructure  Facility  established  under  the 
Connecting Europe Facility. 

The Commission urges Member States and regions, when reprogramming under the MTR, 
to: 

•  scale up support to clean-tech and the transition to clean energy, to accelerate the 
roll-out  of  clean  energy  and  manufacturing.  A  key  component  in  this  is  the 
modernisation  of  electricity  grids,  interconnectors  and  energy  storage  facilities  to 
ensure a true Energy Union, as well as the diffusion of recharging points for electric 
vehicles, which is an important priority in line with the Industrial Action Plan for the 
Automotive Sector. Cohesion policy dedicates almost EUR 9 billion to clean-tech in 
the  2021-2027  programmes  and  more  than  a  third  of  this  amount  has  already  been 
contracted to projects; 

13 

 
•  support  decarbonisation  of  production  processes  and  products,  especially  for 
regions  with  energy-intensive  industries,  by  supporting  the  industrial  transition 
through  the  different  cohesion  instruments,  including  the  Just Transition  Fund. This 
concerns  in  particular  sectors  covered  by  the  EU  ETS,  but  also  sectors  like  the 
automotive sector going through significant industrial transformations;  

•  reinforce  investment  in  climate-related  disaster  preparedness,  adaptation  and 
mitigation,  also  building  on  the  RESTORE  proposal  and  on  the  build-back-better 
principle; 

•  contribute to the Clean Industrial Deal, for instance by promoting the development 
of  lead  markets  in  the  EU,  by  redirecting  resources  towards  de-risking  and 
accelerating  the  uptake  of  hydrogen  production  in  the  EU,  as  well  as  to  the 
Affordable  Energy  Action  Plan,  providing  support  to  the  completion  of  energy 
communities,  the  modernisation  of  EU’s  electricity  grids  and  interconnectors, 
supporting  the  development  of  offsite  construction  or  energy  efficiency  measures  in 
housing,  enterprises  and  public  infrastructure,  as  reducing  energy  demand  is  a  key 
contributor to affordable housing and industrial competitiveness. 

•  strengthen  support  for collective  and  citizen-driven  energy  actions,  for  example 
the  creation  of  energy  communities, through  increasing  administrative  capacities  to 
provide technical and financial advice. 

Eastern Border regions 

The Eastern border regions of the EU - bordering Russia, Belarus and Ukraine - face the 
dual  challenge  of  enhancing  security  while  revitalising  their  economies  that  have  been 
negatively impacted as a direct or indirect consequence of Russia’s war of aggression against 
Ukraine.  

With the mid-term review, cohesion policy resources of the concerned programmes can be re-
allocated to increase investments in defence and the competitiveness of the broader economy 
to boost their recovery.  

To  strengthen  incentives  to  frontload  investments  in  these  regions,  the  Commission 
proposes that the programmes covering regions on the Union’s Eastern borders benefit 
from: 

- 
- 
- 

a co-financing rate of 100%,  
a further pre-financing of 9.5% of the total programme allocation in 2026, 
and a pre-financing rate of 30% in 2026 for the amounts reallocated towards the new 
priorities  of  the  mid-term  review  (STEP,  defence,  housing,  water  resilience  and 
energy transition). 

These incentives only apply if the reallocation to those new priorities reaches at least 15% of 
the  total  programme  allocation.  This  does  not  apply  to  national  programmes  of  Member 
States that have both national and regional programmes. 

14 

 
Foster  prosperity  and  the  right  to  stay  in  all  territories,  with  tailored  policies  for  each 
place 

The changing socio-economic and geopolitical environment has very asymmetric effects on 
Member  States  and  regions,  depending  on  their  economic  specialisation,  geographic 
situation, and demographic structure.   

Many  regions  in  Europe  face  challenges  related  to  stagnant  or  declining  growth  and 
prosperity,  impacting  on  the  quality  of  local  services  and  opportunities  for  citizens.  The 
Commission  and  Member  States  together  should  strive  for  all  citizens  to  have  an  effective 
right to stay in the place they call home by ensuring availability of good jobs, and access to 
basic  public  services  such  as  education  and  health.  This  is  particularly  important  in  non-
urban  territories  (rural,  inner  and  remote  areas)  and  in  the  areas  identified  as  falling  in  a 
Talent  Development  trap17.  In  this  respect,  a  stronger  complementarity  between  cohesion 
policy programmes and the LEADER initiative under the CAP, as well as actions to promote 
sustainable tourism, would help local communities to find local solutions, as also highlighted 
in  the  recent  Vision  for  Agriculture  and  Food.  Actions  would  facilitate  sectors  beyond 
farming  and  fisheries  to  foster  other  business  and  economic  opportunities,  while  managing 
migration flows also to counter de-population. 

Urban  areas  face  their  own  challenges  linked  to  affordable  housing,  societal  integration, 
congestion and pollution. Out of total Cohesion policy, EUR 24 billion is invested in urban 
development, with cities at the forefront of decarbonisation efforts. The role of cities and the 
urban-rural  links  should  be  better  exploited,  to  drive  a  balanced  regional  development,  and 
the Commission will present an ambitious Agenda for Cities later this year. 

Recognising  the  important  role  of  cities  in  delivering  EU  objectives,  in  addressing  local 
challenges  and  in  strengthening  the  urban-rural  links  to  drive  a  balanced  regional 
development,  the  Commission  proposes  to  reinforce  the  European  Urban  Initiative  by 
introducing  the  possibility  of  transferring  resources  from  the  ERDF  to  the  European 
Urban  Initiative.  Such  amounts  would  support  actions  for  the  benefit  of  Member  States 
initiating the transfer. The Commission also proposes to establish a Seal of Excellence for 
the  European  Urban  Initiative,  thus  enabling  support  under  cohesion  policy  programmes 
for  EUI  projects  that  have  been  selected  but  could  not  receive  funding  due  to  insufficient 
resources. Member States would also have the possibility to transfer ERDF resources from 
their  programmes  under  the  Investment  for  Jobs  and  Growth  Goal  to  the  Interregional 
Innovation Investment Instrument thus having more flexibility in the use of resources. 

Islands  and  outermost  regions  face  specific  challenges  related  to  the  higher  costs  of  raw 
materials  and  energy,  in  particular  after  the  beginning  of  the  war  in  Ukraine,  on  top  of  the 
inherent  constraints  stemming  from  their  physical  disconnection  and  remoteness  from 
mainland affecting labour market, transport and mobility, access to raw materials, as well as 
energy  supply.  This  geographical  disconnection  also  renders  the  clean  transition  of  such 
territories  towards  a  climate-neutral  economy  significantly  more  difficult.  Furthermore,  the 
seasonal  employment  created  by  tourism  often  hides  a  lack  of  attractive  employment 
opportunities  for  local  people.  Finally,  a  number  of  islands  and  outermost  regions  have 

17  As 

identified 

in 

the  Communication 

on  Harnessing 

Talent 

in 

Europe’s 

regions 

https://ec.europa.eu/regional_policy/information-sources/publications/communications/2023/harnessing-
talent-in-europe-s-regions_en 

15 

 
 
suffered  extreme  natural  disasters  that  call  for  significant  investments  not  only  in  post-
disaster  recovery  but  also  in  climate  adaptation  and  resilience.  To  support  islands  and 
outermost  regions  address  these  multi-faceted  problems,  the  Commission  will  launch  a 
consultation  on  the  development  of  a  Strategy  for  Islands  and  on  an  updated  Strategy  for 
Outermost Regions. 

Therefore, the Commission urges Member States and regions, when reprogramming under 
the MTR, to: 

•  reinforce  the  role  of  cities  in  delivering  many  EU  objectives,  for  example  by 
transferring  funds  reinforcing  the  European  Urban  Initiative  or  by  increasing 
resources  dedicated  to  cities.  In  parallel,  the  Commission  will  seek  to  encourage  a 
wide-ranging debate in the context of the Urban Agenda, on how cities can contribute 
to EU priorities;  

•  materialise  their  commitments  to  contribute  to  the  New  European  Bauhaus 
(NEB), only partially achieved until now. All Member States committed to contribute 
to  NEB’s  delivery  with  their  2021-2027  programmes  and  18  Member  States 
mainstreamed  the  NEB  principle  in  selection  criteria  and  calls  for  projects.  NEB 
values  naturally  accompany  support  to  affordable  housing  and  sustainable  urban 
development, including town centre redevelopment, cultural heritage renovation, and 
green infrastructure improvement. 

3.  Stronger administrations with simpler, more flexible and more effective rules  

To ensure that cohesion policy supports the achievement of its objectives, it must leverage the 
capacity of both the public administration and the private sector in the delivery of the policies 
and  the  investments  that  cohesion  policy  funds  can  mobilise.  This  requires  actions  to 
reinforce  the  administrative  capacity  of  the  actors  involved  in  implementing  policies,  in 
broader terms, not just related to cohesion policy implementation; at the same time reducing 
administrative  burden  through  simplification  can  speed  up  and  facilitate  the  pick-up  of 
Cohesion funding. 

Reforms and administrative capacity 

Experience shows that the capacity of public administrations to manage EU funding is a pre-
condition for the efficient and effective use of those resources. A lot has been done, whether 
with the technical assistance of the cohesion programmes, the RRF and other initiatives of the 
Commission,  or  dedicated  programmes  to  reinforce  and  modernise  the  administrations 
managing the funds. 

Roadmaps  with  dedicated  action  plans  to  improve  administrative  capacity  of  the  entire 
Cohesion policy ecosystem are now being implemented or finalised in 15 Member States and 
notably by those administrations that had experienced challenges related to their capacity to 
use  EU  funding  over  time.  The  ‘Roadmaps  for  Administrative  Capacity  Building’  are 
strategic  documents  that  include  an  analysis  of  needs  and  challenges,  actions  on  how  to 
address  them,  and  responsible  actors,  aiming  at  achieving  a  more  strategic  approach  to  the 
use of resources for Technical Assistance and capacity building. The MTR is an opportunity 
to examine progress in the implementation of these strategies, to take a clear commitment to 
accelerate  it,  and  to  set  up  appropriate  flanking  measures  through  technical  assistance 
including through Technical Support Instrument. 

16 

 
In  order  to  help  public  administrations  improve  their  capacities  and  effectiveness,  it  is 
clarified  in  the  Commission  proposal  that  costs  related  to  preparatory  actions  for 
reforms  will  be  eligible  including  for  self-standing  reforms  (i.e.  not  accompanied  by 
investments).  

Accelerating investment through simplification and flexibility 

At  the  same  time,  the  Commission  is  aware  that  to  deliver  more  agile  and  better  focussed 
support, further efforts are needed to simplify the regulatory architecture.  

Simplification  and  alleviation  of  the  administrative  burden  for  beneficiaries,  and  most 
importantly  for  economic  operators  like  SMEs,  are  key  priorities  of  the  Commission.  As 
anticipated in the Competitiveness Compass, the Commission will deliver an unprecedented 
simplification effort, including under Cohesion policy. 

Together with this Communication, the Commission is tabling via the legislative proposal a 
series of simplification and flexibility measures in the following areas: 

•  Ensure  that  reallocation  of  resources  to  EU  priorities  can  happen  smoothly, 
easing the current rules requiring a significant portion of the allocations to be tied to 
specific  focus areas. The Commission  proposes to  introduce more  flexibility in the 
thematic  concentration  requirements  in  respect  of  the  allocations  to  the  new 
priorities18  and  as  regards  the  calculation  of  the  climate  contributions  across  the 
ERDF and the Cohesion Fund (while respecting the overall requirements). 

•  To  ensure  that  the  framework  for  completing  the  newly  introduced  investments  and 
for  claiming  and  reimbursing  payments  is  fit  for  purpose  and  does  not  act  as  a 
disincentive to better target and modernise the policy,  the Commission proposes to 
provide a one-off pre-financing of 5% to all programmes that reallocate at least 
15% of their programme allocations in the framework of the mid-term review to 
investments  related  to  STEP,  defence,  affordable  housing,  water  resilience  and 
energy transition; as well as to extend by one year the end date for eligibility of 
cohesion policy for these programmes19. 

•  To ease the implementation of the Just Transition Fund, restrictions regarding the 

modification and functioning of its programmes are removed:  

➢  The  Seal  of  Excellence  mechanism  will  be  applied  to  the  JTF,  allowing  a 
simplified selection procedure for projects selected under other EU instruments, 
which do not have sufficient funding.  

➢  The Commission aligns with the possibilities for projects supported under the 
Innovation  Fund,  allowing  investments  related  to  the  production,  processing, 
transport,  distribution,  storage  or  combustion  of  fossil  fuels,  provided  these 
projects were attributed the ‘Sovereignty Seal’ under the Innovation Fund. 

18  In  light  of  the  significant  investment  needs  to  achieve  the  decarbonisation  and  competitiveness  objectives, 
Member  States  need  to  continue  investing  in  projects  directly  contributing  to  the  climate  and  energy 
transition in line with the requirements set out in Article 6 of Regulation (EU) 2021/1060 which will continue 
to apply to maintain the level of climate related investments. 

19  For Eastern border regions, the incentives indicated in the specific section of this Communication continue to 

apply, and these are not cumulative to the ones indicated in this paragraph. 

17 

 
 
➢  The  modification  of  indicator  targets  in  the  Just  Transition  Plans  will  be 
feasible throughout the implementation period, while maintaining the commitment 
to climate neutrality and fossil fuel phase out.  

In addition to the above legislative simplification measures, the Commission urges Member 
States and regions, when reprogramming under the MTR, to: 

• 

• 

facilitate  the  use  of  performance-based  mechanisms,  such  as  the  rules  on  the 
Simplified Cost Options (SCOs) and the Financing Not Linked to Costs (FNLC); 

to  be  submitted  as  soon  as 

identify  by  June  2025  the  projects  under  the  RRF  that  are  at  risk  of  non-
completion  by  August  2026  and  that  could  be  considered  for  funding  from 
ERDF/CF. The possible amendments of ERDF/CF/JTF programmes under the MTR 
- 
this 
Communication  is  adopted  by  co-legislators  –  could  hence  take  account  of  these 
projects. For projects that are to be funded by ERDF/CF/JTF, Member States need to 
request  a  related  amendment  of  their  RRPs  and  include  provisions  that  ensure  that 
such projects are not subject to double funding. 

legislative  proposal  accompanying 

the 

When  implementing  the  new  possibilities  proposed  in  section  2  of  this  Communication  in 
favour of undertakings, Member States must ensure compliance with applicable Union State 
aid rules, and ensure that funding is necessary to address identified needs and limited to the 
minimum needed. In this context, the Commission has launched a public consultation on the 
scope of the Clean Industrial Deal State Aid Framework that would enlarge the possibilities 
to support SMEs and to support undertakings in assisted areas, and would also allow aid for 
large enterprises in non-assisted areas under certain conditions. 

4.  Conclusions 

In the next MFF, the status quo is not an option. The next long-term budget will have to 
address  the complexities, weaknesses and rigidities that are currently present  and maximise 
the  impact  of  every  euro  it  spends,  focusing  on  EU  priorities  and  objectives  where  the  EU 
action is mostly needed. 

Yet, that MFF will start delivering only in 2028. The Union cannot wait. It needs to act 
now, and make the best and the most out of the current funding cycle. As Cohesion policy is 
the main investment arm of the Union, it is therefore crucial to seize the opportunity of the 
mid-term review to modernise the policy so that it addresses both the existing and the new 
priorities, and accelerate its implementation to have a stronger impact as soon as possible. 

This  Communication  invites  Member  States  to  adjust  their  existing  programmes  to 
maximise  the  contribution  of  cohesion  policy  investments  to  the  Union’s  political 
priorities. 

The largest part of the investment supported by Cohesion policy remains aligned with 
the  new  EU  priorities,  whether  it  is  the  need  to  close  the  innovation  gap  and  strengthen 
competitiveness, enhance support for decarbonisation and a circular economy, or finance key 
infrastructures  and  net  zero  technologies.  But  more  can  be  done,  as  explained  in  this 
Communication.  

18 

 
 
In the areas of competitiveness and innovation, the digital and green transitions, security and 
strategic autonomy including defence, or in the provision of better tailored polices including 
essential  public  services  to  more  remote  places,  the  policy  can  be  more  selective,  more 
targeted, with more European added value.  

It is also crucial to further enhance the principles of cohesion to achieve higher impact, 
more effectiveness, through simple and flexible rules, following a place-based approach 
and tailored policies. In this endeavour, it is key to implement the principle of partnership 
with national, regional and local authorities, where regions and cities have an important role 
to play.  

The  Communication  is  accompanied  by  a  legislative  proposal  which  would  enable  the 
modernisation  of  Cohesion  policy  already  now,  for  the  current  programmes.  To  have  the 
highest  impact  on  the  effectiveness  and  relevance  of  Cohesion  policy  in  the  light  of  the 
current geopolitical circumstances, it is necessary to have the legislative proposals adopted 
as soon as possible by the co-legislators.  

The  Commission  invites  Member  States,  regions,  managing  authorities,  as  well  as  the 
European  Parliament  and  the  European  Committee  of  the  Regions  to  engage 
constructively  in  this  discussion  and  for  the  Member  States  and  the  European 
Parliament to accelerate the legislative work to ensure that the principle of Cohesion and 
Cohesion policy continue to remain at the centre of the European project. 

The Commission will consider putting forward, by the summer, guidelines on the scope for 
simplifying reporting to the Commission and on interpretation of existing provisions to 
reduce uncertainty which may be dissuading investment supported by cohesion funds. 

Member States and regions are urged to submit their  amendments to the programmes 
within  two  months  from  the  entering  into  force  of  the  revised  legislation.  The 
Commission  is  ready  to  support  national  and  regional  authorities  in  their  preparation  of 
amendments to the programme. The Commission will assess the proposed amendments and 
engage closely with the authorities to ensure that the revised programmes are adopted within 
two months from the submission of the amendments by the national or regional authorities. 
The objective is to conclude the process of reprogramming under the mid-term review 
as  soon  as  possible  and  by  the  end  of  2025,  so  that  Member  States,  regions  and  local 
authorities can start implementing the adjusted programmes as of 2026 and over the second 
half of the current MFF cycle20. 

In addition, the Commission encourages Member States to introduce a joint monitoring 
of key investments supported by cohesion funds across the national and regional levels, and 
in  close coordination with  the Commission. This  would centre on important  focus areas, to 
better  steer  and  accelerate  implementation  and  secure  their  timely  delivery.  This  should 
remain light and will be accompanied by a simplification of data transmission and reporting 
from Member States to the Commission, through a wider interconnection of national and EU 
financial reporting systems. 

20  A request for the whole additional pre-financing arising from the application of the new legislation can be 
submitted by the managing authority as soon as a modified programme reallocating amounts to new priorities 
is adopted by the Commission.  The amount of pre-financing requested  in 2025  will count against the N+3 
targets for 2025. 

19 

 
 
The  Commission  will  also  convene  by  July  2025  an  Implementation  Dialogue21  with 
stakeholders dedicated specifically to cohesion policy. This Dialogue, a new tool, will help to 
evaluate  the  progress  of  the  implementation  of  cohesion  policy  by  taking  stock  of 
achievements, identifying best practices, and recognising obstacles in existing rules and their 
implementation.  Furthermore,  the  dialogue  will  seek  specific  recommendations  to  improve 
and simplify implementation processes, ensuring stronger alignment with EU objectives.  

As  outlined  in  the  ‘The  road  to  the  next  multiannual  financial  framework’22,  shaping 
the next long-term EU budget requires a shared analysis on the underlying challenges 
and close cooperation, in view of the preparation of the Commission proposal. A strong 
and effective EU budget is a common interest. Therefore, the proposal for the next financial 
framework  will  build  on  a  broad  consultation,  with  input  at  political,  institutional  and 
stakeholder  level,  alongside  with  active  citizens’  involvement  and  consideration  of  the 
prospective membership of the EU. 

Continued  and  structured  dialogue  with  Member  States’  representatives,  at  different 
levels, across Europe will be crucial to determine ‘what’ and ‘how’ to finance our joint 
future.  Against  this  background,  the  Commission  will  engage  at  different  levels  in  an 
inclusive process as part of its preparation for the next multiannual financial framework. 

The  next  multiannual  financial  framework  must  lay  the  groundwork  for  a  stronger  and 
future-oriented Union. 

21  Defined  in  the  Communication  on  implementation  and  simplification  for  a  simpler  and  faster  Europe  - 

COM(2025) 47 final, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52025DC0047 

22  Communication from the Commission to the  European Parliament,  the European Council, the Council, the 
European  Economic  and  Social  Committee  and  the  Committee  of  the  Regions  -  The  road  to  the  next 
multiannual financial framework - COM(2025) 46 final, 11.2.2025. 

20