COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the European Fund for economic, social and territorial cohesion, agriculture and rural, maritime, prosperity and security for the period 2028-2034 and amending Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509
Date: 2025-07-16
Institutions: Directorate-General for Regional and Urban Policy, European Commission
Subjects: European security, common fisheries policy, distribution of EU funding, economic and social cohesion, economic growth, economic policy, farming sector, fund (EU), maritime transport, rural development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.7.2025  SWD(2025) 565 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT REPORT  Accompanying the document  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL       establishing the European Fund for economic, social and territorial cohesion, agriculture and rural, maritime, prosperity and security for the period 2028-2034 and amending Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509      {COM(2025) 565 final}  
 
 
Table of contents 

1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................................................... 4 

1.1.  Political context ................................................................................................. 4 
1.2.  Scope of this impact assessment ........................................................................ 5 

2. 

PROBLEM DEFINITION .................................................................................................................... 5 

2.1.  What are the problems? ..................................................................................... 6 
Problem 1: Suboptimal spending................................................................ 6 
2.1.1. 

2.1.2. 
Problem 2: High administrative burden for beneficiaries, Member States’ 
authorities and the Commission ................................................................................. 7 

2.1.3. 

Problem 3: Little capacity to quickly respond to emerging needs ............. 8 

2.1.4. 
Problem 4: Low coherence across funds, policy frameworks, reforms and 
investments ................................................................................................................. 9 

2.2.  What are the problem drivers? ........................................................................ 10 
Problem driver 1: Some programmes overlap or have a similar scope .... 10 
2.2.1. 

2.2.2. 
Problem  driver  2:  The  programming  of  EU  funds  with  nationally  pre-
allocated envelopes is too fragmented ...................................................................... 10 

2.2.3. 
Problem driver 3: Heterogeneous programme-specific rules may lead to a 
suboptimal use of resources...................................................................................... 11 

Problem driver 4: Persistent weak administrative capacity and governance 
2.2.4. 
at national, regional and local levels ........................................................................ 12 

2.2.5. 

2.2.6. 

2.2.7. 

Problem driver 5: Budgetary allocations can lead to rigidities. ............... 12 

Problem driver 6: The delivery models are too complex ......................... 14 

Problem driver 7: Low uptake of cross-border and multi-country projects
15 

2.3.  How likely is the problem to persist? .............................................................. 16 
Problem 1: Suboptimal spending.............................................................. 16 
2.3.1. 

2.3.2. 
Problem  2:  High  administrative  burden  for  beneficiaries,  Member  States 
and the Commission ................................................................................................. 16 

2.3.3. 

Problem 3: Limited capacity to quickly respond to emerging needs ....... 17 

2.3.4. 
Problem 4: Low coherence across funds, policy frameworks, reforms and 
investments ............................................................................................................... 17 
3.  WHY SHOULD THE EU ACT? ........................................................................................................ 17 

3.1.  Legal basis ....................................................................................................... 17 
3.2.  Subsidiarity: Necessity of EU action ............................................................... 18 
3.3.  Subsidiarity: Added value of EU action .......................................................... 19 
4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ............................................................................... 20 

4.1.  General objectives ........................................................................................... 21 
4.2.  Specific objectives ........................................................................................... 21 
5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .................................................................... 21 

5.1.  What is the baseline from which options are assessed? .................................. 21 

 
 
 
5.2.  Approach of this impact assessment ................................................................ 22 
5.3.  Options on the design of the plans .................................................................. 24 
Options on the delivery model ................................................................. 24 
5.3.1. 

5.3.2. 

Options on the management mode ........................................................... 25 

5.4.  Options on the scope of the plans .................................................................... 25 
5.5.  Options to support cross-border projects ......................................................... 29 

6.  ASSESSMENT OF THE OPTIONS RELATED TO THE DESIGN OF THE PLANS ..................... 29 

6.1.  What are the impacts of the options? .............................................................. 29 
Options on the delivery model ................................................................. 29 
6.1.1. 

6.1.2. 

Options on the management mode ........................................................... 33 

6.2.  How do the options compare? ......................................................................... 34 
6.3.  Preferred option for the design of the plans .................................................... 36 

7.  ASSESSMENT OF THE OPTIONS RELATED TO THE SCOPE OF THE PLANS ....................... 36 

7.1.  What are the impacts of the options? .............................................................. 36 
7.2.  How do the options compare? ......................................................................... 43 
7.3.  Options to support cross-border projects ......................................................... 46 

8.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .................................. 48 
ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 49 
LEAD DG, DECIDE PLANNING/CWP REFERENCES .................................................................. 49 
1. 
2.  ORGANISATION AND TIMING ...................................................................................................... 49 
3. 
CONSULTATION OF THE RSB....................................................................................................... 49 
EVIDENCE, SOURCES AND QUALITY ......................................................................................... 49 
4. 
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT) ................................................ 51 
ANNEX 3: WHO IS AFFECTED AND HOW? .......................................................................................... 61 
PRACTICAL IMPLICATIONS OF THE INITIATIVE..................................................................... 61 
1. 
SUMMARY OF COSTS AND BENEFITS ....................................................................................... 61 
2. 
RELEVANT SUSTAINABLE DEVELOPMENT GOALS ............................................................... 63 
3. 
ANNEX 4: COMPETITIVENESS CHECK ................................................................................................ 67 
1.  OVERVIEW OF IMPACTS ON COMPETITIVENESS ................................................................... 67 
SYNTHETIC ASSESSMENT ............................................................................................................ 67 
2. 
3. 
COMPETITIVE POSITION OF THE MOST AFFECTED SECTORS ............................................. 68 
ANNEX 5: SME CHECK [FOR SME RELEVANT AND HIGHLY RELEVANT INITIATIVES] .......... 69 
ANNEX 6: EU FUNDS WITH NATIONALLY PRE-ALLOCATED ENVELOPES ................................. 72 

ANNEX  7:  FURTHER  ANALYSIS  SUPPORTING  THE  IDENTIFICATION  OF  PROBLEM 

DRIVERS ........................................................................................................................................... 78 

ANNEX  8:  OVERVIEW  OF  THE  DELIVERY  MODEL  AND  MANAGEMENT  FUNDS  OF 

CURRENT EU FUNDS WITH NATIONALLY PRE-ALLOCATED ENVELOPES ...................... 94 
ANNEX 9: SUMMARY OF THE IMPACT OF COHESION POLICY INTERVENTIONS ..................... 95 

ANNEX 10: IMPACTS ON ADMINISTRATIVE COSTS OF THE OPTIONS ON THE SCOPE 

OF THE PLANS ................................................................................................................................. 98 

 
 
ANNEX  11:  RHOMOLO  ANALYSIS  OF  THE  THREE  OPTIONS  ON  THE  DELIVERY 

MODEL ............................................................................................................................................ 103 

 
 
 
 
 
1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

1.1. 

Political context 

As highlighted in the relevant evaluations, the complexity of the funding architecture is a 
major factor hindering the implementation of the current and previous EU programmes, 
limiting their impact. Currently, many programmes may finance the same activities, but 
without  the  same  rules  and  conditions  and  there  is  insufficient  flexibility  to  respond  to 
unforeseen needs. This leads to inefficiencies and administrative burden for beneficiaries, 
Member  States  and  the  Commission. In  addition,  the  start  of  NextGenerationEU 
repayments,  the  increasing  number  of  EU  priorities  and  the  tight  fiscal  situation  of 
inefficiencies  and 
Member  States  all  reinforce 
administrative burden.  

to  reduce 

the  need 

identified 

The  Political  Guidelines  acknowledge  that  ‘our  spending  is  spread  over  too  many 
overlapping  programmes  –  many  of  which  fund  the  same  things  but  with  different 
requirements and difficulties to combine funding effectively’. The Guidelines set out that 
the  new  long-term  budget  needs  to  be  more  focused,  simpler,  with  fewer  programmes 
and more impactful.  

In  line  with  the  Political  Guidelines,  the  College  adopted  on  11  February  2025  the 
Communication  ‘The  road  to  the  next  multiannual  financial  framework’,  which  states 
that  ‘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’. 
The  Communication  also  underlines  that  flexibility  is  key  in  guaranteeing  the  budget’s 
ability to respond to a changing reality.  

In this political context, impact assessments for programmes under the next multiannual 
financial  framework  focus  on  how  to  streamline  the  architecture  of  the  EU  budget, 
thereby  assessing  the  most  important  policy  choices  underpinning  the  legislative 
proposals for the future EU programmes. Policy aspects are considered in the analysis of 
the context, the problem definition and the objectives, which inform the choices on the 
programme  architecture.  Given  that  the  architecture  of  the  new  multiannual  financial 
framework  will  differ  significantly  from  the  current  one,  assumptions  on  the  budget  of 
each programme would be unreliable at this stage. Therefore, the impact assessment does 
not include funding scenarios and, consequently, only qualitative cost benefit analysis is 
possible.   

This  reflects  the  specificities  of  this  exercise,  clearly  acknowledged  in  Tool  #9  of  the 
Commission’s better regulation toolbox which states that ‘the special case of preparing a 
new multiannual financial framework is a unique process requiring a specific approach 
as regards scope and depth of analysis’.  

 
 
 
1.2. 

Scope of this impact assessment 

EU funds with nationally pre-allocated envelopes1 have crucially supported the delivery 
of key EU Treaty objectives – from economic, territorial and social cohesion to ensuring 
a fair standard of living for the agricultural community or creating an Area of Freedom, 
Security  and  Justice.  The  policy  challenges  that  prompted  the  creation  of  these 
instruments  remain relevant  in  today's world,  while new challenges  arising from  recent 
geopolitical  shifts  have  also  emerged.  The  next  multiannual  financial  framework  is  a 
golden  opportunity  to  facilitate  the  delivery  on  the  policy  objectives  of  the  EU  and  its 
Member States, since desired synergies and results are unlikely to materialise without the 
alignment  between  the  policy  objectives  and  financial  architecture.  In  this  light,  in  the 
Communication  on  the  road  to  the  next  MFF,  the  Commission  has  suggested  a  new 
approach  to  the  budget  with,  at  its  core,  a  plan  for  each  Member  State  linking  key 
reforms  with  investments,  and  focusing  on  our  joint  priorities,  including  promoting 
economic, social and territorial cohesion.   

Currently, there  are over 10 EU funds  that  are  predominantly  pre-allocated, accounting 
for  more  than  2/3  of  the  EU  budget,  and  which  are  assessed  as  part  of  this  impact 
assessment: 

➢  In the area of cohesion policy: Cohesion Fund, European Regional Development 

Fund, European Social Fund+, the Just Transition Fund.  

➢  In  the  area  of  common  agricultural  policy  and  fisheries:  European  Agricultural 
Guarantee  Fund,  European  Agricultural  Fund  for  Rural  Development,  European 
Maritime, Fisheries and Aquaculture Fund.  

➢  In  the  area  of  home  affairs:  the  Asylum,  Migration  and  Integration  Fund,  the 

Border Management and Visa Instrument and the Internal Security Fund.  

➢  The 2021-2027 long-term budget also introduced the Brexit Adjustment Reserve 
over and above the MFF ceilings and, with NextGenerationEU, the Recovery and 
Resilience Facility.  

➢  Outside  the  multiannual  financial  framework  or  the  EU  budget,  there  are  the 

Social Climate Fund (from 2026) and the Modernisation Fund.  

Since the transport envelope of the Connecting  Europe Facility benefits from a transfer 
from  the  Cohesion  Fund,  it  is  also  included  in  the  scope  of  this  impact  assessment, 
together with the energy strand – while the digital strand is assessed as part of the impact 
assessment  on  the  European  Competitiveness  Fund.  A  part  of  the  LIFE  programme  is 
also  included  in  this  impact  assessment,  given  that  funding  under  the  nature  and 
biodiversity strand of LIFE budget is mainly pre-allocated to Member States.  Annex 6 
provides a more detailed description of the scope of this impact assessment.  

2.  PROBLEM DEFINITION 

Figure 1 visualises the relevant problems, underlying problem drivers and consequences:  

1 Spending programmes in the EU budget can be divided between those that have nationally pre-allocated 
envelopes and those that do not. Nationally pre-allocated envelope refers to amounts in EU funds that are 
earmarked predominantly for the use by a given Member State.. 

 
 
 
Figure 1: Problem tree 

2.1.  What are the problems? 

2.1.1.  Problem 1: Suboptimal spending 

The  fragmentation  of  nationally  pre-allocated  envelopes  into  many  programmes  with 
different  rules  creates  inefficiencies  both  between  programmes  and  between  different 
layers of implementation.  

Fragmentation  increases  the  risk  of  duplication  and  overlaps  between  programmes 
targeting  the  same  policy  objectives.  This  can  even  create  substitution  effects.  For 
example, the mid-term evaluation of the Recovery and Resilience Facility (RRF) pointed 
to risks of substitution effects generated by the RRF to the detriment of cohesion policy 
concerning the 2021-27 programmes. In Member States such as Spain, Greece, Italy and 
Romania,  some  more  mature  projects  that  were  planned  under  the  CEF  or  cohesion 
instruments  (and  expected  to  be  implemented  under  2021-2027  cohesion  programmes) 
were moved into the national recovery and resilience plans (RRPs). Substitution effects 
can be partly explained by the RRF being created as an emergency instrument, after the 
comprehensive set of funding instruments for the current MFF were already agreed. On 
the other hand, duplications increase the risk of double funding, which the co-existence 
of different rules and cost-based and performance-based delivery models makes harder to 
detect2.  

Fragmentation  also  prevents  the  efficient  pooling  of  resources  to  support  EU  strategic 
investments. The work leading to the adoption of the Strategic Technologies for Europe 
Platform  (STEP)  showed  that,  while  many  EU  funds  with  nationally  pre-allocated 
envelopes and as well as directly managed ones support EU’s strategic technologies, the 
fragmentation of funding across various spending programmes following different rules 
prevents  the EU budget  from  reaching sufficient  scale because it prevents the  effective 
use  of  cumulative  or  combined  funding.  While  the  Regulation  on  the  Strategic 

2 ECA Special Report on double funding from the EU budget 

 
 
 
 
Technologies  for  Europe  Platform  (STEP)  will  improve  coordination  and  pooling  of 
resources  for  strategic  technologies  until  the  end  of  the  programming  period,  more 
consistency  is  needed  to  maximise  the  use  of  the  EU  budget  to  better  achieve  key 
political objectives, avoid funding gaps and reach all relevant beneficiaries. 

The  fragmented  implementation  of  programmes  can  also  lead  to  coordination  issues 
between  the  different  levels  (EU,  national,  regional  and  local)  involved  in  the 
implementation,  undermining  the  efficient  implementation  of  investments3.  In  cohesion 
policy  funds,  implemented  via  shared  management,  Member  States  and  the  regions  are 
responsible  for  tailoring  their  programmes  to  their  needs  and  priorities  (consistent  with 
the  legislative  framework  and  the  applicable  conditionalities).  The  shared  management 
set-up,  together  with  the  application  of  the  partnership  principle  and  multi-level 
governance,  are considered key success  factors in  ensuring the involvement of relevant 
stakeholders  and  social  partners  as  well  as  ownership 
throughout  programme 
implementation.  While  the  RRF  is  implemented  under  direct  management,  it  relies  in 
many instances on the established structures set out for shared management programmes 
and the pool of knowledge generated. Nevertheless, in some Member States, complexity 
and  lack  of  capacity  remain  major  bottlenecks  to  their  effective  involvement.  On  the 
other hand, under the direct management set-up of the RRF, ownership by regional and 
local authorities and stakeholders can be weak and their involvement in the planning and 
implementation stages of the RRPs insufficient.  

Furthermore, resources are not always allocated where they can achieve the best results, 
based on Member States and regions’ needs and EU policy priorities. For instance, while 
it is still too early to quantify impacts of the new CAP given that its implementation only 
started  in  2023,  evidence  collected  so  far  confirms  that  the  CAP  has  contributed  to 
increasing farmers’ income over time and efforts have been put to increase the fairness of 
income support towards smaller farms, however disparities with other economic sectors 
and  within  the  farming  community  still  remain  large.  This  also  means  limited 
attractiveness  of  the  sector  for  future  generations.  As  underlined  in  the  report  of  the 
Strategic Dialogue on the future of EU  agriculture, while basic income support remains 
the most funded CAP measure, it is not sufficiently targeted to socio-economic needs of 
farmers.  

Likewise,  even  though  cohesion  policy  has  successfully  contributed  to  upwards  social 
and  economic  convergence,  gaps  remain.  Regions  at  different  levels  of  development 
experience economic stagnation and some have fallen into a development trap4. Regions 
are also unevenly equipped to cope with emerging and transition challenges. In addition, 
an  overreliance  on  grants  may  lead  to  “crowding-out”  effects  and  sub-optimal 
investment.  In  a  context  of  budgetary  constraints,  financial  instruments  are  a 
complementary  form  of  support  to  grants,  whose  use  can  help  achieve  the  desired 
leveraging  effects, 
the 
effectiveness of the EU budget. However, their uptake remains limited – with only 6% of 
total resources of cohesion policy for the 2021-2027 period channelled through financial 
instruments.  There  is  therefore  a  need  to  reflect  on  how  to  optimise  the  use  of  EU 

the  private  sector  participation,  and  enhance 

including 

3  For  example,  the  preliminary  findings  of  an  audit  of  the  European  Court  of  Auditors  on  EU  budget’s 
support  to  integration  found  that  the  coordination  between  AMIF  and  ESF+  was  still  limited  –  despite 
bringing AMIF under the umbrella of CPR coordination. 
4 COM(2024) 149 final - Communication on the 9th Cohesion Report 

 
 
 
funding, tailored to the specific regional needs, and provide EU added value compared to 
national spending.   

2.1.2.  Problem  2:  High  administrative  burden  for  beneficiaries,  Member 

States’ authorities and the Commission 

Managing close to 540 EU programmes with nationally pre-allocated envelopes, subject 
to  different  rules,  delivery  models  and  management  modes,  is  complex  and  costly  for 
Member  States’  authorities,  beneficiaries  as  well  as  for  the  Commission.  National  and 
regional  authorities  need  to  manage  different  funds  in  parallel5.  This  can  create 
implementation  issues,  as  currently  experienced  by  all  EU  programmes  with  nationally 
pre-allocated envelopes (albeit to a different extent).  

The programming of EU funds in the 2021-2027 period was subject to delays, in part due 
to  complexities  and  in  part  due  to  COVID-19  and  the  creation  of  the  RRF,  where 
Member  States  chose  to  focus  their  limited  administrative  capacity  into  preparing  the 
RRPs before the other new programmes funded by nationally pre-allocated envelopes.  

The efforts to simplify in the current programming period have not always delivered the 
anticipated results. For example, while Member States have overall welcomed the move 
towards  strategic  planning  in  the  CAP,  they  find  the  CAP  Strategic  Plans  still  too 
detailed and complex to  implement and request that  their design and implementation is 
further  simplified.  Likewise,  while  the  merger  of  different  funds  under  ESF+  has 
produced  efficiency  gains  –  e.g.  streamlined  programming  and  implementation  rules, 
fewer programmes under shared management and less indicators used for monitoring and 
reporting  –,  stakeholders  consider  that  the  programming  process  and  documents  could 
still be further simplified6. The relative novelty of the RRF’s performance-based delivery 
model  also  created  some  implementation  challenges.  Some  Member  States  found  the 
definition  of  milestones  and  targets  too  detailed,  the  fixed  composition  of  groups  of 
milestones and targets for each instalment too rigid and the process for revising the plans 
too  burdensome  –  causing  implementation  delays  and  administrative  burden  for  all 
parties involved. The combination of national, Commission and ECA audits also creates 
administrative burden 7. 

Access  to  EU  funding  remains  complex.  For  example,  despite  the  progress  made  to 
simplify the delivery model of the CAP, beneficiaries still find the system too complex8. 
In  response,  the  Commission  initiated  a  simplification  exercise  during  the  current 
programming period. Overall, administrative burden is undermining the attractiveness of 
the  EU  budget  and  could  prevent  funding  from  reaching  those  beneficiaries  needing 
support the most, as they may not have the expertise and resources required to navigate a 
complex financial landscape. 

5 For example, managing authorities dealing with home affairs funds often complain that managing three 
relatively small national programmes stretches their already limited capacity. 
6 ESF+ mid-term evaluation [upcoming] 
7 RRF mid-term evaluation 
8 Study on simplification and administrative burden for farmers and other beneficiaries under the CAP | EU 
CAP Network 

 
 
 
 
2.1.3.  Problem 3: Little capacity to quickly respond to emerging needs 

While the EU budget is predominantly an investment budget, spending programmes with 
nationally pre-allocated envelopes have proven their added-value in supporting the EU’s 
response to crises such as the COVID-19 pandemic, Russia’s war of aggression against 
Ukraine,  or  climate-related  events9.  As  these  flexibilities  were  not  embedded  in  the 
design of these programmes they had to be created ad-hoc, through legislative changes to 
the Common Provisions Regulation (CPR) and fund-specific regulations10. Although this 
process  has  since  been  simplified,  certain  governance  difficulties  persist.  While 
amending  the  CAP  Strategic  Plans  or  cohesion  policy  programmes  does  not  require  a 
Council decision, the process is also considered complex by Member States.  

Additional resources to mitigate the impact of a crisis or to cater for new policy priorities 
have  often  come  from  budgets  intended  for  structural  objectives.  The  past  years  have 
therefore exposed a trade-off between the Union’s capacity to react to emergencies in a 
context of limited resources and the ability to deliver on mid-to-long-term priorities. The 
creation of reserves  such as Emergency Assistance under the Thematic Facilities in  the 
Home Affairs Funds, the CAP agricultural reserve or the flexibility reserve for cohesion 
policy  programmes  have  provided  additional  room  of  manoeuvre  to  address  crises  and 
new needs. However, as these reserves could not always cope with competing crises and 
new  priorities,  special  instruments  at  the  level  of  the  MFF  have  often  had  to  be 
mobilised. Member States and stakeholders alike call for a more flexible budget, able to 
respond to new needs and emerging priorities throughout the programming period. This 
flexibility should not put at stake the predictability of EU funding, which is needed to run 
long term investments and secure the necessary funding for key long-term priorities. 

2.1.4.  Problem 4: Low coherence across funds, policy frameworks, reforms 

and investments 

As  recognised  in  the  9th  cohesion  report,  reforms  are  needed  to  create  an  enabling 
environment, amplifying the impact of investments by addressing bottlenecks to growth 
and convergence. For example, the recent experience of the RRF has shown for example 
that SMEs have benefited from a wide spectrum of reforms, from reforms improving the 
business  environment  and  reducing  red  tape  to  reforms  supporting  the  digitalisation  of 
public  administration  –  which  have,  as  a  result,  strengthened  SME’s  place  in  the 
economy.  Likewise,  reforms  are  also  an  important  tool  to  enable  but  also  give  scale  to 
individual  projects  –  for  example,  reforms  in  public  procurement  and  permitting  are 
important  to  align  the  regulatory  framework  between  Member  States  and  hence  enable 
the  delivery  of  cross-border  projects.  Furthermore,  reforms  can  also  play  a  crucial  role 
for mainstreaming and capitalising on the results of EU funded projects, for instance in 
the area of human capital.  

For  example,  the  support  to  new  farmer  generations  promoted  under  the  CAP  is 
intrinsically linked to Member States’ responsibilities to put in place the right conditions 
to access the land market. In this context, despite the effort done by the CAP to enhance 

9 With key initiatives including the Coronavirus Response Investment Initiative (CRII), Security Action for 
Europe (SAFE) or the recent RESTORE proposal – as well as catering for new priorities (e.g. STEP). 
10 RRF mid-term evaluation 

 
 
 
generational renewal, provisions put in place at national level have not always provided 
the  right  incentives,  limiting  the  impact  of  EU  support.  Yet,  Member  States  face 
difficulties implementing much needed reforms, because they come with a high political, 
social or economic cost or because of a lack of technical know-how.  

Over the years, the concept of "reform" has been interpreted in various ways across EU 
programmes with nationally pre-allocated envelopes, leading to diverging approaches in 
how a reform is defined, if and how the EU budget is used to incentivise it and the results 
achieved  on  the  ground.  Furthermore,  scattering  funding  for  reforms  across  many 
funding  streams  may  lower  the  attractiveness  –  and  hence  effectiveness  –  of  reforms 
efforts. Overall, fragmented approaches prevent from making full use of the size of the 
EU budget as an incentive for reforms that contribute to Union objectives. 

Relying on multiple policy documents and analytical tools to inform the programming of 
investments  and  reforms  exacerbates  the  lack  of  policy  coherence  between  funding 
instruments as well as between the EU-level policies and national and regional ones. The 
European Semester has  increasingly been used  as a policy reference  framework for the 
programming of EU funding. Its link with cohesion policy funding has strengthened over 
time,  enabling  to  better  steer  the  programming  of  cohesion  policy  resources  towards 
development  challenges.  The  RRF  has  gone  even  further  by  requiring  that  the  national 
the  Semester  country-specific 
RRPs  address  all  or  a  significant  subset  of 
recommendations.  However,  other  programmes  rely  on  other  documents  to  steer 
programming11. With different timelines and institutional frameworks, the multiplicity of 
reference  documents  complicates  the  identification  of  reforms  and  investments  that 
would best contribute to the EU’s policy priorities. 

Likewise, while the conditionality mechanisms have demonstrated the power of the EU 
budget  for  triggering  changes  within  Member  States  in  the  Rule  of  Law  and  other 
fundamental  rights  areas,  the  current  legal  framework  –  with  multiple  programmes 
following  different  rules  –  is  complex  and  brings  additional  burden  for  managing 
authorities and the Commission. It could also encourage “programme-arbitrage” whereby 
Member  States  with  particular  issues  could  be  tempted  to  shift  some  investments 
between programmes to avoid being subject to a particular condition if the investment in 
question can be implemented under several programmes. Meanwhile, the Modernisation 
Fund, which is not part of the EU budget, is not subject to any rule of law requirements 
nor the Conditionality Regulation. 

2.2.  What are the problem drivers? 

Annex 7 provides further analysis supporting the identification of problem drivers. 

2.2.1.  Problem driver 1: Some programmes overlap or have a similar scope 

EU funds with nationally pre-allocated envelopes often target similar policy areas, 
territories  and  sectors.  The  policy  objectives  of  the  various  funds  can  at  times  be 
overlapping. For instance, to finance basic and advanced digital skills, beneficiaries can 

11  For  example,  the  CAP  relied  on  ad  hoc  Commission  CAP  Recommendations,  while  the  Border 
Management  and  Visa  Instrument  (BMVI)  refers  to  the  Schengen  Recommendations  adopted  by  the 
Council. 

 
 
 
receive  funding  from  six  EU  programmes  with  nationally  pre-allocated  envelopes12  as 
well as other programmes without nationally pre-allocated envelopes13. At the same time, 
better  synergies  between  EU  funds  to  deliver  on  complex  problems,  requiring 
comprehensive approaches – for instance, when it comes to enhancing the attractiveness 
of  rural  areas,  which  requires  support  to  farmers  (supported  by  the  CAP)  but  also 
investments in education, infrastructure or healthcare (mainly supported by cohesion).  

There are also synergies between the CAP, especially some interventions under the 
EAFRD,  and  cohesion  policy  when  it  comes  to  supporting  investments  in  rural 
areas (especially beyond farming or food production) as illustrated below: 

-  Non-productive  investments  on  farms  can  help  farmers  improve  environmental 
performance  by  restoring  agro-ecosystems  or  integrating  landscape  elements  in 
their fields. Cohesion policy may support similar projects, also outside the remit 
of agriculture and agricultural production i.e.  nature conservation, reforestation, 
wetland  restoration,  and  rehabilitation  of  degraded  landscapes  to  enhance 
biodiversity, tourism or other economic activities etc.  

-  The  EAFRD  can  support  on-farm  productive  investments  such  as  renewable 
energy  installations  in  farms.  Similarly,  cohesion  policy  may  support  the 
installation  of  solar  panels  including  in  small  businesses  in  rural  areas  and 
projects to reduce energy costs.  

-  The  EAFRD  also  supports  off  farm  investments  in  rural  areas,  however  these 
account  for  less  than  6%  of  the  EAFRD  budget.  As  both  the  EAFRD  and 
cohesion policy funds intervene in rural and remote areas including for support to 
smaller  businesses,  both  the  area  of  intervention,  the  target  groups  and  the 
objective for development/diversification are similar, however differences exist in 
the specific targeting of the support.  

2.2.2.  Problem  driver  2:  The  programming  of  EU  funds  with  nationally 

pre-allocated envelopes is too fragmented 

Nationally  pre-allocated  envelopes  cover  several  EU  funds,  and  while  some  multi-
programmes  exist,  each  of  the  funds  in  most  cases  involves  several  sets  of 
programmes. For instance, cohesion policy involves the ERDF, CF, ESF+ and JTF and 
is  implemented  through  27  high  level  ‘partnership  agreements’  and  more  than  300 
programmes. Overall, EU funds with nationally pre-allocated envelopes are implemented 
through close to 540 programmes – with the 27 social and climate plans to be added as of 
2026. 

Fragmentation  can  lead  to  a  sizeable  lag  between  the  preparation  of  the  financial 
framework  and  its  implementation.  In  the  2021-2027  programming  period,  the  late 
adoption  of  the  sectoral  legislation  and  the  lengthy  process  to  adopt  programming 

12 The Just Transition Fund (JTF), the European Regional Development Fund (ERDF), the European Social 
Fund+ (ESF+), the European Maritime, Fisheries and Aquaculture Fund, the European Agricultural Fund 
for Rural Development (EAFRD) and the RRF). 
13 Such as Erasmus+, the Digital Europe Programme, Horizon Europe, InvestEU and the Technical Support 
Instrument. 

 
 
 
documents  led  to  delays  in  implementation.  For  instance,  two-level  programming  in 
cohesion policy lasts on average 18-24 months. While slow programme implementation 
may result in higher outstanding commitments and higher risk of decommitments, it also 
raises issues of coherence, as policy priorities shift over time.  

The  programming  of  EU  funds  with  nationally  pre-allocated  envelopes  can  be 
further  simplified.  Member  States  have  overall  been  supportive  of  the  move  towards 
single  programming  in  the  CAP  but  call  for  further  simplification.  Many  find  the 
Strategic  Plans  too  detailed  and  have  complained  –  for  example,  the  Spanish  CAP 
Strategic  Plan  is  over  3,000  pages  long.  Furthermore,  Member  States  have  also 
complained  that  the  procedure  for  amending  them  is  too  complex.  At  the  same  time, 
there  is  a  strong  call  from  stakeholders,  including  Member  States,  for  stability  and 
predictability  and  to  build  on  the  efforts  already  made  to  adjust  to  the  current  delivery 
model. 

The  mid-term  evaluation  of  the  RRF  highlights  that  combining  reforms  and 
investments  boosts  their  effectiveness.  Appropriate  sequencing  between  reforms  and 
investments  ensures  that  prior  reforms  amplify  the  impact  of  subsequent  investments. 
Moreover,  synergies  between  reforms  and  investments  can  more  easily  be  exploited 
where their implementation is coordinated in an integrated manner. However, given the 
national  legal  framework  and  the  fast  pace  in  designing  RRPs  in  a  crisis  context,  local 
and  regional  authorities  and  relevant  stakeholders,  including  social  partners,  pointed  to 
their  insufficient  involvement  in  the  design,  implementation  and  monitoring  of  the 
included measures. 

2.2.3.  Problem  driver  3:  Heterogeneous  programme-specific  rules  may 

lead to a suboptimal use of resources 

Diverging  co-financing  rates,  eligibility  rules,  or  asymmetric  conditionality 
mechanisms  can  lead  to  a  suboptimal  use  of  nationally  pre-allocated  envelopes. 
Heterogeneous  programme-specific  rules  not  only  create  confusion,  but  also  encourage 
competition  between  programmes,  as  project  promoters  seek  out  programmes  with  the 
less  stringent  criteria  and/or  less  complex  procedures14.  While  rationalisation  and 
streamlining efforts were made in this current MFF15, challenges remain.  

Bringing  the  European  Agricultural  Guarantee  Fund  (EAGF)  and  the  EAFRD 
under the same umbrella has allowed for strategic planning and the harmonisation 
of management and control rules for both pillars of the CAP. However, removing the 
EAFRD  from  the  CPR  has  made  establishing  synergies  with  other  EU  funds  more 
challenging, for example in the context of community-led local development approaches 
in  rural  areas  (LEADER),  where  implementing  integrated,  multi-funding  approaches 
require considerable coordination efforts among administrations. 

14  It  is  not  only  at  EU  level  that  rules  are  complex:  as  shown  by  the  forthcoming  ESF+  mid-term 
evaluation,  additional  requirements  set  up  at  (sub-)  national  level  can  further  increase  the  administrative 
burden on managing authorities and beneficiaries. 
15 For instance, bringing the three home affairs funds  – AMIF, BMVI, ISF – under the CPR umbrella has 
allowed  them  to  benefit  from  the  experience  and  best  practices  of  cohesion  policy  funds  (e.g.  use  of 
simplified cost options, flexibility in programme amendments, single audit principle). However, it has also 
come with challenges as national authorities have had to set up new management and control systems for 
the Home Affairs Funds.   

 
 
 
While  the  fragmentation  of  the  EU’s  funding  landscape  has  led  to  the  need  to 
combine different funding, this remains very challenging. Several factors complicate 
the process, including varying administrative and legal requirements; legal and financial 
incompatibilities;  different  eligibility  criteria;  possibly  different  State  aid  exemptions; 
unsynchronised  timelines;  and  the  lack  of  experience  of  managing  authorities. 
Combining  funding  from  performance-  and  cost-based  instruments  is  especially 
challenging, since it is difficult to clearly demarcate the respective costs/results.  

2.2.4.  Problem  driver  4:  Persistent  weak  administrative  capacity  and 

governance at national, regional and local levels 

Institutional  capacity and the regulatory environment are a decisive factor for the 
successful implementation of EU funds. Regions with stronger institutions are usually 
better at implementing projects, managing funds and adapting to change. As emphasised 
in  the  Letta  report,  addressing  the  disparities  in  technical  and  administrative  capacities 
among the Member States is essential for ensuring a level playing field within the Single 
Market. Investments must therefore be accompanied by administrative capacity building 
and targeted reforms, including at subnational level. 

The  EU  budget  has  consistently  supported  the  strengthening  of  Member  States’ 
administrative  capacity.  It  has  done  so  through  technical  assistance  for  national  and 
regional authorities in a shared management context; technical support directly provided 
by the services of the Commission or via implementing partners; project level advisory 
support which also supports private project promoters; and technical assistance envelopes 
put at the disposal of the Commission’s services themselves for the management of the 
funds. Yet, administrative capacity at national, regional and/or local level often remains 
weak.  Recent  reports16  highlight  that  the  administrative  capacity  and  quality  of 
institutions  in  beneficiary  countries  remain  significant  barriers  to  recovery  efforts, 
national  and  regional  resilience,  and  overcoming  development  traps.  From  this 
perspective  discontinuing  support  for  the  objective  of  public  administration  reforms 
under cohesion policy in 2021-2027 created some gaps for funding. Beyond the formal 
involvement of regional and local authorities, quality data at regional/local level is also 
important 
the  programming  and 
implementation of EU funds. 

their  meaningful 

involvement 

to  ensure 

in 

Diverging  rules  across  programmes  make  it  more  difficult  for  administrations  to 
understand  and  access  the  available  technical  support.  While  the  demand-driven 
nature of technical support requests from Member States may weaken the link with EU 
priorities,  it  is  also  hard  to  follow-up  on  the  results  and  complete  reforms  efforts  –  for 
instance, in the event of changes in Member States or regions’ administrations.    

2.2.5.  Problem driver 5: Budgetary allocations can lead to rigidities. 

Different factors influence budgetary allocations and their use.  Neither geographical 
nor  thematic  concentration  requirements  are  being  assessed  in  this  Impact  Assessment. 
For example, the level of development of regions, along with other indicators, plays an 
important  role  in  the  allocation  of  cohesion  policy  funding  to  ensure  that  resources  are 
available for long-term investment and are concentrated on areas of greatest need.  

16 Including the 9th cohesion report and the RRF mid-term evaluation 

 
 
 
EU  cohesion  policy  categorises  regions  for  funding  based  mainly  on  GDP  per  capita, 
creating  three  main  categories: less-developed,  transition,  and  more-developed  regions. 
As  a  result,  most  of  the  funds  are  targeted  in  less  developed  regions  with  a  GDP  per 
capita under 75% of the EU average. This approach is broadly supported by stakeholders 
and consistent with TFEU (Article 174). 

Today,  120  million  EU  citizens  live  in  regions  with  an  average  GDP  per  capita  below 
75% of the EU average; 60 million people live in regions with GDP per capita lower than 
in 2000, and 75 million people live in regions with near-zero growth. Overall, one third 
of  the  EU  population  lives  in  places  that  have  slowly  fallen  behind.  Economic  activity 
has become increasingly concentrated in major urban areas, while many regions – often 
caught in development traps from which escaping is difficult – are stagnating.  

A system which, as currently, identifies three categories of development, is underpinned 
by the principle that funding allocated to a specific category of regions must be used for 
the  benefit  of  that  category  (with  some  flexibilities).  It  helps ensuring  an  alignment 
between EU spending for territorial cohesion and EU policies and provides a more long-
term  framework  for  public  investment,  notably  in  less  developed  regions  which  can 
incentivise private investment; also reflecting solidarity between all EU regions, which is 
especially imperative when people in those regions feel increasingly left behind.  

Other requirements are imposed via thematic concentration mechanisms. For broad 
and common challenges and EU policy priorities, these requirements have proven useful 
to  ensure  cohesion  policy  funds  contribute  to  specific  policy  objectives.  Therefore,  it 
could  be  an  important  tool  to  increase  the  leverage  of  the  EU  budget  and  align  it  with 
European  strategic  interests.  However,  concentration  requirements  can  also  lead  to 
rigidity  in programming and reduce budgetary flexibility in  times of evolving  priorities 
and emerging crises. In addition, the monitoring of the requirement and the mechanisms 
put  in  place  to  ensure  the  achievement  of  these  requirements  can  be  an  administrative 
burden.  Therefore,  there  is  a  policy  trade-off  between  flexibility  and  the  need  to  target 
specific EU policy priorities. 

Most EU funds allocate national envelopes upfront at the start of the programming 
period.  This  leaves  little  room  to  allocate  funding  to  account  for  new  needs  (without 
reopening the regulatory framework) or to those Member States achieving better results. 
Efforts have been made in the current programming  period, but the approaches diverge 
across funds17 . The lack of budgetary reserves at programme-level also limits the room 
of  manoeuvre  at  EU  level  to  address  new  needs.  In  this  regard,  the  three  Thematic 
Facilities under the home affairs funds are an innovation,  with  their multiannual  scope, 
mix  of  actions  and  because  they  combine  all  three  management  modes.  Yet,  increased 
flexibility has also been coupled with higher administrative burden in the implementation 
of the Facilities. The agricultural reserve is one of the main novelties of the current CAP 
and has empowered the Commission to provide additional support to farmers in the event 
of foreseen crises. While Member States agree on the need for better crisis management, 
many  call  for  a  stronger  focus  on  prevention  and  for  more  transparent  criteria  in  the 
management  of  the  agricultural  reserve.  The  present  system  of  geographic  allocations 

17 For example, the mid-term review of cohesion policy seeks to cater for Member States’ new needs but 
without reallocating funding across Member States, while the mid-term review of the home affairs funds 
aims to provide additional funding to Member States taking into account changes in needs 

 
 
 
across the three  categories  of regions has also  been made more  flexible  in  the 2021-27 
programming  period  by  permitting  the  transfer  of  a  share  of  resources  from  less-
developed  regions  to  other  regions,  with  one  Member  State  fully  exploiting  this 
flexibility thus far. 

The transfer of resources between CAP funds or among cohesion funds is working 
well,  but  there  is  little  appetite  for  transfers  to  other  EU  programmes.  This  is  the 
case,  even  if  these  share  similar  policy  objectives  or  concern  policy  areas  with  higher 
needs.  Finally,  although  financial  instruments  help  trigger  investments  for  revenue-
generating and cost-saving activities, their uptake remains limited. 

2.2.6.  Problem driver 6: The delivery models are too complex 

Currently,  most  EU  funds  with  nationally  pre-allocated  envelopes  reimburse 
Member States on the basis of beneficiaries´ expenditure. Relying on real costs brings 
complexity and burden for Member States’ authorities and beneficiaries and is also more 
prone  to  errors.  Furthermore,  the  focus  is  on  managing  invoices  rather  than  the  results 
achieved by EU funding. The use of simplified cost options (SCOs)18 – unit costs, lump 
sums  and  flat  rates  –  has  increased  but  remains  limited,  while  the  use  of  financing  not 
linked  to  costs  (FNLC)  remains  sporadic19.  Overall,  the  managing  authorities’  lack  of 
experience  and/or  capacity,  coupled  with  the  difficulties  in  accessing  relevant,  quality 
data to define the appropriate performance indicators, continue to be seen as bottlenecks 
in implementing simplified forms of funding. Time constraints related to implementation 
of parallel EU funds and programmes and divergent legal interpretations among relevant 
actors – from the Commission to Member States’ managing authorities or the European 
Court  of  Auditors  –  further  complicate  their  uptake. This  might  be  particularly 
challenging for regional and local authorities with limited administrative capacity, whose 
involvement  is  however  important  for  the  successful  implementation  of  funding  under 
shared  management.  Support  for  institutional  and  administrative  capacity  is  needed  to 
ensure successful implementation. 

The Common Agricultural Policy has moved closer to a performance-based delivery 
model, whereby all interventions are planned ex ante and linked to specific outputs 
and  results  indicators  in  the  CAP  Strategic  Plans.  At  the  same  time,  it  retains 
elements of a cost-based delivery model, whereby the amounts reimbursed are the actual 
costs  incurred  by  Member  States  when  reimbursing  beneficiaries.  While  the  move 
towards a more performance-based delivery model has been welcomed by stakeholders, 
it  came  with  high  transition  costs  and  did  not  always  translate  into  simplification  for 

18  Unit  costs  and  lump  sums  retain  a  link  to  costs  of  the  particular  action  because  the  amounts  are 
calculated  ex-ante  as  an  approximation  of  the  actual  costs.  However,  these  costs  are  not  checked 
afterwards, and the pre-defined amount is paid once the output is delivered. The impact on performance is 
indirect,  driven  by  simplification  –  instead  of  managing  invoices,  beneficiaries  can  focus  on  the 
implementation  of  investments.  The  ESF+  is  the  frontrunner  in  the  use  of  SCOs,  with  some  40%  of  the 
2021-2027 budget implemented through SCOs and FNLC at the time of writing. 
19 Under FNLC, payments are conditional upon the achievement of results and the fulfilment of conditions. 
Despite  the  simpler  payments  and  delivery  it  offers,  only  12  FNLC  schemes  (mostly  in  the  ESF+)  have 
been approved by the Commission in 9 Member States. 

 
 
 
Member States authorities or farmers20. To address these concerns, the Commission has 
launched  a  simplification  exercise,  with  packages  of  legislative  and  non-legislative 
initiatives adopted in 2024 and 2025. 

The  RRF  has  shown  that  a  performance-based  delivery  model  can  trigger  faster 
disbursements to Member States and ensure better value for money. The fulfilment 
of milestones linked to reforms – which do not necessarily involve costs as such – also 
impacts  the  level  and  timing  of  disbursements  that  have  been  negotiated  with  Member 
States with the view to provide a strong incentive to frontload reforms. While subsequent 
revisions  of  the  plans  made  milestones  and  targets  more  focused  and  simpler  to 
implement, and the broader use of partial suspension mechanisms improved the delivery 
model's  flexibility,  these  adjustments  came  at  a  high  resource  cost,  and  significant 
challenges  persist.  Moreover,  in  most  Member  States,  the  disbursement  from  Member 
States’  authorities  to  beneficiaries  for  measures  supported  by  the  RRF  in  the  Member 
States  is  almost  exclusively  done  based  on  expenditure  which  strongly  limits  the 
simplification for beneficiaries.  

2.2.7.  Problem  driver  7:  Low  uptake  of  cross-border  and  multi-country 

projects 

Cross-border projects 

Cross-border  projects21  and  projects  of  high  EU  relevance  are  key  to  ensuring 
connectivity  and  coherence  across  the  Union  and  to  fully  reap  the  benefits  of  the 
Single Market. While EU programmes with nationally pre-allocated envelopes support a 
considerable  amount  of  the  latter,  the  uptake  of  genuine  cross-border  projects  remains 
low.  While  cross-border  projects  create  significant  positive  externalities  and  foster 
solidarity, they also  entail specific  challenges for project promoters, due to their multi-
jurisdictional nature and coordination issues. The unequal distribution of project benefits 
and project costs between the different Member States concerned makes it more difficult 
to finance these projects from national funding sources alone.  

The resulting market failures, whereby positive externalities of cross-border investments 
are not considered in public or private investment decisions, calls for an intervention at 
the  EU  level.  To  overcome  this,  the  directly  managed  CEF  programme  focuses  on 
projects  which  bring  large  benefits  to  the  EU  as  a  whole,  but  whose  commercial  cost-
benefit ratio tends to be low or whose costs and benefits are unevenly distributed across 
borders.  One  key  success  of  the  CEF  has  been  the  creation  of  integrated  management 
structures between different Member States (from regional groups to joint ventures or a 
bilateral  legal  framework)  to  facilitate  coordination  in  the  implementation  of  complex 
cross-border projects.  

20  For  instance,  Member  States  still  need  to  ensure  the  regularity  and  legality  of  EU  funds  spending  at 
beneficiary  level.  The  challenge  has  been  even  greater  for  regionalised  Member  States  who  needed  to 
redefine the cooperation mechanisms between the regional and national levels. 
21 Cross-border projects are those aiming to link two or more Member States’ infrastructure (for instance, a 
railway link, an electricity interconnector, a terrestrial or submarine cable or IT systems). 

 
 
 
Multi-country projects 

“Multi-country  projects”  aim  to  foster  cross-border  cooperation  between  Member 
States’  authorities  or  project  promoters  from  different  countries.  They  serve  to 
jointly  tackle  common  challenges  and  find  shared  solutions  in  fields  such  as  health, 
environment,  research,  education,  transport,  sustainable  energy  and  more.  For  instance, 
HOME  funds  promote  cross-border  cooperation  through  transnational  cooperation 
networks for visa processing and joint operations in relation to terrorism and organised 
crime.  Multi-country  projects  also  support  environmental  protection,  as  they  often 
involve  the  conservation  of  natural  areas  that  span  national  borders  (e.g.  transnational 
species populations or managing Natura 2000 sites).  

Important  Projects  of  Common  European  Interest  (IPCEIs)  are  of  a  strategic 
importance for the Union and thus bring a very high EU added value. The mid-term 
evaluation  of the RRF showed that the Facility helped increase the number of Member 
States  participating  in  IPCEI  projects  (in  particular  for  hydrogen,  microelectronics  and 
connectivity),  including  several  in  Central  and  Eastern  Europe,  which  would  not  have 
participated otherwise. However, there is still scope for improvement to ensure coherence 
in procedures when IPCEI projects are funded via shared management funds and to avoid 
duplication  in  assessment  and  delays  in  procedures  and  for  the  Commission  to  play  a 
more proactive coordination role22.  

Interreg 

Interreg helps overcome border obstacles and capitalise on border opportunities, such as 
the establishment and  improvement of public transport links and services or the setting 
up  of  joint  facilities  (e.g.  waste  management  plants,  healthcare  infrastructure).  In 
addition,  Interreg plays  a crucial role in  building trust  and bridges with  third countries, 
such  as  Ukraine,  Moldova,  Georgia  and  those  in  the  Western  Balkans,  fostering 
cooperation  and  cohesion  beyond  EU  borders.  However,  several  challenges  need  to  be 
addressed  –  including  the  limited  integration  within  national/regional  programmes, 
administrative  and  legal  barriers,  and  the  need  to  tailor  approaches  to  diverse  border 
contexts  and  policy  frameworks.  Evaluating  project  impact  and  ensuring  long-term 
sustainability are also significant hurdles, particularly after funding ends. 

2.3.  How likely is the problem to persist? 

2.3.1.  Problem 1: Suboptimal spending 

Without  changes  to  the  EU-level  framework,  the  fragmentation  of  nationally  pre-
allocated  envelopes  is  likely  to  continue  to  lead  to  suboptimal  spending  as  described 
above.  In  the  context  of  national  fiscal  consolidation,  little  progress  on  new  own 
resources for the EU budget and the repayment of the NextGenerationEU borrowing to 
start  as  of  2028,  the  negative  impact  will  even  be  higher.  The  policy  challenges  of  the 
past will remain relevant. At the same time, the Letta and Draghi reports duly underline 
that  new  and  emerging  policy  challenges  linked  to  competitiveness,  reindustrialisation, 
demographic  decline,  defence,  climate  adaptation  and  digitalisation,  require  significant 

22 Through the establishment of the Joint European Forum for IPCEI (JEF-IPCEI) in October 2023 and the 
newly initiated IPCEI Design Support Hub. 

 
 
 
investments. These various factors increase the risk of fragmentation and overlaps if left 
unaddressed, and hence will make the optimal use of every euro spent by the EU budget 
all  the  more  important  to  make  sure  it  is  able  to  support  the  Union’s  policy  priorities 
coherently.  

2.3.2.  Problem  2:  High  administrative  burden  for  beneficiaries,  Member 

States and the Commission 

Without  changes  to  the  EU-level  framework,  the  implementation  of  EU  funds  with 
nationally  pre-allocated  envelopes  is  likely  to  continue  incurring  delays  and  slow 
disbursements  at  the  beginning  of  the  implementation  period.  As  a  result,  there  will 
continue  to  be  a  time  lapse  between  the  moment  EU  funding  is  needed  and  when  it  is 
eventually  disbursed.  Managing  multiple  programmes  in  parallel  will  also  continue 
stretching  Member  States  and  regions’  administrative  resources.  The  perspective  of 
enlargement  will  make  administrative  capacity  all  the  more  important,  with  (potential) 
candidate countries  and potential candidate countries having  to  significantly boost their 
capability to implement EU policies and manage EU funds. 

Lastly,  the  perceived  complexity  of  EU  funds  could  reduce  the  accessibility  and  the 
attractiveness  of  EU  funding  for  beneficiaries  in  the  future.  While  the  consequences  of 
the latter cannot be determined at this stage, also due to the major role played by national 
implementing  rules,  one  cannot  discard  that  it  could  lead  to  new  waves  of  protests  in 
some sectors such as agriculture, despite the simplification actions already implemented 
in  the  current  period,  or  encourage  EU  companies,  SMEs  and  others  to  seek  funding 
elsewhere, including outside of the EU.  

2.3.3.  Problem 3: Limited capacity to quickly respond to emerging needs 

As outlined in the Niinisto report23, the confluence of different risks leads to an increased 
probability  of  major  cross-sectoral  crises,  shocks  and  disruptions  occurring 
simultaneously in the years ahead. Without changes to the EU-level framework, the EU 
budget  will  not  be  equipped  to  quickly  and  efficiently  address  these  challenges. 
Furthermore,  the  continued  use  of  the  ad-hoc  mechanisms  developed  in  the  current 
programming  period  heightens  the  risk  of  undermining  the  delivery  of  EU’s  policy 
objectives in the longer term. Overall, the lack of flexibility could reduce the relevance 
and added value of the Union’s budget for Member States, stakeholders and citizens in 
general.  

2.3.4.  Problem 4: Low coherence across funds, policy frameworks, reforms 

and investments 

Without  changes  to  the  EU-level  framework,  EU  funds  with  nationally  pre-allocated 
envelopes  would  continue  to  rely  on  different  policy  documents  and  reference 
frameworks,  making  it  difficult  to  identify  the  reforms  and  investments  needs  that  best 
serve the  Union’s  objectives.  As a result, the gap between  the EU policy priorities and 
what is financed by the EU budget would remain and possibly widen further. 

23  Report  on  “Strengthening  Europe’s  civilian  and  military preparedness  and  readiness”, 5bb2881f-9e29-
42f2-8b77-8739b19d047c_en 

 
 
 
Furthermore, progress in implementing reforms will most likely remain slow and uneven 
across  Member  States.  While  the  RRF  has  positively  impacted  Member  States’  reform 
efforts, additional reform efforts will be needed to address critical challenges such as low 
productivity growth or demographic trends, among others. In view of a potentially larger 
Union  in  the  years  to  come,  an  additional  emphasis  on  supporting  candidate  and  new 
Member States  to  continue their reform  path  towards convergence  will also  be needed. 
With the end of the RRF in 2026, and in the absence of a dedicated focus on reforms in 
the next  MFF, there would  be limited capacity at  Union level  to  incentivise the reform 
efforts. 

3.  WHY SHOULD THE EU ACT? 

3.1.  Legal basis 

Article 174 TFEU commits the EU to promote economic, social and territorial cohesion. 
Articles  176,  177  and  162  TFEU  establish  the  ERDF,  CF  and  ESF  respectively  and 
define  their  respective  objectives.  Article  38  TFEU  empowers  the  EU  to  define  and 
implement  a  common  agriculture  and  fisheries  policy.  Article  39  TFEU  sets  the 
objectives  of  the  CAP,  which  include  the  increase  of  agricultural  productivity,  a  fair 
standard  of  living  for  the  agricultural  community,  stabilise  markets,  assure  the 
availability of supplies and that these supplies reach consumers at reasonable prices. The 
Treaties task the Union with the constitution of an area of freedom, security and justice, 
based on a common policy on asylum, immigration and external  border control, a high 
level of security and no internal border controls for persons.   

Article  175  TFEU  lists  the  Structural  Funds,  which  shall  support  the  achievement  of 
economic,  social  and  territorial  cohesion  –  the  European  Agricultural  Guidance  and 
Guarantee  Fund,  Guidance  Section;  European  Social  Fund;  European  Regional 
Development  Fund.  Article  177  TFEU  provides  that  “the  European  Parliament  and  the 
Council  […]  shall  define  the  tasks,  priority  objectives  and  the  organisation  of  the 
Structural Funds, which may involve grouping the Funds.” Furthermore, Article 177 (2) 
TFEU  provides  that  “a  Cohesion  Fund  set  up  in  accordance  with  the  same  procedure 
shall provide a financial contribution to projects in the fields of environment and trans-
European networks in the area of transport infrastructure”. 

3.2. 

Subsidiarity: Necessity of EU action 

Nationally  pre-allocated  envelopes  play  a  vital  role  in  delivering  on  EU  priorities 
across  all  Member  States  and  regions.  Cohesion  Policy  is  a  prime  example  of  EU 
solidarity  in  action,  promoting  integration  and  cooperation  among  Member  States  and 
reducing  regional  disparities  within  and  between  Member  States,  including  between 
urban,  rural,  coastal  or  sparsely  populated  areas  and  between  Europe’s  mainland  and 
outermost  regions  and  islands.  Cohesion  policy  funding  has  triggered  investments  that 
would not have materialised with the same scope, ambition and speed if the EU funding 
was  not  available24.  RRF  contributes  to  Member  States’  and  regions’  economic  and 
social recovery and resilience, while also accelerating the green and digital transition.  

24 Ex-post evaluation of the 2014-2020 cohesion policy 

 
 
 
The application of common rules linked to CAP funding helps ensure a level playing 
field  among  Member  States  in  the  agri-food  sector.  The  combination  of  the  CAP 
policy  tools  contributes  to  a  fair  standard  of  living  for  farmers  across  the  EU, 
guaranteeing  food  security  throughout  the  Union,  enhancing  the  attractiveness  of  the 
sector  also  for  new  entrants,  and  addressing  challenges  of  a  cross-border  and  global 
nature.   

The  conservation  of  marine  resources,  being  an  EU  exclusive  competence,  puts  a 
responsibility  on  the  Union  in  terms  of  policy  making  and  financing.  This  requires 
continued  support  to  provide  for  the  evidence  base  for  conservation  measures  and 
management  of  fish  stocks,  data  collection,  and  the  provision  of  scientific  advice  and 
knowledge, and also to contribute to the implementation of the new Control Regulation.   

In  the  field  of  home  affairs,  EU  funding  helps  ensure  a  common  approach  when 
implementing EU acquis and standards, while fostering cooperation across borders 
in the Area of Freedom, Security and Justice. Given the strong national focus of these 
policy  areas,  EU  funding  is  best  allocated  through  nationally  pre-allocated  envelopes. 
Support from the EU budget will prove particularly important for the implementation of 
the Pact on Migration and Asylum and the new Internal Security Strategy.  

EU funding is also necessary to uphold EU values and fundamental rights. Without 
EU  involvement,  some  EU  countries  might  link  the  promotion  and  protection  of  rights 
and  EU  values  to  national  political  and  economic  interests.  This  could  create 
discrimination and inequalities. However, as highlighted in the Political Guidelines, the 
RRF  showed  how  nationally  pre-allocated  envelopes  can  contribute  to  reforms  that 
strengthen the rule of law.  

The transboundary nature and scale of many of the  present and future  challenges 
call  for  EU-level  action,  including  through  nationally  pre-allocated  envelopes.  For 
example, a weak spot in the border of a Member State or a threat posed to one Member 
State  can  affect  the  EU  as  whole,  while  a  higher  level  of  EU  external  border  security 
benefits  all Member States.  Managing the  impact  of climate change  and  environmental 
degradation is another transnational challenge requiring EU-level action25.  

Likewise,  defence  requires  a  common  response  at  EU  level,  including  through 
nationally pre-allocated envelopes. As highlighted by the Communication on the mid-
term  review26,  cohesion  policy  is  already  funding  security  and  defence-related 
investments  contributing  to  regional  development.  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.  

Furthermore,  funding  at  Union  level  supports  “EU  public  goods”,  i.e.  strategic 
policies  that  are  insufficiently  prioritised  by  Member  States  due  to  divergent 

25 The combined impacts of climate change could exceed 60% of the EU’s GDP by 2080, disproportionally 
impacting  certain  Member  States  and  regions,  requiring  EU  action  to  provide  long-term  investments  to 
preserve social, economic, and territorial cohesion. 
26 communication-mid-term-review-2025_en.pdf 

 
 
 
national  interests  or  market  failures,  but  which  bring  high  EU-wide  benefits27.  
These  include  projects  benefitting  more  than  one  Member  State,  such  as  cross-border 
projects  or  IPCEIs.  For  instance,  EU  funding  for  cooperation  between  Member  States' 
law  enforcement  authorities  can  improve  the  exchange  of  information  across  borders, 
thereby contributing to the internal security of the Schengen area. Likewise, by financing 
cooperation  between  regions,  Interreg  programmes  strengthen  ties  between  EU  regions 
and  local  communities  and  neighbouring  countries  (including  in  outermost  regions). 
They also contribute to building good relations between border regions, as illustrated by 
the emblematic PEACE Programme in Northern Ireland. 

3.3. 

Subsidiarity: Added value of EU action 

Allocating  EU  funding  through  nationally  pre-allocated  envelopes  ensures  that 
support is focused on the specific needs of each Member State and its regions, while 
being  consistent  with  EU  priorities.  As  they  know  the  exact  needs  of  their  territory, 
regional  and  local  stakeholders  and  as  such  should  be  involved  in  the  programming  of 
EU  funds.  At  the  same  time,  allocating  funding  through  nationally  pre-allocated 
envelopes can help the EU achieve its policy objectives more efficiently by linking EU 
funding  to  reforms.  This  approach  enhances  the  EU's  leverage  to  encourage  and  assist 
Member  States  in  overcoming  institutional  and  regulatory  obstacles  that  hinder  the 
fulfilment  of  EU  policy  priorities,  including  the  implementation  of  the  EU  acquis. 
Reforms  can  also  magnify  the  positive  impact  of  investments,  thereby  maximizing  the 
value of each euro spent.  

EU funding also enables EU-level coordination to address transnational challenges 
such as military mobility. EU-level coordination is needed to support the development 
of  dual-use  transport  infrastructure  along  the  four  European  military  mobility  corridors 
endorsed  by  the  EU  Military  Committee.  This  is  crucial  to  ensure  the  large-scale 
movements  of  troops  and  heavy  material  at  short  notice,  against  a  background  where 
Member  States  make  individual  and  selective  investments  on  their  national  networks, 
without taking into account the investments made by other Member States.  

Finally, modern, efficient and resilient national, regional and local authorities are a 
pre-requisite  for  the  achievement  of  Union  goals.  They  play  a  pivotal  role  in 
implementing  EU  funding  and  policy  priorities,  together  with  non-state  actors28. 
Nationally pre-allocated envelopes can provide both with the necessary support to deliver 
more efficiently on EU common objectives. For example, EU funding delivered through 
nationally pre-allocated envelopes can also provide technical assistance funding, which is 
crucial  for  data  acquisition  and  the  developments  of  tools  that  support  policy 
implementation.  

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

The intervention logic of this initiative is presented in Figure 2.   

27 EU public goods can be defined as “policies and initiatives whose value to the citizens are higher when 
conducted at EU rather than at national level” (Fuest and Pisani-Ferry, 2019). The concept of EU public 
goods  is  based  on  the  notion  that  the  EU  should  only  step  in  when  the  private  sector or  Member  Sates’ 
budgets fall short of financing goods that would benefit the EU as a whole.  
28 E.g. social partners, consumers and business organisations, non-profit and civil society organisations 

 
 
 
Figure 2: Intervention logic 

4.1.  General objectives 

EU funding alone is not sufficient to fulfil the Treaty obligations outlined in section 3.1. 
if not accompanied by complementary actions – such as legislative initiatives – as well as 
funding from other sources – national and private. Considering the above, the focus and 
general objective of this initiative is to ensure that the EU budget is well-equipped to 
support  Member  States  and  regions  in  delivering  on  EU  policy  objectives  and 
priorities and maximise the impact of every euro spent.  

4.2. 

Specific objectives 

To address the identified problem drivers, three specific objectives have been set taking 
into account the Political Guidelines, which call for a more focused, simpler, impactful 
and responsive EU budget.   

Specific  Objective  1  (SO1)  –  Ensuring  coherence  between  EU  priorities,  national 
and  regional  actions.  The  first  objective  (linked  to  Problems  2  and  4)  is  to  align  EU 
funding  with  key  EU  priorities,  while  tailoring  EU  interventions  to  Member  States’ 
regional  and  sector  specific  needs.  Nationally  pre-allocated  envelopes  should  support 
investments,  reforms  and  other  policy  interventions  with  a  strong  EU  added  value, 
contributing to goals that cannot be achieved as effectively by individual Member States 
alone. EU  support  should  be  adapted  to  the  specific  needs  of  individual  regions  and 
sectors,  in  full  respect  of  Treaty  objectives  and  obligations,  while  ensuring  better 
alignment between EU/national priorities and funding.  

Specific  Objective  2  (SO2)  –  Creating  a  simple  and  cost-effective  framework 
delivering on EU priorities.  The second objective (linked to Problem 2) is to simplify 
the  implementation  framework  and  reduce  the  administrative  costs  for  Member  States’ 
authorities,  the  Commission,  as  well  as  beneficiaries  through  a  more  coordinated, 
consistent  and  holistic  policy  intervention  for  each  Member  State  and  its  regions. 
Simplification should be done in full respect of the partnership principle, which ensures 
that regional and local authorities, as well as economic and social partners and the bodies 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 
 
 
 
 
representing  civil  society  at  large,  are  involved  at  all  stages  of  programming  and 
implementation of nationally pre-allocated envelopes.  

Specific  Objective  3  (SO3)  –  Meeting  both  long-term  policy  goals  and  emerging 
policy  priorities.  The  third  objective  (linked  to  Problem  3)  is  to  adapt  EU  funding  to 
changing  circumstances  and crisis  situations in Member States, regions, the Union as a 
whole  or  in  particular  sectors  in  a  more  agile  way,  without  compromising  long-term 
objectives and stability and predictability for beneficiaries.  

This  initiative will be monitored through the performance framework for the post-2027 
budget, which is examined in a separate impact assessment. 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1.  What is the baseline from which options are assessed? 

Under the baseline, EU funds with nationally pre-allocated envelopes would continue to 
be  governed  by  separate  fund-specific  regulations  and  implemented  through  different 
programmes as described in the problem definition. Negotiated between the Commission 
and each Member State, with involvement of regional and local authorities and relevant 
partners,  the  Partnership  Agreement  would  continue  to  be  the  overarching  strategic 
programming  document  which  would  set  the  investment  priorities  for  each  Member 
State. It would also continue to include thematic and horizontal enabling conditions that 
would be the same for all Member States. The scope of the Partnership Agreement would 
be the same as today (i.e. cohesion and fisheries). The principle of partnership and multi-
level governance would continue to apply. 

As  is  currently  the  case,  more  detailed  programming  including  the  intervention  logic 
would  be  set  out  in  separate  programmes,  mainly  implemented  under  shared 
management.  Member  States  would  continue  to  be  free  to  choose  the  number  of 
programmes  they  want,  and  whether  they  prefer  national  or  regional  programmes  (or  a 
combination of both).  They  would  also continue to  decide which competent  authorities 
(national/regional) should manage (specific components of) the programmes. This should 
however  not  lead  to  increased  fragmentation  in  those  policy  areas  which  have  already 
moved  to  single  programming  (such  as  the  CAP  or  fisheries). Cost-based  delivery 
models would continue to prevail, with the possibility to use SCOs and FNLC forms of 
funding. Budgetary  flexibilities  would  remain  limited,  both  within  programmes  as  well 
as between programmes, as outlined in the problem definition.  

Cross-border and multi-country projects would continue to be eligible for support under 
several funds with different rules (direct and shared management). 

5.2.  Approach of this impact assessment 

While  regional  and  territorial  disparities  have  been  substantially  reduced,  including  by 
EU  cohesion  policies,  29%  of  EU  citizens  still  live  in  regions  with  a  GDP  per  capita 
below 75% of the EU average and about 135 million people live in places which, in the 
last  two  decades,  have  slowly  fallen  behind.  The  current  divergent  growth  trajectories 
risk widening socio-economic gaps between and within Member States, notably between 
rural and urban areas. 

 
 
 
 
 
 
 
 
At the same time, food security and nature protection sustain Europe’s quality of life with 
the  Common  Agricultural  Policy  (CAP)  able  to  guarantee  that  450  million  Europeans 
have access to safe, high quality and diversified food products at affordable prices. At the 
same  time,  the  CAP  contributes  to  preserving  vibrant  rural  areas  and  helps  the 
agricultural sector make significant progress towards sustainability. Yet, long-term risks 
for food security and the effects of climate change and environmental degradation put the 
agricultural sector under increasing pressure. In addition, farmers, fishers and rural areas 
are  increasingly  affected  by  unfair  global  competition,  higher  energy  prices,  a  lack  of 
younger farmers and fishers and difficulties in accessing capital. For example, despite the 
substantial  support  from  the  CAP,  the  agricultural  income  per  worker  remains  volatile 
and significantly below the average wage in the EU economy (60% in 2023).  

War, insecurity, poverty and a lack of opportunities have strengthened migration flows, 
and  the  weaponisation  of  migration  at  the  EU  borders  has  illustrated  new  forms  of 
threats. At the same time, the global political and economic landscape poses challenges 
of unprecedented magnitude, with  war still raging on the European continent  and  in  its 
neighbourhood.  

While these are only  a  few of the many challenges faced by our  Union, they show the 
need  to  improve  the  design  of  EU  support  to  best  deliver  on  our  shared  priorities  and 
common  policies  and  ensure  that  the  EU  budget  continues  to  play  a  key  role  in 
supporting fair and inclusive growth, sustainable economic convergence, and security. 

In this light, in line with the Political Guidelines, the Commission’s Communication on 
the road to the next MFF suggested a new approach to the budget with, at its core, a plan 
for each Member State linking key reforms with investments, and focusing on our joint 
priorities, including promoting economic, social and territorial cohesion.   

A  plan  for  each  Member  State  would  gather  all  investments,  other  instruments,  and 
reforms  relevant  for  EU  priorities.  Each  Member  State,  with  close  involvement  of 
regional  and  local  authorities  and  other  relevant  stakeholders,  would  be  responsible  to 
draw  up  their  plan  and  to  propose  the  relevant  key  investments,  other  instruments,  and 
reforms, which could be organised in thematic/sectoral and/or regional chapters.  

The  preparation  of  the  plans  would  incorporate  the  findings  of  the  steering  mechanism 
announced as part of the Competitiveness Compass Communication29 of February 2025, 
linking  EU  priorities  with  the  EU  budget.  The  steering  mechanism  would  identify  the 
main  challenges  that  the  Union  and  its  Member  States  face  in  all  relevant  policy  areas 
and provide country-specific recommendations, which would help with the identification 
of  reforms,  investments  and  other  instruments  for  the  individual  plans.  This  would 
contribute  to  ensuring  that  the  plans  address  key  EU  priorities  and  have  a  strong  EU 
added  value.  Reform,  investment  and  other  instrument  proposals  would  be  tailored  to 
each Member States’ national and, where relevant, regional needs. Since the plans would 
cover  a  broad  range  of  policy  areas  (cf.  infra  on  scope)  based  on  the  findings  of  the 
steering  mechanism,  there  will  be  no  options  regarding  thematic  priorities.  The 
functioning of the proposed steering mechanism and principles of its governance are not 
covered by this impact assessment. 

29 COM(2025) 30 final 10017eb1-4722-4333-add2-e0ed18105a34_en 

 
 
 
 
 
  
 
 
Each  plan  would  be  negotiated  and  approved  by  the  Commission  based  on  common 
assessment  criteria. Technical  support  and  assistance  would  be  provided  as  part  of  the 
plans,  targeted  to  Member  States’  and  regions’  needs,  to  address  the  disparities  in 
technical and administrative capacities between Member States and/or regions. The plans 
would be subject to the respect of the rule of law, in line with the Political Guidelines.   

Regional and local actors, including civil society, and specific sectors will remain at the 
centre of the plans, as the partnership principle and multi-level governance arrangements 
would  continue  to  apply  with  appropriate  mechanisms  considering  the  context  of  the 
plan.  Member  States  could  choose  to  have  regional/territorial  chapters,  in  accordance 
with  their  constitutional,  legal  and  administrative  setting  or  preference,  as  well  as 
thematic/sectoral  chapters.  The  plan  should  also  specify  how  responsibilities,  including 
the  delivery  model  and  following  payments,  are  shared  among  different  levels  of 
government.  Hence,  while  there  would  be  one  coordinating  authority  in  each  Member 
State, other authorities, would be in charge of the implementation of specific regional or 
thematic/sectoral chapters.  Regional partnership and monitoring committees would also 
be established.  

The plans would follow a common rulebook, with the same rules on key issues such as: 

-  Governance of the plans  –  including  the role of  Member States’ authorities and 

monitoring committees; 

-  Conditionality – with horizontal conditions regarding compliance with the rule of 
law and the Charter of Fundamental Rights of the EU, as well as the principles of 
“do no significant harm” and gender equality; 

-  Management  and  financial  rules  –  including  assurance,  data  collection  and 

recording, transparency, processing of personal data, payments. 
-  Specific type of support – including the use of financial instruments. 
-  Other  horizontal  provisions,  such  as  State  aid  compliance,  empowerment  for 

delegated and implementing acts. 

The  main  characteristics  of  the  plans  as  described  above  will  not  be  assessed  in  this 
impact  assessment  since  they  stem  from  the  Political  Guidelines.  As  outlined  in  the 
intervention logic, in  light  of the problems  identified and the specific objectives of this 
initiative, there are choices to be made regarding the design and scope of such plans.  

There is a need to examine first the design (or the ‘mechanics’) of the plan, that is, how it 
will  work  and  which  characteristics  it  should  have  to  best  fulfil  the  objectives  outlined 
above. This  concerns on the one hand the “delivery model”  (that  is,  how  payments  are 
made)  and  on  the  other  hand  the  “management  mode”  (that  is,  how  EU  spending  is 
implemented and overseen). The choices with respect to those design features will have 
an  impact  on  the  scope  of  the  plans,  which  should  therefore  be  examined  in  a  second 
stage. Other elements, such as the structure of the underlying funds (e.g. how they would 
be integrated under the plans), the policy priorities to be covered, possible concentration 
requirements and the impact on EU policies enshrined in the Treaty are not assessed as 
part of this impact assessment. 

At the same time, an option to implement existing funds currently governed by separate 
fund-specific regulations within a single plan for each Member State is not analysed as 
part of this impact assessment. 

 
 
 
 
 
 
In light of the above, this impact assessment will proceed in two stages. First, section 6 
will  assess  the  options  related  to  the  design  of  the  plans  (delivery  model  and 
management  mode).  Following  an  analysis  of  their  impacts  (6.1),  it  will  assess  the 
effectiveness  and  coherence  of  the  options  in  relation  to  the  specific  objectives  of  this 
initiative (6.2) and compared to the baseline. The choice of the preferred option for the 
design of the plans will be made on that basis (6.3).  

Second, section 7 will assess the options related to the scope of the plans. There will 
be two sets of options – the first set focused on the scope of the plans as such, and the 
second set to assess whether the plans are a suitable tool to support cross-border/multi-
country projects. It will follow a similar structure as section 6, looking at the impacts of 
the available options (7.1) and assess their effectiveness and coherence in relation of the 
specific  objectives  and  compare  to  the  baseline  (7.2).  In  doing  so,  it  will  take  into 
account the preferred option chosen for the design of the plans.  

Given that assumptions on the budget would be unreliable at this stage, the impact will 
not  include funding scenarios and no cost  benefit analyses will be carried out  to  assess 
the efficiency of the policy options proposed. 

Summary of the options 

5.3.  Options on the design of the plans 

This section examines which design features are best suited to reach the objectives of this 
initiative. The options focus in particular on  the plans the delivery model (1); and their 
management mode (2). Annex 8 presents the current set-up regarding both dimensions. 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
 
 
 
 
 
 
 
 
5.3.1.  Options on the delivery model 

Option  A:  Cost-based  finance  model  with  the  possibility  to  disburse  funds  based  on 
performance 

This option entails the use of a cost-based delivery model in which disbursements remain 
predominantly  linked  to  incurred  expenditure  and  Member  States  submit  cost-based 
payment  claims  to  the  Commission  to  reimburse.  The  use  of  SCOs  at  the  level  of 
operations  and  of  FNLCs  disbursements  would  be  further  encouraged,  with  a  view  to 
simplifying implementation and enhancing the focus on results.  

Option B: Delivery against pre-agreed milestones and targets 

Option B implies a system where payments are made only upon fulfilment of milestones 
and  targets  which  represent  the  different  implementation  stages.  of  each  supported 
reform, investment and other instruments. The estimated costs of implementing planned 
reforms,  investments  and  other  instruments  would  be  assessed  ex-ante  and  serve  as  a 
basis to determine the level of ambition of milestones and targets, but the disbursement 
to  Member  States  would  not  be  based  on  the  expenditure  incurred  for  their 
implementation. Payments would be made upon completion of pre-agreed milestones and 
targets  capturing  key  steps  in  the  implementation  of  reforms,  investments  and  other 
instruments.  

Option C: Hybrid model 

Option C also implies a system where payments are largely made only upon fulfilment of 
milestones  and  targets,  as  under  option  B.  However,  it  would  also  allow  for  payments 
based on expenditure incurred in cases where it is difficult to clearly estimate the costs ex 
ante  or  where  there  could  be  a  risk  of  overpaying  (e.g.  projects  subject  to  public 
procurement, especially large infrastructure projects).    

5.3.2.  Options on the management mode 

Option D: Shared management 

Member States and the Commission would share the responsibility for implementing the 
funds and as well as in protecting the financial interests of the Union. The Commission 
would  negotiate  with  Member  States  and  approve  the  plans  to  ensure  alignment  with 
political  priorities  and  compliance  with  assessment  criteria.  Tasks  related  to  budget 
implementation  would  be  delegated  to  Member  States,  who  would  themselves  appoint 
bodies for the management and control of the funds. In case a cost-based delivery model 
was  applied,  the  Member  State  authority  would  submit  payment  claims  to  the 
Commission  and  provide  assurance,  as  it  is  currently  the  case  for  shared  management 
funds.  If  a  performance-based  delivery  model  was  adopted,  national  and/or  regional 
programme authorities jointly assess the fulfilment of milestones and targets and provide 
assurance.  The  Commission  would  be  able  to  interrupt  payments  to  request  additional 
evidence  and  apply  suspensions.  If  needed,  ex-post  audits  could  be  performed  and 
corrective  measures  and  potential  recoveries  could  be  applied  if  some  milestones  and 
targets  are  not  fulfilled.  Technical  assistance  could  help  address  the  administrative 
capacity challenges faced notably by regional and local authorities. 

Option E: Direct management 

 
 
 
The  Commission  would  oversee  the  implementation  of  programmes  directly  and  the 
management  would  be  more  centralised  at  the  Member  State  level.  In  a  performance-
based model, the Commission assesses the fulfilment of milestones and targets, based on 
the  relevant  evidence  provided  by  Member  States  in  addition  to  management 
declarations, and would carry out audits. In a cost-based model, the Commission would 
check all evidence of the expenditure incurred for the implementation of measures and 
conduct audits and controls to verify their legality and regularity.  

5.4.  Options on the scope of the plans 

The effectiveness of the design options of the national plans will depend on which of the 
current  spending  programmes  is  integrated  in  the  new  instrument  –  i.e.  the  extent  to 
which  the  current  spending  programmes  would  be  subject  to  the  same  rules  (incl. 
management  mode  and  delivery  model)  and  included  into  one  envelope  per  Member 
State (the “scope” of the plans”).   

As  the  Political  Guidelines  refer  to  “a  plan  for  each  country  linking  key  reforms  with 
investment, and focusing on our joint priorities, including promoting economic, social 
and  territorial  cohesion”  all  options  build  on  Option  1.  While  the  focus  is  on  those 
spending programmes with nationally pre-allocated envelopes, this does not exclude that 
(parts of) other spending programmes are also integrated in the plans, for instance those 
with strong synergies (e.g. LIFE; food and feed strand of the Single Market Programme). 
The impact  assessment  does not  discuss  whether existing  (sub-streams)  of programmes 
are intended to  be re-oriented or discontinued  – but  rather which EU programmes with 
nationally pre-allocated envelopes could fit within the scope of the plans from a policy 
perspective.  

Option 1 
The  funds  currently  covered  by  the  CPR  would  be  covered  in  the  plans,  i.e.  cohesion 
policy  funds  (ERDF,  CF,  JTF,  ESF+),  fisheries,  aquaculture  and  maritime  policy 
(EMFAF)  and  the  three  home  affairs  funds  (AMIF,  BMVI,  ISF).  This  Impact 
Assessment does not discuss nor prejudge the way they would be covered. In particular, 
the  policy  priorities,  and  possible  concentration  requirements  are  not  assessed.  The 
currently  off-budget  Social  Climate  Fund  (SCF)  would  also  be  brought  under  the 
umbrella of the plans since its objectives are closely aligned with cohesion funds and the 
implementation  of  the  Fund  will  be  based  on  Member  States  plans  with  characteristics 
similar  to  those  considered  in  this  document  (e.g.  payments  linked  to  the  fulfilment  of 
objectives). The initial phase of the SCF will require a stable environment, including by 
having legal certainty for Member States and beneficiaries, in order to ensure a rapid and 
efficient start of implementation.   

Support  would  continue  to  be  provided  for  all  regions  with  a  strong  focus  on  the  less 
developed  regions  as  well  as  territories  with  special  features  (e.g.  outermost  regions, 
northern  sparsely  populated  regions,  islands,  mountainous  areas)30.  The  plans  would 
allow  to  incorporate  subnational/regional  and  sectoral  chapters  into  the  plan  –  Member 
States  could  have  chapters  that  are  only  national,  only  regional  and  only  sectoral  or  a 
combination  of  the  three.  The  plan  would  also  specify  the  sub-national  reforms  and 
investments  and  how  responsibilities,  as  well  as  the  following  payments,  are  shared 

30 See Annex 9 for further analysis 

 
 
 
 
 
among  different  levels  of  government.  Member  States  could  choose  to  delegate  part  of 
the design and implementation of supported measures to regional authorities, based on a 
national framework.  

The  partnership  principle  would  remain  a  fundamental  feature  of  the  plans.  One 
coordinating  committee  (at  national  level)  and,  if  appropriate,  more  monitoring 
committees (at regional level and/or covering certain sectoral interventions) could be put 
in  place  for  the  implementation,  depending  on  the  structure  of  the  plan.  In  addition, 
stakeholders  would  have  to  be  more  closely  involved  in  the  setting  up  of  reform  and 
investment measures that are relevant to them or that are implemented at their level.   

The  Common  Agricultural  Policy  would  remain  self-standing  with  separate  Member 
State CAP strategic plans. 

Option 2 
Both  CAP  funds  aim  to  “to  ensure  a  fair  standard  of  living  for  the  agricultural 
community”, among other Treaty objectives. As part of the EAGF, the core instrument is 
the  basic  income  support  for  sustainability  (known  as  BISS)  which  is  provided  to  all 
farmers  on  the  basis  of  their  eligible  hectares.  Complementary  income  support  is 
provided  for  young  and  small  farmers,  while  coupled  income  support  is  targeted  at 
specific sectors facing  competitiveness,  sustainability  or quality  difficulties, and certain 
interventions  aim  at  strengthening  the  position  of  farmers  in  the  value  chain,  mainly 
through  producers’  organisations  and  interbranch  organisations.  EAGF  comprises  also 
payments for the provision of ecosystem services, the so-called eco-schemes, for annual 
commitments  taken  up  by  farmers  going  beyond  the  minimum  conditionality  rules 
(further details below) and which today covers 22% of the EAGF.  

The focus of the EAFRD includes the development of thriving rural areas, which deliver 
on the needs of the agricultural community and help attracting newcomers to the sector. 
As  part  of  the  EAFRD,  income  support  is  also  provided  for  farmers  located  in  areas 
under  natural  or  other  area-specific  constraints,  productive  and  non-productive 
investments,  risk  management  tools  and  different  types  of  cooperation  and  knowledge 
exchange.  The  key  element  of  EAFRD  are  payments  for  the  provision  of  ecosystem 
services,  known  as  agri-environmental,  climate  related  and  other  management 
commitments (AECM). These payments are equally established based on farming area or 
per animal. 

The instruments in the two funds work together to achieve the objectives of the CAP but 
interventions  supported  by  the  EAFRD  are  mainly  of  a  multi-annual  nature  and  co-
financed by the EU budget while direct payments and market measures under the EAGF 
are annual and solely financed by the EU budget. 

The  study  on  funding  for  EU  rural  areas  found  that  the  EAFRD  and  cohesion  policy 
funds  demonstrate  strong  complementarity  -  albeit  at  different  scales  of  intervention  - 
especially  when  appropriate  strategies  for  rural  areas  are  in  place,  leading  to  better 
synergies between the CAP, cohesion policy and other EU funds supporting rural areas. 
Section  2.2.1  of  the  problem  definition  provides  examples  of  the  types  of  synergies 
between the EAFRD and cohesion policy. Based on the above, there are two options for 
the integration of the CAP within the plans, which result in different levels of synergies 
and complementarities with Option 1. 

 
 
 
 
 
 
 
 
Option 2a – EAFRD within the national plans 

Only the EAFRD would be integrated in the plans for each country linking key reforms 
with  investments.  Concretely,  certain  elements  of  the  objectives  of  the  CAP  would  be 
delivered  according  to  the  provisions  governing  the  plans  while  others  would  be 
delivered outside of the plan through the EAGF.  

The  governance  structure  described  in  Option  1  would  be  compatible  with  the 
governance  of  the  current  CAP,  as  it  would  still  be  possible  for  Member  States  to 
delegate  to  regional  managing  authorities  the  EAFRD  interventions  envisaged  in  the 
plans,  while  the  national  coordinating  body  would  remain  responsible  for  ensuring  the 
appropriate  coordination  and  guaranteeing  the  coherence  and  consistency  of  the  plans. 
There could be monitoring committees set up at regional level, in addition to the central 
monitoring committee set up at national level.  

Building  on  the  current  CAP  (which  is  also  subject  to  the  partnership  principle),  the 
enhanced  partnership  principle  of  Option  1  would  also  apply.  This  will  guarantee  the 
involvement  of  all  relevant  public  bodies  (including  competent  regional  and  local 
authorities),  economic  and  social  partners  as  well  as  relevant  bodies  representing  civil 
society in the implementation of CAP objectives. 

The EAGF would continue as a self-standing fund outside the plans and would include 
only the instruments of direct payments to farmers and market measures.  

Option 2b – CAP within the national plans 

Both  the  EAFRD  and  the  EAGF  would  be  integrated  in  the  plans.  The  multi-level 
governance, with  a strong regional dimension as outlined in Option 2a would apply, as 
well as the enhanced partnership  principle. In line with  the nature of the CAP,  specific 
rules would be needed to preserve the integrity of the single market and fair competition 
between farmers. Taking this into account, among other specific elements, the integration 
of the CAP within the plans would be accompanied by specific policy objectives for the 
CAP and specific policy requirements attached to the set of interventions to be supported 
in  the  agricultural  sector  and  rural  areas.  These  interventions  and  rules  would  need  to 
make  sure  that  support  is  targeted  to  farmers  who  need  it  most  –  with  a  particular 
attention  to  the  farmers  in  areas  with  natural  constraints,  young  and  new  farmers,  and 
mixed  farms,  as  well  as  those  providing  ecosystem  services.  A  dedicated  agricultural 
chapter  within  the  plans  would  allow  to  bring  these  specific  elements  together  in  a 
coherent  strategy  for  agriculture  per  Member  State,  building  on  the  experience  of  the 
CAP Strategic Plans. At the same time, Member States would also be able to draw on the 
wider set of interventions available within the plans to achieve the CAP objectives, such 
as the dedicated support for young farmers, setting – up business development alongside 
interventions to improve attractiveness and living standards in rural areas, etc. 

Option 3 

The Modernisation Fund is an off-budget programme set up from 2021 to 2030. A small 
percentage  of  the  total  EU  ETS  allowances  are  auctioned  to  the  benefit  of  13  lower-
income Member States and proceeds are shared between the beneficiary Member States 
in shares set in the ETS Directive. The funding is used to support the modernisation of 
the energy sector in line with State aid rules. From a policy perspective, these projects are 
similar  to  investments  also  covered  by  other  EU  spending  programmes,  in  particular 
cohesion policy, the RRF and the SCF. 

 
 
 
 
From  a  budgetary  point  of  view,  the  Modernisation  Fund  is  of  a  very  different  nature 
than  other  EU  spending  programmes.  Member  States  are  the  driving  actors  of  the 
implementation,  submitting  investment  proposals  for  the  screening  of  the  EIB  or  the 
validation by the Investment Committee. The Commission has the obligation to adopt the 
disbursement  decision  once  an  investment  has  been  confirmed  by  the  EIB  (for  priority 
investments)  or  recommended  for  financing  by  the  Investment  Committee  (for  non-
priority  investments).  Disbursements  are  not  subject  to  the  Financial  Regulation.  The 
Budgetary  Authority  has  no  role  and  the  European  Court  of  Auditors  has  no  auditing 
powers  with  regard  to  Member  States’  spending.  It  can  only  audit  the  EIB  and 
Commission procedures and disbursement decisions. Unlike the other ETS-funded funds, 
disbursements  made  under  the  Modernisation  Fund  are  not  subject  to  any  rule  of  law 
conditionality nor the Conditionality Regulation.  

Under  Option  3,  the  Modernisation  Fund  would  be  integrated  into  the  plans,  providing 
more visibility to the investments to be carried out beyond the current obligations set out 
in the ETS Directive. While Member States would still be responsible for the selection of 
reforms  and  investments  they  wish  to  support,  programming  would  need  to  take  into 
account  the  steering  mechanism  and  be  subject  to  approval  by  the  Commission,  which 
would  be  carried  out  based  on  the  assessment  framework  agreed  at  EU  level.  Member 
States’  spending  would  be  subject  to  the  same  audit  and  control  rules,  delivery  model, 
payments rules, etc. as the rest of the plan. Finally, the spending would need to comply 
with the rule of law conditionality.  

There are two options for the integration of the Modernisation Fund in the plans, which 
largely depend on the outcome of the assessment of Options 1 and 2. 

•  Option  3a:  the  Modernisation  Fund  would  be  integrated  in  the  plans,  together 

with the other funds covered by the CPR and the SCF (Option 1). 

•  Option 3b: the Modernisation Fund would be brought under the umbrella of the 
plans, which would also cover the funds mentioned in Option 3a as well as either 
the EAFRD only (Option 2a) or the EAFRD and the EAGF (Option 2b). 

5.5.  Options to support cross-border projects 

Option  4  focuses  on  cross-border  infrastructure  projects  in  the  field  of  transport  and 
energy, as currently covered under the CEF. The digital strand of CEF is assessed as part 
of the impact assessment on the European Competitiveness Fund. 

Option 4a: cross-border infrastructure projects under nationally pre-allocated envelopes 
The  implementation  of  cross-border  (in  transport  and  energy)  and  dual-use  projects  on 
the  military  mobility  would  be  programmed  and  implemented  within  the  plans.  Hence, 
the  implementation  of  such  projects  would  be  done  under  the  rules  of  the  plans  – 
including  shared  management  and  a  performance-based  delivery  model.  Each  Member 
State would be responsible to implement the part of the cross-border section or a military 
mobility project on its territory.  

Option 4b: dedicated instrument for cross-border infrastructure projects 
A  separate  instrument  would  be  created  to  provide  support  for  the  implementation  of 
cross-border  projects  (in  transport  and  energy)  and  dual-use  projects  on  the  military 

 
 
 
 
 
 
 
  
 
 
mobility  network.  Building  on  the  experience  of  the  CEF,  this  instrument  would  be 
directly  managed  with  competitive  calls  for  proposals  where  project  promoters  apply 
directly  for  funding  and  selection  by  the  Commission  in  a  cost-based  delivery  model. 
National projects of a cross-border relevance (e.g. national section of a TEN-T corridor 
within a Member State) would be implemented through the plans. 

Since the Political Guidelines clearly state that “the European Competitiveness Fund will 
support Important Projects of Common Interest (IPCEIs)”, IPCEIs will be covered in the 
dedicated impact assessment – including possible links with the plans. The options rather 
focus on  cross-border infrastructure projects  in  the transport and  energy  sectors, noting 
that  other  sectors  (e.g.  digital)  are  covered  in  the  scope  of  the  Competitiveness  Fund 
Impact Assessment. 

6.  ASSESSMENT OF THE OPTIONS RELATED TO THE DESIGN OF THE PLANS 

6.1.  What are the impacts of the options? 

6.1.1.  Options on the delivery model 

Option  A:  Cost-based  finance  model  with  the  possibility  to  disburse  funds  based  on 
performance 

As  cost-based  financing  has  been  used  for  a  long  time,  managing  authorities  and 
beneficiaries are overall familiar with the way it works, albeit to a different extent across 
Member States and programmes. This could facilitate communication and understanding, 
as  the  actors  involved  would  be  able  to  build  on  existing  practices,  structures  and  IT 
infrastructure.  However,  this  also  applies  to  performance-based  models  given  the 
experience gained under the RRF by Member States and beneficiaries over recent years 
(which would be further strengthened with the set-up of the SCF). 

In  this  model,  however,  payments  from  the  Commission  to  Member  States  are  slower, 
since  they  only  take  place  once  expenditure  has  been  incurred  and  paid  and 
corresponding  management  verifications  carried  out.  Relying  on  a  cost-based  delivery 
model  would  not  reduce  the  current  level  of  administrative  costs,  both  for  Member 
States’ authorities in the verification of invoices and beneficiaries for keeping them.  

With  a  view  to  simplifying  implementation  and  enhancing  the  focus  on  results,  this 
option  would  be  paired  with  a  possibly  strengthened  requirement  to  use  SCOs  and 
encourage the use of the FNLCs disbursements to reduce the need for checks on actual 
costs.  SCOs  would  help  reducing  it  and  simplifying  the  process  to  beneficiaries. 
However,  the  experience  of  Member  States  and  regions  with  such  schemes,  as  well  as 
beneficiaries, remains low (especially for FNLC).   

As  the  complexity  of  the  verification  process  can  make  transactions  that  involve 
reimbursement  of  actual  costs  more  susceptible  to  errors,  this  model  would  not  reduce 
the currently high error rate of cohesion policy funds. However, the use of SCOs allows 
for a more efficient and reliable approach, with lower likelihood of errors. A slow pace of 
payments  is,  however,  not  an  issue  for  all  types  of  instruments  (e.g.  direct  payments 
under  the  CAP  have  a  very  high  annual  execution  rate)  and  not  all  policies  have  high 
error rates (e.g. the CAP). 

 
 
 
Under a cost-based delivery mode, incentivising reforms could only be based on enabling 
conditions  and  financial  support  for  reforms  only  on  effective  costs  of  their 
implementation which would be a constraint and could involve more complexities.  The 
costs  of  reforms  are  often  difficult  to  quantify,  and  it  is  often  the  political  costs  rather 
than  the  implementation  cost  that  makes  their  adoption  difficult.  While  the  current 
system  of  enabling  conditions  has  helped  to  ensure  the  right  framework  conditions  for 
investments,  their  completion  would  only  grant  access  to  funding  and  not  trigger 
payments. Yet, experience shows that the incentive to carry out reforms is significantly 
stronger  if  the  reforms  are  tailor-made  (as  opposed  to  minimum  conditions  identical  to 
all) and can trigger payments. 

Option B: Delivery against pre-agreed milestones and targets 

The  focus  here  is  on  achieving  tangible  results  captured  by  specific  milestones  and 
targets, rather than submitting detailed claims for reimbursement. This aspect may result 
in  better  communication  opportunities  for  the  wider  public,  as  it  would  be  easier  to 
communicate on the results achieved with EU funding by relying on the milestones and 
targets  completed  (rather  than  when  only  invoices  are  available  at  hand).  A  clear 
performance orientation would also increase the policy alignment to EU priorities, as this 
could  be  ensured  at  the  moment  of  the  design  and  payment,  provided  that  the  right 
safeguards are established, including to avoid over-reliance on input and process-oriented 
indicators  that  might  not  capture  the  quality  of  the  outcomes  achieved.  This  model 
requires strong ex-ante checks as well as a clear definition of milestones and targets.  

Programming based solely on negotiated outputs and/or results would likely represent an 
administratively burdensome process, (as experienced in the RRF or with FNLC schemes 
under cohesion policy funds31), in particular in view of the at times complex exercise of 
estimating  the costs of envisaged interventions  ex-ante.  However, this would  only  be  a 
one-off  process.  Furthermore,  Member  States’s  authorities  have  already  acquired  a 
significant  amount  of  experience  in  such  delivery  models,  which  would  reduce  entry 
costs. The use of standardised milestones/targets and – whenever possible – standardised 
costs  may  help  in  this  context  to  improve  consistency  and  comparability.  In  addition, 
more  extensive  use  of  technical  assistance  could  be  considered  in  the  future  to  support 
Member States – whenever relevant – in the ex-ante costing exercise.   

On the other hand, under such a system, funds are likely to be disbursed more rapidly to 
Member States, especially since such a delivery model allows to pay for the completion 
of  preparatory  and  intermediate  implementation  steps  of  the  supported  reforms  or 
investments.  However,  the  speed  of  disbursements  would  ultimately  depend  on  the 
Member State’s capacity to fulfil on time specific milestones and targets linked to policy 
interventions (incl. reforms) and investments. 

This model would provide more incentives for Member States to carry out reforms. As 
shown by the mid-term evaluation  of the RRF, linking reforms  and investment  under a 
performance-based  delivery  model  provides  effective  incentives  for  Member  States  to 
deliver  on  reforms,  which  do  not  necessarily  come  with  (financial)  costs  and  hence  do 
not  fit  so  well  under  a  cost-based  delivery  model.  Linking  investments  with  reforms 
would  increase  the  overall  impact  of  the  EU  budget  –  as  opposed  to  funding  only 

31 Mid-term evaluation of ESF+ 

 
 
 
investments. Such a model is also compatible with interventions with stable outputs to be 
delivered  over  time  without  the  need  to  set  out  ex-ante  a  precise  target  to  achieve;  for 
example, CAP interventions relying on a given value per hectare set out in the plan with 
payments based on achieved outputs.  

In  terms  of  assurance,  such  a  model  requires  somewhat  different  capacities  for 
verification and audit compared to a cost-based model under Option A. While it would 
imply  initial  adjustment costs  for  Member  States,  this  could  be  mitigated  by  actions  to 
enhance  administrative  capacity  as  well  as  with  technical  assistance  and  support. 
Member  States  will  also  be  able  to  build  on  the  experience  gained  by  national 
implementing  and  audit  authorities  under  the  RRF.  A  lower  administrative  burden  for 
(final)  beneficiaries  could  be  expected  at  the  implementation  phase  (while  preparations 
would be more resource intensive), provided this model is also replicated at national and 
regional  level,  but  this  has  largely  not  been  the  case  until  now.    The  use  of  FNLC  by 
Member States with their own beneficiaries could, in this regard, be further promoted to 
ensure consistency and avoid duplicating reporting requirements. 

Given the timeframe of implementation of the plans (linked to the duration of the MFF), 
milestones  and  targets  would  most  often  be  based  on  outputs  and  results,  rather  than 
impacts.  This  being  said,  a  focus  on  outputs  and  results  rather  than  invoices  would 
considerably improve the performance orientation of nationally pre-allocated envelopes. 
Furthermore,  the  Performance  Regulation  –  which  will  monitor  the  implementation  of 
the plans – will provide an extensive number of harmonized output and result indicators 
which  will  already  considerably  improve  performance  monitoring  while  reducing  the 
administrative burden. 

Option C: Hybrid model 

Option  C  also  implies  a  system  where  payments  are  made  only  upon  fulfilment  of 
milestones  and  targets,  following  the  same  principles  as  outlined  under  option  B. 
However, it would also allow for payments based on expenditure incurred in cases where 
it  is  more  difficult  to  estimate  the  costs  ex  ante  or  are  subject  to  change  (e.g.,  major 
infrastructure or public procurements projects where agreeing in advance on the level of 
EU  support  could  lead  to  overcompensation  and/or  to  the  distortion  of  offers  by  the 
bidders as they know in advance what the promoter is ready to pay).  

Similarly  to  option  B,  this  hybrid  model  allows  for  disbursement  upon  meeting 
milestones  and  targets  or  fulfilment  of  reforms,  an  overall  rapid  disbursement  of  funds 
and  lower  administrative  burden  for  beneficiaries  related  to  the  submission  of 
reimbursement  claims.  Therefore,  this  dual  approach  would  allow  upholding  the 
performance orientation of the EU budget.  

While  the  transition  to  a  predominantly  performance-based  system  not  linked  to  costs 
will  entail  initial  adjustment  costs  for  Member  States,  this  option  provides  a  balance 
between  performance  adherence  and  flexibility  to  address  the  different  policies’  needs 
and diverse challenges. Enabling real costs for a limited number of specific cases could 
be  considered  to  reduce  complex  cost  estimates,  thus  reducing  uncertainty  and 
minimising risks of uncertainty related to cost estimates.  

However,  this  option  would  also  imply  that  a  duplication  of  payment,  assurance  and 
reporting systems which would increase administrative burden. The combination of cost-
based  and  non–cost-based  delivery  models  also  introduces  additional  complexity  for 

 
 
Member States, a criticism voiced in the context of the new delivery model of the CAP 
and the RRF mid-term evaluation. It would also be difficult to delineate which (types of) 
investments could justify payments based on incurred expenditure. For example, the RRF 
has shown that it is  possible to  apply  a non-cost-based delivery model to  infrastructure 
projects. More extensive use of technical assistance could be considered in the future to 
support Member States – whenever relevant – in the ex-ante costing of complex projects. 

Quantification of the impacts of the delivery model (see Annex 11) 

The  RHOMOLO  model  (Barbero  et  al.,  202432)  was  used  to  simulate  the  impact  of 
cohesion  policy  interventions  for  the  period  2021–2027  for  all  three  options  on  the 
delivery model (see Annex 11 for the more detailed analysis). The analysis showed that 
the 15-year cumulative GDP multiplier for Option B is 29.5% higher than for Option A; 
70%  of  this  difference  is  due  to  frontloading  investment  (since  a  performance-based 
delivery model allows to pay for the achievement of interim milestones and targets) and 
the remaining 30% is due to additional supply-side effects of 10% (due to the focus on 
results  rather  than  spending).  The  15-year  cumulative  GDP  multiplier  of  Option  C  is 
19.5%  higher  than  that  of  Option  A,  with  79%  of  this  difference  being  attributable  to 
frontloading investment and the remaining 21% to the additional 5% supply-side effects. 

Therefore,  the  frontloading  investments  under  a  performance-based  delivery  model 
means  the  benefits  to  GDP  of  the  interventions  start  to  materialise  earlier,  leading  to 
larger  cumulative  GDP  gains  over  time.  Furthermore,  larger  supply-side  effects  lead  to 
higher GDP multipliers. 

6.1.2.  Options on the management mode 

Option D: Shared management 

As concerns cohesion  policy, the CAP,  the CFP and also  home affairs policy, Member 
States, regions and beneficiaries have a lot of experience with shared management. They 
have processes in place that have become well-established over the many years that these 
EU  policies  have  existed.  Through  its  decentralised  nature,  responsibilities  are  spread 
across different actors, which may make implementation less of a burden for one single 
entity.  This  also  allows  for  local  and  regional  knowledge,  needs  and  experiences  to 
feature more easily, including when it comes to faster adaptation to local circumstances. 
This  is  especially  true  concerning  the  involvement  of  stakeholders.  A  shared-
management system also allows for building the institutional and administrative capacity 
at the local and regional level. Lastly, because of the shared responsibilities, ownership 
of  Member  States  and  regions  is  greater,  ultimately  making  the  design,  adoption  and 
implementation of reforms (as well as investments) more sustainable. 

Under a model with payments against pre-agreed objectives, shared management would 
mean  that  the  assessment  of  whether  milestones  and  targets  have  been  met  is  the 
responsibility of Member States. Since Member States authorities have not had this kind 
of assessment responsibility on such a large scale before, the learning curve will be steep 

32 Barbero, J., Christou, T., Crucitti, F., García  Rodríguez, A., Lazarou, N.J., Monfort, P., and Salotti, S. 
(2024).  A  spatial  macroeconomic  analysis  of  the  equity-efficiency  trade-off  of  the  European  cohesion 
policy. Spatial Economic Analysis 19(3), 394-410. 

 
 
 
for all authorities involved. Member States would need to have appropriate management 
and  control  framework  in  place  to  implement  their  plans,  the  necessary  capacity  and 
guidance to conduct such assessments and take appropriate and timely action to remedy 
deficiencies.  In  the  absence  of  such  frameworks,  this  approach  could  lead  to 
inconsistency and an uneven playing field  across  Member States. To mitigate that risk, 
dedicated  measures  to  support  better  governance  and  capacity  building  could  also  be 
included  in  the  plans  from  the  outset,  where  relevant,  or  introduced  later  during 
implementation if specific difficulties arise and to ensure consistency and a level-playing 
field  across  Member  States.  Since  the  quality  of  knowledge  of  local  needs  does  not 
depend only on the formal involvement of local actors but on the data available, efforts 
should  be  done  to  ensure  a  high-quality  data-driven  needs  assessment  drives  the 
programming and implementation of the plans.  

Another  disadvantage  of  this  option  relates  to  reducing  direct  Commission  steer  and 
controls which could be mitigated by the negotiating process, the governance and rules 
set in plans, as well as regular system audits that would enable the Commission to check 
the robustness and reliability of national audit and control procedures. As under current 
programmes (e.g., cohesion), the Commission would in any case retain the possibility to 
react  and  take  action  whenever  needed  to  ensure  Member  States  comply  with  their 
obligations throughout implementation. (ex post). 

Option E: Direct management  

Through  the  RRF,  both  Member  States  and  Commission  have  gained  experience  with 
direct management at a larger scale in the context of nationally pre-allocated envelopes. 
However,  processes  are  still  not  as  well-established  as  in  shared  management. 
Furthermore,  many  Member  States  relied  on 
the 
implementation  of  shared  management  funds  to  implement  the  RRF.  Because  of  the 
centralised nature and payment system, the Commission can exercise more direct control 
over  the  implementation  of  the  funds.  However,  more  centralised  direct  management 
might generally lack local knowledge and experiences, making adaptation to local  (and 
possibly changing) needs more difficult and less flexible. Centralised direct management 
also  does  not  support  national/regional/local  ownership  to  the  extent  that  shared 
management does.  

the  existing  structures  for 

6.2.  How do the options compare? 

Effectiveness 

SO1 – Ensuring coherence between EU priorities, national and regional actions 

The  assessment  of  the  options  on  the  management  mode  shows  that  shared 
management (Option D) would best cater for the multi-level governance and strong 
regional dimension of the plans. Regions know their needs best and are best placed to 
implement  the projects  in their territoriesEvery territory has its own specific needs and 
knows best  how to  address  them  – with  some needing  to  invest  more in education and 
skills,  while  others  in  need  of  improving  the  management  of  their  external  borders. 
Shared  management  would  ensure  that  the  plans  are  tailored  to  the  specific  needs  of 
Member States and regions and help enhance ownership of the reforms and investments. 
In  turn,  this  would  help  to  deliver  more  efficiently  on  the  policy  objectives  set  at  EU 
level.  On  the  other  hand,  while  under  direct  management,  the  Commission  would 
exercise  more  control  over  implementation  and  can  ensure  better  alignment  with  EU 

 
 
priorities, the lack of local and regional knowledge and expertise as well as more limited 
ownership of local/regional bodies could lead to incoherence between EU priorities and 
local  and  regional  actions.  Hence,  national/regional/local  ownership  under  shared 
management  would  increase  the  success  and  impact  of  EU  funds  compared  to  direct 
management. 

As for the delivery model, Option B would ensure better coherence, value for money 
and  accountability  compared  to  a  cost-based  delivery  model  (Option  A).  Option  B 
increases  the  focus  on  concrete  outcomes  of  expenditure  and  its  contribution  to 
economic, social and environmental objectives. The specific results to be achieved would 
be set out clearly in advance, enhancing Member States’ and stakeholders’ ability to plan 
ahead, and thereby ensuring coherence with national and regional actions. Furthermore, 
providing financial support upon the fulfilment of milestones and targets would provide 
incentives  to  deliver  on  the  actual  implementation  of  agreed  measures.  It  would  be 
important to establish meaningful performance milestones and targets, as their quality is 
a prerequisite for the success of a performance-based delivery model. 

Option B would provide a simpler framework for having reforms at Member States 
level  than  under  Options  A  and  C,  which  moreover  have  the  potential  to  further 
enhance coherence between EU and national/regional/local activities by ensuring that the 
implementation  of  EU  priorities  and 
the 
necessary  framework  conditions  for 
national/regional/local investments are in place    

SO2 – Creating a simple and cost-effective framework delivering on EU priorities 

The  assessment  of  the  options  on  the  management  mode  show  that  relying  on 
shared management for the plans (Option D) would ensure simplicity for Member 
States  and  regions  and  reduce  administrative  costs.  Member  States’  and  regional 
authorities  could  build  on  the  existing  management  and  control  structures  and 
arrangements for the management of EU funds with nationally pre-allocated envelopes. 
While  Member  States  have  developed 
the  RRF 
(implemented under direct  management),  these  were often the same structures used for 
the implementation of shared management funds such as cohesion. Adjustment costs for 
Member  States’  authorities  would  therefore  be  lower  under  shared  management 
compared to direct management – except for the still-to-be-implemented SCF, where the 
integration into the plans would entail changes to the management mode rules.   

implementation  structures  for 

As for the delivery model,  Option B would likely  imply some adjustment costs for 
national and regional authorities. Setting up a solid performance framework, based on 
reliable, high-quality data, can create costs for Member States’ authorities, beneficiaries 
and the Commission. These would however be one-off entry costs and could be mitigated 
given  that  Member  States’  authorities  have  already  acquired  experience  with  such 
delivery  model  and  through  the  provision  of  technical  assistance.  Conversely,  while 
relying  on  a  cost-based  delivery  model  would  reduce  adjustment  costs  for  Member 
States, given the high levels of familiarity with such a system, it would not address the 
high administrative costs involved in the verification of invoices, as well as issues related 
to being more prone to errors  under cohesion policy funds. A hybrid system (Option C) 
would  result  in  a  duplication  of  payment  and  assurance  systems  and  hence  higher 
administrative costs for Member States’ authorities.  

SO3 – Meeting both long-term policy goals and emerging policy priorities 

 
 
The  assessment  of  the  options  shows  that  flexibility  can  be  achieved  both  under  a 
cost-based  and  a  performance-based  delivery  model.  Flexibility  very  much  depends 
on  the  legal  requirements  linked  to  programming  (e.g.  whether  money  is  earmarked  to 
certain  priorities,  if  there  are  any  reserves,  what  are  the  requirements  regarding  the 
amendments of the programmes or conditions for payment). Such rules can be designed 
in a more flexible or stricter way which does not depend on the delivery model as such.  

The  same  applies  when  comparing  shared  and  direct  management  mode.  The 
experience from the current programming period shows that both in case of the RRF and 
cohesion policy, many rules that were introduced did not allow for achieving the level of 
flexibility  that  is  required  for  the  challenges  faced  by  all  EU  policies.  This  being  said, 
shared  management  could  ensure  that  priorities  emerging  at  regional/local  level  can  be 
addressed more effectively (provided the right rules are in place). 

Figure  3. Summary of the effectiveness  of the options on the design of the plans  – 
qualitative assessment (from “+” less effective to “+++” most effective)  

Delivery model 

Management mode 
Direct  
Shared  

Combination 
cost/performance  
++ 
++  
N/A  

+++ 
+++ 
N/A 

+ 
++  
N/A 

Specific 
objectives  

Cost-based  Performance-

based  

SO1  
SO2  
SO3  

+ 
+  
N/A 

+++ 
+++ 
N/A 

Coherence 

Internal  coherence  assesses  how  the  different  elements  of  the  plans  would  work 
together. This would be achieved by applying the same delivery model and management 
mode to the entire plan. Bringing the different funds under the same roof would facilitate 
further  synergies  both  from  a  policy  and  administrative  point  of  view.  For  example, 
applying the same delivery model to all measures supported by the plans would allow to 
more  easily  track  and  report  on  the  overall  implementation  of  the  plans,  while  more 
easily  assessing  the  risk  of  double  funding.  Relying  on  the  same  shared  management 
structure would remove overlaps and allow to better exploit the synergies between policy 
areas covered by the plans. 

As for external coherence, it looks at how the plans would work with other instruments 
in the EU budget, as well as national/regional funding and private investments. Moving 
towards a fully performance-based delivery model would mirror the efforts also done by 
other EU spending  programmes to  apply a stronger focus on performance. This  can be 
seen in external action funding (e.g. Ukraine Facility; Western Balkans Facility) but also 
in  EU  programmes  without  nationally  pre-allocated  envelopes,  where  the  use  of 
performance-based  forms  of  funding  has  increased  over  time  (e.g.  Horizon  Europe, 
Erasmus+). Applying a performance-based delivery model to the plans would therefore 
reduce  the  fragmentation  of  the  EU  budget  into  different  programmes  with  different 
delivery models. At the same time, it would be important to ensure that the risk of double 
funding can be easily assessed, given that the concept of double-funding is a cost-based 
concept  which  is  difficult  to  apply  to  a  performance-based  delivery  model.  Under  the 
next  MFF,  the  plans  will  contribute  to  bolstering  EU  Competitiveness  under  the  pre-
allocated  envelope,  through  notably  the  promotion  of  economic,  social  and  territorial 

 
 
  
 
 
cohesion  with  regions  at  its centre,  and complement  investments  at EU level  under the 
European Competitiveness Fund. 

Finally, experience shows that having different programmes with different management 
modes does not undermine the coherence between EU spending programmes. It would be 
important to align the rules of spending programmes to be able to exploit the synergies 
between them (e.g. rules on cumulative funding) and avoid inconsistencies (e.g. different 
level of assurance).  

6.3. 

Preferred option for the design of the plans 

In light of the above, the preferred option for the design of the plans is a delivery model 
against  pre-agreed  objectives  (Option  B  of  the  delivery  model),  under  shared 
management (Option D of the management mode). This preferred option will be taken 
into account when assessing the options related to the scope of the plans in section 7. 

7.  ASSESSMENT OF THE OPTIONS RELATED TO THE SCOPE OF THE PLANS 

7.1.  What are the impacts of the options? 

Option 1 (cohesion policy funds; EMFAF; home funds; SCF) 

The  plans  would  ensure  better  consistency  between  different  policy  priorities. 
Policies are mutually  dependent  and need to  be closely coordinated, in  concert with  all 
competent authorities. For example, linking cohesion policy with home affairs under one 
plan  could  ensure  a  better  integration  of  asylum  seekers  into  local  communities, 
including  in  the labour market,  while a  closer link between  cohesion  and maritime and 
fisheries  policy  could  also  help  stimulate  economic  activities,  such  as  tourism  and 
shipping, creating jobs and improving livelihoods in coastal regions. Likewise, the plans 
would allow to better exploit the synergies that exist between the SCF and cohesion – for 
instance,  on  skills  or  providing  trainings  targeting  vulnerable  households  on  energy 
efficiency.  This  would  go  in  line  with  the  recommendations  of  the  high-level  expert 
group on the future of cohesion policy, which found that “cohesion is far too important to 
be left to cohesion policy alone; it should operate in concert with other EU and national 
policies,  as  these  are  mutually  dependent  and  must  work  together  to  reach  their 
collective  goals.  Economic,  social  and  territorial  cohesion  cannot  be  achieved  without 
other policies taking into account their uneven territorial impact”.  

Support  would  be  provided  to  all  regions  regardless  of  their  level  of  development 
with  particular  attention  to  less  developed  ones.  New  priorities  and  challenges  are 
relevant  to  various degrees for all regions as well  as all Member States, even for those 
with a higher level of development. Other challenges, such as the demographic transition, 
access to essential services, the loss of social and human capital, and pockets of poverty 
or  increasing  climate  or  security  risks,  may  also  require  a  specific  territorial  focus, 
irrespective  of  the  categories  of  regions  where  the  supported  territories  are  located  and 
targeting the sub-regional level too. This would help in achieving impacts comparable to 
current analytical results (see Annex 9 for a detailed analysis).  

Furthermore,  the  plans  would  retain  a  strong  regional  and  territorial  dimension, 
that closely involves regional and local authorities in the design and implementation 
of cohesion and sectoral policies and supports regional/local ownership in line with 

 
 
 
 
to 

the 

and 

level 

allowing 

regional/subnational/sectoral 

current practices, including the possibility to interact directly with the Commission 
services.  Indeed,  the  set  of  challenges  faced  by  regions  call  for  enhancing  the  place-
based  dimension  of  cohesion  policy.  By  including  a  fully-fledged  governance  structure 
for 
incorporate 
subnational/regional  and  sectoral  chapters  into  the  plans,  the  latter  would  ensure  that 
support  is  focused  on  the  specific  needs  of  each  Member  State  and  its  regions  and 
sectors,  while  being  consistent  with  EU  priorities.  Considering  the  broad  experience  in 
the programming and management of EU funds of regions and local authorities, as well 
as  the  lessons  learnt  from  the  CAP  –  which  also  caters  for  a  strong  involvement  of 
regional  managing  authorities  within  a  national  strategic  plan  –  having  sub-national 
chapters would not bring additional burden or reduce flexibility but would rather ensure 
that the plans deliver most efficiently on our joint policy objectives. Concretely, reforms 
and  investments  would  be  tailored  to  the  challenges  of  regions  and  territories  with 
different  development  profiles  (trapped,  with  specific  transition  needs,  with  very  low 
development  levels,  with  different  levels  of  administrative  capacity,  etc.),  while 
delivering  on  EU  priorities.  Overall,  the  strong  regional  dimension  of  the  plans  would 
fulfil  the  Political  Guidelines’  call  for  a  strengthened  cohesion  and  growth  policy  with 
regions at the centre, designed in partnership with national, regional and local authorities.  

The  plans  are  also  expected  to  significantly  enhance  the  EU’s  competitiveness  by 
removing  long-standing  regulatory  barriers  at  the  national  or  regional  levels  and 
create an environment more conducive to investment. With high levels of public debt 
and  relatively  low  growth  prospects,  Member  States  and  regions  need  to  make  a  more 
efficient use of budgetary resources to increase productivity, enhance economic growth 
and  create  jobs.  Structural  reforms,  including  at  subnational  level,  can  drive  the  green 
and  digital  transitions,  convergence  of  Member  States  and  regions,  and  improve  the 
functioning  of  governance,  labour,  and  product  and  services  markets  as  well  as  justice 
and social protection systems. In the medium to long run, they increase the mobility and 
efficient use of production factors, thus raising productivity and the economy’s aggregate 
output.  By  accelerating  growth,  structural  reforms  can,  in  turn,  both  reduce  concerns 
about the potential short-term growth costs of ambitious reforms and create fiscal space 
to implement them. Moreover, structural reforms can stimulate private sector investment 
by improving the business environment, facilitating the reallocation of resources to more 
sustainable activities.  

The  plans  would  give  Member  States  the  necessary  incentive  to  engage  in  an 
ambitious  reform  agenda.  For  example,  the  plans  could  include  reforms  related  to 
lifting barriers  in the internal  market,  competitiveness  reforms  or procurement reforms. 
They could also be used to support Member States and regions in the implementation of 
key  EU  policy  priorities,  such  as  the  European  Pillar  of  Social  Rights,  the  Pact  on 
Migration  and  Asylum  or  the  European  Green  Deal.  Even  if  not  directly  related  to 
investments included in the plans, the reforms supported would improve the effectiveness 
of  EU  funds  as  they  concern  Member  States’  structural  reforms  where  implementation 
would benefit the implementation of investments across the board.  

In  contrast  with  the  current  enabling  conditions  in  cohesion  policy  which  are  the 
same  for  all  Member  States,  reforms  would  be  tailored  to  a  specific  national  or 
subnational  context.  Indeed,  Member  States  have  different  political,  economic,  social 
and  sustainability  contexts,  but  they  all  face  similar  challenges.  Reform  needs  can  also 
exist  at  the  subnational  level,  especially  where  regional  and  local  authorities  have 
significant  competencies.  At the same time,  the  steering  mechanism at EU level  would 

 
 
 
 
ensure  that  reform  priorities  are  aligned  with  EU  priorities  and  undertaken  across 
Member  States  in  a  coherent  but  tailored  way.  By  design,  the  plans  would  effectively 
align  EU  funding  with  key  EU  priorities,  including  the  promotion  of  economic,  social 
and  territorial  cohesion,  while  increasing  policy  coherence  between  the  EU  and  the 
national, regional and local level.  

This closer link between EU funding and EU policy priorities would enhance the EU 
added value of the plans. The steering mechanism would identify those investments and 
reforms  that  contribute  to  goals  that  cannot  be  achieved  as  effectively  by  individual 
Member States acting alone. As a result, higher support can be expected under the plans 
than  is  currently  the  case  under  nationally  pre-allocated  envelopes  for  projects  with  a 
high  EU  added-value,  such  as  cross-border  (e.g.  cooperation  projects  between  Member 
States’  authorities)  and  multi-country  projects  (e.g.  Important  Projects  of  Common 
European Interest). This being said, the delivery of more complex cross-border projects 
such as infrastructure projects connecting two Member States would continue to require a 
special  delivery  system.  This  is  further  elaborated  in  the  section  on  the  impacts  of  the 
options on cross-border. 

Having a plan per Member State with a broad eligibility scope and a single set of 
rules  is  expected  to  provide  more  clarity  on  funding  opportunities  and  in  turn 
facilitate access to funding of EU businesses and project promoters, including local 
authorities. The new simplified system would rationalize the approval mechanisms and 
harmonize  the  regulatory  landscape  –  whether  on  audit,  eligibility,  collection  of  data, 
visibility  or  reporting  rules  -  by  providing  beneficiaries  and  programme  authorities  a 
simpler  and  fully  aligned  regulatory  framework  across  policies.  These  benefits  are 
expected to be larger for SMEs, which often have limited resources compared to larger 
companies  to  navigate  complex,  heterogeneous  programme-specific  rules.  Increased 
flexibility  will  allow  to  faster  address  new  challenges  that  will  appear  during  the 
implementation,  by  reducing  the  number  of  changes  to  the  applicable  rules  and 
requirements set out in the basic act. This should reduce the administrative burden at all 
levels  of  the  implementation  system  –  beneficiaries,  implementing  bodies  and  the  EU 
institutions.  

The  plans  would  be  implemented  ensuring  value  for  money  and  improving  the 
results  on  the  ground  through  a  performance-based  delivery  model.  Payments 
against the fulfilment of investment and reform objectives (rather than the reimbursement 
of eligible costs) would allow to speed up disbursements and increase the efficiency of 
EU  spending  to  achieve  more  results  with  the  existing  resources.  This  would  allow  to 
strengthen  the  performance  dimension  of  the  EU  budget  in  the  policy  areas  currently 
supported by the funds that would be integrated into the plans as part of  Option 1. This 
would  be  in  line  with  the  calls  from  the  Council  to  reflect  on  how  to  make  cohesion 
policy more performance-based with  a view to  enhancing  its efficiency,  building  on its 
own experiences as well as lessons learned from other EU instruments.33   

Under such an option, the CAP would remain outside of the plans. This would ensure 
continuity  with  the  current  model  of  the  CAP  Strategic  Plans  building  on  the  expertise 
gained so far by Member States with the implementation of the CAP Strategic Plans. At 

33 Council conclusions on the Communication on the 9th Cohesion Report, 5 June 2024. 

 
 
 
 
 
 
 
the  same  time,  it  would  also  allow  for  manageable  changes  and  for  outlining 
responsibilities both at the EU and national level and towards the final beneficiaries with 
a  focus  on  generating  further  simplification.  Combining  targeted  direct  income  support 
with on-farm investments, knowledge exchange and investments in rural areas (such as 
business  start-ups)  can  maximise  the  impact  of  EU  spending  to  foster  farm 
entrepreneurship  and  generational  renewal.  The  integration  of  the  interventions  to 
support 
the 
administrative  requirements  associated  to  these  interventions  and  can  also  facilitate  the 
fulfillment of the environmental and climate objectives.  

the  provision  of  ecosystem  services  also  contributes 

to  simplify 

While  a  one  fund  approach  for  the  future  CAP  would  allow  to  ensure  some 
continuity  while  addressing  agricultural  challenges  in  a  more  targeted  way,  this 
would come with a more limited possibility to address emerging or unforeseen needs 
and  changing  priorities.  Irrespective  of  the  options  and  given  the  specificities  of  the 
CAP  (regular  payments  made  to  9  million  farmers  altogether),  budgetary  predictability 
for the CAP will be essential.  

Under this option, as well as under option 2, there would be the possibility to have 
additional harmonization of some key horizontal aspects of policy design as part of 
the future MFF (e.g., monitoring, performance, audit and control systems, the broader 
conditionality system). This would create synergies in terms of administrative procedures 
for Member States, thereby reducing costs. 

Option 2 (CAP) 

With one CAP Strategic Plan per Member State, the CAP is already the closest to 
the plans in terms of design. The CAP Strategic Plans have marked a major change in 
the  way  the  CAP  budget  is  programmed  and  spent,  bringing  increased  flexibility  and 
responsibility to Member States in addressing regional and local specificities and needs 
within a set of common EU rules and objectives. As such, the CAP Strategic Plans have 
shown  that  the  move  to  single  programming  per  Member  State  is  feasible  and  an 
appropriate tool to deliver on the CAP objectives.  

The plans would build on the strengths of the CAP Strategic Plans  – in particular 
its governance structure. The multi-level governance and strong regional dimension of 
the  plans  would  go  in  line  with  the  current  governance  of  the  CAP,  which  allows  for 
regional  managing  authorities  to  be  responsible  for  the  implementation  of  the  regional 
interventions  envisaged  in  the  plans,  while  the  national  managing  authority  remains 
responsible  for  ensuring  the  appropriate  coordination  and  guaranteeing  coherence  and 
consistency.  This  would  ensure  continuity  and  predictability  for  Member  States’s 
authorities  implementing  CAP  and  farmers  alike,  thereby  reducing  the  need  for  the 
respective Member States’ authorities to have to adjust their administrative system again 
(after  the  big  changes  required  for  the  CAP  2023-2027).  While  the  complexity  of 
devising a comprehensive national plan (as well as any later amendments) covering many 
different policy domains would require accrued efforts for national administrations, this 
would not undermine the coherent approach towards the CAP since the approval of the 
plans  (and  any  future  amendment)  would  need  to  address  all  objectives  in  a 
comprehensive and balanced manner.  

From a budgetary standpoint, the main advantage in bringing the CAP within the 
plans  would  be  to  apply  the  same  rules  to  all  funds  under  shared  management, 

 
 
 
 
 
 
 
 
while  addressing  some specificities  for  the  CAP  to  preserve  the  single  market  and 
fair  competition  between  farmers.  This  would  mean  using  the  same  delivery  model 
with  common  rules  allowing  for  technical  specificities  on  programming,  payments  or 
requirements  regarding  management  and  control  systems  and  protecting  the  financial 
interests of the Union, including the requirements for farmers or companies in agri-food 
sector. Already now farmers or rural communities and other rural stakeholders may be at 
the  same  time  beneficiaries  of  both  the  CAP  and  cohesion  policy  funds.  Bringing  the 
CAP under the plans would allow them to implement their projects under a unified audit 
and control system, thereby reducing the complexity and administrative burden linked to 
operating under two parallel systems, while also lowering potential risks of errors, audit 
duplications and double funding.  

Bringing the whole CAP under the umbrella of the plans would be an opportunity 
to  further  improve  the  delivery  model  of  the  CAP.  While  payments  are  still  mainly 
made  based  on  incurred  costs,  new  performance  indicators  have  been  introduced  to 
monitor the progress of implementation. This dual system leads to burdensome reporting 
requirements. Instead, the future CAP could generate stronger results with less reporting 
requirements  by  moving  towards  performance-based  payments.  The  report  on  Strategic 
Dialogue  on  the  future  of  EU  agriculture  takes  the  example  of  the  eco-schemes,  a 
mechanism  to  trigger  greener  practices  by  farmers,  to  call  for  linking  payments  to  the 
fulfilment of quantifiable outputs to  provide more meaningful incentives and flexibility 
to farmers. 

From a policy standpoint, bringing the CAP into the plans may enable the use of the 
EU budget as a catalyst for triggering important reforms to  address long-standing 
challenges in the farming sector and rural areas in general where CAP tools are not 
fit for purpose. The Vision for Agriculture  and Food underscores the need for reforms, 
from generational renewal to strengthening farmers’ position in the food value chain. For 
instance, tackling the main entry barriers for farmers – such as access to land and access 
to capital – requires reforms at national level.  Other areas of reforms concern skills for 
better career opportunities, better availability and access to essential services and broader 
digital  connectivity,  better  living  and  working  conditions,  gender  equality  and  social 
inclusion,  as  well  climate  mitigation  and  adaptation  and  environmental  protection.  By 
strategically  linking  reforms  with  investments,  the  plans  could  become  a  catalyst  for 
triggering  those  reforms  that  will  strengthen  the  attractiveness,  competitiveness  and 
resilience of the agricultural sector and rural areas, in line with the priorities of the Vision 
on Agriculture and Food.  

At  the  same  time,  linking  disbursement  with  pre-set  milestones  and  targets  in  the 
area  of  reforms  could compromise  the  regularity  of  EU  disbursements  and  finally 
the stability of support given to farmers. This would in particular be of concern for all 
instruments  directly  supporting  farm  income  (e.g.,  direct  payments,)  on  which  farmers 
directly rely for their livelihood. It would therefore require introducing specific rules to 
protect the interest of final beneficiaries. 

The plans would also allow Member States to better exploit the complementarities 
that  exist  between  cohesion  policy  and  rural  development  in  the  CAP.  This  would 
allow  Member  States  to  provide  a  more  effective  and  comprehensive  support  to  rural 
areas. As the Vision for Agriculture and Food puts it, the contribution of Cohesion Policy 
to the economic diversification and the provision of infrastructure and associated services 

 
 
 
 
 
 
can play a greater role to help rural areas to remain attractive places to live for farmers, 
their families and other rural inhabitants, as well as stimulate tourism.  

Nevertheless, in order to fulfil the CAP policy objectives, to preserve the integrity of the 
single  market,  and  ensure  fair  competition  between  farmers,  to  ensure  the  stability  and 
predictability of support farmers need, the full integration of the CAP (Option 2b) would 
require  the  introduction  of  specific  rules  to  accommodate  the  delivery  of  instruments 
directly supporting farm income (including direct payments,) on which farmers rely for 
their livelihood.  

Integrating only the EAFRD into the Plans (option 2a) would mean a step backwards 
from the current CAP Strategic Plans (where both Pillars of the CAP have been brought 
under a single umbrella) and strategic planning approach. It would only partially help 
better exploit the synergies with other EU policies such as cohesion, which are important 
for the development of thriving rural areas as only a limited share of EAFRD budget is 
addressing  the  wider  needs  of  rural  areas  beyond  the  farming  sector.  From  the 
administrative  point  of  view,  Member  States  would  need  to  work  with  two  different 
programming instruments and delivery structures, one under the plan and one under the 
current  EAGF.  While  this  could  come  with  increased  administrative  costs,  the  latter 
would  be  mitigated  considering  that  the  plans  would  build  on  the  current  CAP 
governance structure (which is particularly relevant for the EAFRD).  

The  interventions  to  be  financed  under  both  Pillars  would  need  to  be  carefully 
designed  to  avoid  overlaps.  For  example,  this  would  concern  interventions  linked  to 
supporting  young  farmers  (which  can  currently  receive  complementary  income  support 
under EAGF and start-up aid under EAFRD) as well as environmental measures (where 
farmers can receive complementary payments for eco-schemes in the EAGF and can also 
apply  for  multiannual  environmental  projects  under  EAFRD).  This  would  be  crucial  to 
avoid  that  all  the  efforts  carried  out  in  the  current  programming  period  to  increase  the 
complementarities among different CAP tools would be negatively affected and ensure a 
more efficient use of EU funding. 

Option 3 (Modernisation Fund) 

Integrating  the  Modernisation  Fund  into  the  plans  and,  by  extension,  into  the  EU 
budget  financial  architecture  would  fundamentally  alter  its  set-up  and  operation, 
simplifying  the  EU’s  financial  landscape.  A  single  coordinating  framework  would 
address the overlaps that currently exist between the Modernisation Fund and other EU 
spending  programmes,  such  as  cohesion  policy,  ensuring  a  more  efficient  use  of  EU 
funds,  while  facilitating  access  to  funding  by  project  promoters.  Furthermore,  the  link 
between  reforms  and  investments  would  help  maximise  the  value  of  every  euro  spent 
through nationally pre-allocated envelopes (as explained earlier for Option 1).  

It  would  make  applicable  existing  budgetary  safeguards  concerning  audit  and 
control systems. As highlighted by the European Court of Auditors34, the Modernisation 

34 ECA Special report 05/2023: “The EU’s financial landscape: A patchwork construction requiring further 
simplification and accountability”. 

 
 
 
 
 
 
 
 
 
 
Fund is currently managed completely outside the EU  budget, with no oversight by the 
European budgetary authority and European Court of Auditors. This poses challenges in 
terms of accountability and sound financial management, especially given the significant 
size of the instrument. Integrating the Modernisation Fund within the next MFF and the 
future  plans  would  ensure  that  supported  projects  are  subject  to  the  same  democratic 
scrutiny and financial safeguards as other nationally pre-allocated envelopes, in terms of 
transparency,  performance  monitoring  and  protection  against  fraud,  corruption  and 
conflicts of interests. 

Most  importantly,  it  would  also  ensure  the  respect  of  the  rule  of  law.  As  an  off-
budget  programme,  the  Modernisation  Fund  is  not  currently  subject  to  any  rule  of  law 
conditionality  nor  the  Conditionality  Regulation  –  which  is  different  from  other  ETS 
instruments.  This  allows  Member  States  to  continue  receiving  funding  even  in  case  of 
breaches  of  the  principles  of  the  rule  of  law.  Alongside  the  Conditionality  Regulation, 
which will continue to apply as a complementary instrument, the next MFF will provide 
for  a  streamlined  and  harmonised  conditionality  system  for  all  EU  funds  allocated  to 
Member  States.  Integrating  the  Modernisation  Fund  into  the  future  plan  would,  in  this 
respect,  address  existing  double  standards  and  enhance  the  overall  coherence  of  EU 
action.  This  would  go  in  line  with  the  rationale  of  the  Political  Guidelines,  which 
strongly underscore that the respect of the rule of law is a must for EU funds.   

The  main  risks  of  the  Modernisation  Fund’s  integration  into  the  plans  could  be  a 
loss of the targeted focus, a risk of reallocation and the adjustment costs of Member 
States. It would be essential to preserve the targeted focus of the Modernisation Fund for 
specific  Member  States.  In  this  regard,  integration  into  the  plans  could  broaden  the 
toolbox  available  for  the  much-needed  modernisation  of  the  energy  sector  in  lower 
income  Member  States,  as  these  would  be  able  to  more  easily  exploit  synergies  with 
other policy areas (e.g. cohesion policy) and support the completion of investments with 
reforms  in  the  energy  sector.  Likewise,  stability  and  predictability  of  funding  for  the 
energy  transition  would  need  to  be  ensured  in  a  context  of  a  single  national  envelope. 
The Commission would need to ensure that all objectives of the Modernisation Fund  are 
fulfilled in a comprehensive  manner as part of the plans. A performance-based delivery 
model,  with  clear  milestones  and  targets  set  from  the  outset,  would  also  allow  to  track 
outcomes  and  ensure  the  auction  proceeds  are  used  effectively  towards  their  intended 
purpose.  Finally,  Member  States  would  need  to  move  away  from  ad  hoc  investment 
proposals  to  implementing  reforms  and  investments  under  the  single  plans.  While  this 
could  mean  losing  a  degree  of  flexibility  compared  to  the  status  quo  and  increasing 
administrative  complexity,  this  would  be  mitigated  by  a  performance-based  delivery 
model (allowing faster disbursements than under a cost-based delivery model) as well as 
swift amendment procedures of the plans. 

Impacts on administrative costs of the options on the scope 
In the absence of a dedicated analysis of costs, the quantitative analysis is based on the 
data  of  the  second  interim  report  on  the  assessment  of  the  administrative  costs  and 
administrative  burden  in  the  management  of  the  CPR  funds  2021-2027.  Annex  10 
provides a more detailed explanation of the approach taken. 

A  reduction  factor  is  applied  to  Options  1  and  2,  reflecting  the  expected  simplification 
from  integrating  the  concerned  spending  programmes  into  the  plans  which  follow  the 
same  rules  (e.g.  delivery  model;  management  mode;  financial  management,  etc.).  The 
reduction factor varies between Options: 

 
 
 
 
 
 
- 

It  is  higher  for  Option  1  (50%)  considering  the  similarities  that  already  exist 
between these funds which are covered by the CPR; 

-  Option 2a also assumes a 40% reduction factor given the similarities that already 

exist between Pillar II of the CAP and cohesion policy. 

-  Option 2b assumes a 30% reduction factor, considering the need to cater for the 

specificities of direct payments. 

Setting  a  reduction  factor  is  inherently  difficult  and  represents  a  methodological 
assumption. However, these factors rely on the existing data, in particular the fact that the 
differences  that  exist  per  fund  within  the  CPR  have  large  differences  between 
themselves, showing the potential for simplification: EUR 37 968 per EUR million spent 
for the total CPR funds vs EUR 18 625 per EUR million spent for the ESF+, the lowest 
figure for a fund in the category (a reduction factor of around 50%). While the ESF+ has 
a much stronger homogeneity in terms of interventions than other funds (e.g. ERDF), this 
does not seem to be the driving factor behind the lower administrative costs since other 
funds with a reduced scope (e.g. home funds) also report high administrative costs.  

To make sure these reduction factors are as realistic as possible, they are not based on the 
figures  calculated  in  the  RRF  mid-term  evaluations  as  the  methodologies  were  not 
equivalent  (CPR  funds  set  at  EUR  37,968  per  EUR  million  spent  and  RRF  with  EUR 
2,500  per  EUR  million  spent)  and  because  the  future  plans  will  continue  to  rely  on  a 
multi-level governance structure and shared management. 

Estimates 
Option 

Status quo 

Option 1 

Option 2a 

Option 2b 

Total  administrative  costs 
per million EUR spent 

37,968 

18,984 

22,781 

26,578 

From the above, it seems that both Option 1 and Option 2 would significantly reduce 
administrative costs for Member States compared to the status quo. Options 1 and 2a 
would bring the biggest reduction, followed by Option 2b. 

7.2.  How do the options compare? 

Effectiveness 

SO1 – Ensuring coherence between EU priorities, national and regional actions. 

A plan per Member State would ensure more coherent, coordinated programming 
of  pre-allocated  envelopes,  reflecting  the  different  needs  at  national  and  regional 
level while ensuring support for EU priorities identified in the steering mechanism. 
All  options  would  not  only  reinforce  policy  coherence  across  all  governance  levels, 
through a dual system driving the programming of the plans: 

 
 
 
 
 
 
 
 
➢  With common objectives set at EU level for all Member States and regions; 
➢  A steering mechanism to address national and regional challenges, relying on the 
country-specific  recommendations  of  the  European  Semester  as  well  as  other 
recommendations  and  documents  relevant  for  the  policy  areas  covered  by  the 
plans – including in the field of agriculture, migration and security, etc. 

Furthermore,  through  the  strategic  link  between  reforms  and  investments,  all  options 
would ultimately  increase the EU’s competitiveness  by fostering an investment  climate 
that supports innovation and resilience. This would also be in line with the ambition set 
in the Competitiveness Compass35, which calls for action on horizontal enablers, such as 
removing barriers to the single market as well as simplifying the regulatory environment 
through a refocused EU budget. 

Option  1  would  already  significantly  contribute  to  aligning  EU  funding  with  key  EU 
priorities,  including  the  promotion  of  economic,  social  and  territorial  cohesion,  while 
tailoring  further  EU  interventions  to  Member  States’  and  regional  specific  needs.  This 
close  link  between  the  steering  mechanism  and  the  plans  would  ensure  that  the  latter 
support investments and reforms with a strong EU added value.  

Option  2  would  reinforce  policy  coherence  even  more  as  bringing  the  CAP  under  the 
umbrella of the plans would allow Member States to have further possibility to contribute 
(via the EAFRD in Option 2a, or the whole set of CAP instruments under Option 2b) to 
overarching  EU  priorities  such  as  food  security  and  natural  protection,  and  social  and 
territorial  cohesion.  While  option  2a  would  reduce  the  internal  coherence  of  the  CAP 
(which would be ensured under 2b, in both cases, the CAP would continue to maintain a 
strong  focus  on  specific  policy  objectives  that  respond  to  the  challenges  of  the 
agricultural  sector  and  rural  areas  and  the  orientations  outlined  by  the  Vision  on 
Agriculture  and  Food.  Option  2  would  also  contribute  to  the  Vision’s  aim  of  a  better 
alignment between national and EU policies.  

Finally,  with  a  scope  similar  to  cohesion  policy  funding,  the  integration  of  the 
Modernisation  Fund  (Option  3)  would  further  contribute  to  enhancing  the  policy 
coherence of the plans – with Option 3b providing more benefits than Option 3a.  

SO2 – Creating a simple and cost-effective framework delivering on EU priorities. 

All  options  are  expected  to  reduce  the  administrative  costs  for  Member  States  and 
regions, albeit to different extents. Option 1 would reduce the number of programmes 
from  more  than  400  to  a  plan  for  each  Member  State.  The  move  towards  single-step 
programming in cohesion policy, based on a single set of rules, is also expected to reduce 
delays in the start of programmes, without prejudice to a strong multi-level governance 
and regional dimension of the plans. Rather, it would combine the strengths of cohesion 
policy  and  the  RRF  and  build  on  existing  structures  to  reduce  adjustment  costs  for 
Member  States.  This  would  ensure  EU  funds  address  real  needs  and  create  a  sense  of 
common ownership among the partners involved. 

35 
e0ed18105a34_en 

https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-

 
 
 
 
 
 
 
 
Option 2a is expected to bring some further simplification compared to Option 1, when 
considering  the  similarities  that  exist  between  the  CAP  and  the  CPR.  From  the 
administrative  point  of  view,  however,  Member  States  would  need  to  work  with  two 
different  programming  instruments  and  delivery  structures  for  the  CAP,  one  under  the 
plan  and  one  under  the  current  EAGF.  While  this  could  entail  administrative  costs  for 
Member States,  the latter would be mitigated by the administrative cost reductions that 
would  be  brought  by  the  design  of  the  plans  (e.g.  performance-based  delivery; 
governance  structure  building  on  the  CAP  governance).  To  reduce  the  risk  of 
fragmentation,  interventions  supported  under  the  plans  and  the  EAGF  (which  would 
remain separate) would need to be carefully designed. 

While Option 2b would also bring additional simplification compared to the status quo, 
administrative  arrangements  would  require  the  introduction  of  specific  rules  under  the 
plans to preserve the integrity of the single market and fair competition between farmers. 
Direct  payments  to  farmers  as  well  as  market  measures  where  technically  applicable 
would  be  subject  to  the  same  rules  as  the  rest  of  the  plan  (e.g.  same  audit  and  control 
rules; payment rules; delivery model). Funding intended for direct income support would 
however have to follow different rules to preserve the specific nature of the CAP support, 
in  particular  to  ensure  the  regularity  of  EU  disbursements  and  finally  the  stability  of 
support  given  to  farmers.  Under  Option  2b,  it  is  likely  that  some  administrative 
adjustments would be needed at Member State level (planning and payment authorities). 
In  addition,  the  complexity  of  devising  a  comprehensive  national  plan  (as  well  as  any 
later amendments) covering all policy domains would require accrued efforts for national 
administrations. However, this option would ensure a higher coherence of EU spending 
against the CAP objectives than 2a. 

The  integration  of  the  Modernisation  Fund  into  the  plans  (Option  3)  is  likely  to  bring 
additional  complexity  and  administrative  costs  to  Member  States.  However,  this  would 
need to  be balanced against  the gains  that would stem from  the increased protection of 
the EU’s financial interests following the integration of the Modernisation Fund into the 
plans,  and  the  simplification  of  the  EU’s  financial  landscape,  in  line  with  the  Political 
Guidelines.    

Finally, having a plan per Member State with a broad eligibility scope and a single set of 
rules  (established  in  one  regulation)  is  expected  to  provide  more  clarity  on  funding 
opportunities and in turn facilitate access to funding of EU businesses (including SMEs) 
and project promoters. The benefits are expected to be higher for Option 3 (integration 
of the Modernisation Fund) compared to Options 1 and 2. 

SO3 – Meeting both long-term policy goals and emerging policy priorities. 

Single  national  envelopes  would  ensure  the  efficient  and  flexible  allocation  of 
funding across policies areas, allowing Member States to address new policy priorities 
such as defence, while improving the coherence with other EU policies. They would also 
make  it  easier  to  reallocate  resources  to  respond  to  unforeseen  challenges  or  shifting 
policy needs without needing to re-open the legislative framework.  

Option  1  would  allow  Member  States  to  more  flexibly  design  a  more  comprehensive 
plan,  tailored  to  the  challenges  they  face.  For  example,  Member  States  at  the  EU’s 
external  borders  could  dedicate  a  larger  share  of  their  envelopes  to  address 

 
 
 
 
 
 
 
 
 
migratory/security challenges, without undermining the delivery of other objectives such 
as  cohesion  policy,  considering  that  home  affairs  interventions  also  help  reducing 
economic,  territorial  and  social  disparities  (for  e.g.  between  those  regions  under  higher 
pressure  at  the  borders  of  the  EU  and  others).  Before  approving  the  plans,  and  any 
subsequent  amendments,  the  Commission  would  check  that  Member  States  have 
addressed all relevant objectives.  

Option  2  would  add  further  flexibility  of  nationally  pre-allocated  envelopes  albeit  to  a 
different  extent.  Under  Option  2a,  Member  States  would  be  able  to  better  exploit  the 
synergies  that  exist  between  support  through  some  tools  of  the  EAFRD  to  rural  areas 
beyond  farming  and  cohesion  policy  to  support  the  development  and  attractiveness  of 
rural areas, but to the detriment of synergies  within the CAP (between first and second 
pillar)  which  are  also  very  important  for  the  farming  community.  Under  Option  2b, 
Member States would have at hand an even wider range of tools to deliver on the CAP 
objectives. At the same time, to ensure the integrity of the single market and preserve fair 
competition between farmers, the integration of the CAP into the plans would need to be 
accompanied by specific rules.  

Finally, the integration of the Modernisation Fund (Option 3) would further contribute to 
enhancing  the  efficiency  and  flexibility  of  nationally  pre-allocated  envelopes  –  with 
Option 3b providing more benefits than Option 3a.  

Figure  4.  Summary  of  the  effectiveness  of  the  options  on  the  scope  –  qualitative 
assessment (from “+” less effective to “++++” most effective) 

Option 1 

Option 2a 

Option 2b 

Option 3a 

Option 3b 

+ 

+ 

+ 

+ 

+ 

+ 

++ 

++ 

++ 

+++ 

++ 

+++ 

++++ 

++ 

++++ 

Specific 
objectives 

SO1 

SO2 

SO3 

Coherence 

All  three  options  would  contribute  to  reducing  overlaps  between  EU  spending 
programmes,  hence  ensuring  a  more  coherent  use  of  EU  funding.  Option  1  would 
allow to  ensure better policy coherence  across  cohesion  policy funds, the  SCF, HOME 
funds and EMFAF. This could lead to a more impactful EU budget spending to address 
important challenges, such as boosting the EU’s competitiveness. Option 2a would take 
this further, by also tackling the limited overlaps that exist in the EU budget’s support to 
rural areas (beyond farming) – mainly, between the EAFRD and cohesion policy funds – 
and  hence  provide  a  more  integrated  and  comprehensive  support  to  rural  areas.  While 
option 2a would reduce the internal coherence of the CAP while bringing some synergies 
with  cohesion,  Option  2b  would  bring  additional  coherence  to  CAP  spending  while 
ensuring more synergies with other policies. Finally, the integration of the Modernisation 
Fund (Option 3) would reduce the overlaps that currently exist with cohesion policy.  

 
 
 
 
 
 
 
 
 
The  steering  mechanism  would  also  ensure  coherence  between  the  plans  and  other  EU 
spending  programmes, such as the European Competitiveness  Fund, the  Global  Europe 
Fund  or  a  dedicated  instrument  for  cross-border  projects  in  the  energy  and  transport 
sector. For example, the European Competitiveness Fund could provide advisory support 
for the setting up of IPCEIs, which could be financed through the national envelopes. As 
for the Global Europe Fund, the plans will provide support to tackle migration, security 
or  cross  border  cooperation  in  conjunction  with  the  priorities  financed  in  neighbouring 
countries. Regarding transport, Member States could use their plans to invest in national 
sections  of  the  TEN-T,  complementing  the  cross-border  links  financed  by  a  dedicated 
instrument for cross-border projects.  

At the same time, having a simplified framework for nationally pre-allocated envelopes 
should  allow  to  better  exploit  synergies  with  other  instruments  of  the  EU  budget, 
including  the  European  Competitiveness  Fund.  Both  instruments  would  include  rules 
allowing  to  capitalise  on  such  synergies  (e.g.  rules  on  the  use  of  cumulative  funding). 
Looking  beyond  the  EU  budget,  having  a  plan  per  Member  State  could  facilitate 
consistency with national or regional sources of funding, thereby maximising the value of 
every euro spent in the EU budget. Finally, combining different funds under one single 
envelope  should  increase  the  leveraging  effect  of  the  EU  budget,  helping  to  mobilise 
private investment. 

7.3.  Options to support cross-border projects 

Under  Option  4a  (cross-border  projects  within  the  plans),  the  closer  link  between 
EU  funding  and  policy  priorities  of  the  plans  would  enhance  their  cross-border 
dimension. The steering mechanism would identify cross-border projects with a high EU 
added-value. As a result, one can  expect higher support under the plans  for both cross-
border projects and for national projects of high EU relevance than is currently the case 
under nationally pre-allocated envelopes for cross-border projects.  

However,  the  implementation  of  cross-border  infrastructure  projects  through  the 
plans would be more complex and costly for  both  Member States’ authorities and 
project promoters. For the Member States to align their investment agendas with those 
of  neighbouring  countries  would  be  a  lengthy  process,  both  during  the  initial  plan 
negotiations and in case of amendments. Germany for instance would have to coordinate 
its  national  plan  with  eight  neighbouring  Member  States;  Hungary  with  five.  In  cases 
where  the  process  is  delayed  in  one  or  more  Member  States,  this  may  cause  knock-on 
delays. While the Commission could support these coordination efforts – both during the 
negotiations and through the provision of technical assistance via the plans –, the burden 
for Member States’ authorities and would remain significant. Similarly, this option could 
also  significantly  increase  the  administrative  burden  for  project  promoters,  who  would 
need  to  implement  their  cross-border  projects  under  several  national  plans  and  report 
within separate reporting and audit schemes (one per Member State).   

This  being  said,  the  plans  could  cater  for  complementary  investments  to  cross-
border sections and to projects of high EU relevance. These could include sections of 
national interest on the trans-European networks as well as certain energy projects, such 
as  national  grid  reinforcements  that  support  cross-border  interconnections.  Since  these 
projects  would  be  carried  out  within  the  territory  of  a  single  Member  State,  their 
implementation  would  not  entail  the  additional  costs  mentioned  above  for  cross-border 
projects  involving  more  than  one  Member  State.  These  envelopes  could  also  be  very 

 
 
 
 
 
relevant  when  combined  with  Union  funding  in  the  context  of  cross-border  renewable 
energy auctions that are centrally managed (auction-as-a-service model). 

Under Option 4b (separate instrument) directly managed EU support would ensure 
the predictability and stability needed by complex cross-border projects. Awarding 
funding directly at EU level would allow to maintain the long-term political commitment 
to  strategic  projects,  to  create  sufficient  certainty,  predictability  and  stability  for  other 
investors.  Direct  management  would  also  facilitate  a  coordinated  implementation  of 
military  mobility  projects  to  facilitate  the  seamless  and  rapid  transport  of  troops  and 
military equipment across the EU.  

The  competitive  allocation  of  grants 
in  a  phased  approach  under  direct 
management, while ensuring predictability of funding, allows to focus on the most 
mature  (phases  of)  projects.  Furthermore,  in  case  of  significant  delays  during 
implementation  or  if  the  project  costs  are  lower  than  initially  anticipated  (for  instance 
through  successful  public  procurement  procedures),  it  would  be  important  to  allow  to 
free the amounts not used by beneficiaries in order to re-allocate them to other projects. 
The “use it or lose it” principle of the CEF has ensured that funds are optimised within 
the  programme  and  are  reallocated  to  other  projects  offering  best  EU  added  value.  For 
CEF  2014-2020,  the  “use  it  or  lose  it”  approach  will  allow  to  increase  programme 
absorption from about 80% to 90% based on current estimates. 

Direct  management  of  complex  cross-border  projects  would  also  reduce 
administrative  costs  for  Member  States’  authorities.  The  overall  cost  of  direct 
management  is  also  low  thanks  to  economies  of  scale  under  a  cost-based  delivery 
model.36  This  is  confirmed  by  the  high  productivity  ratio  of  an  average  of  EUR  25 
million per full-time equivalent annually. This covers the entire lifecycle of programme 
management from the publication of the call until audit, including feedback to policy and 
reporting. In terms of cost-efficiency, the direct management of cross-border projects in 
transport  and  energy  represents  0.39%  of  the  EU  funds  over  the  2021-2027  period 
including all coordination and management costs incurred in the Commission37.  

This option would however require efforts to ensure consistency with the transport and 
energy  investments  that  would  be  included  in  the  plans.  To  avoid  overlaps  and 
complexity,  it  would  be  important  to  define  a  clear  scope  –  both  for  this  separate 
instrument and other EU spending programmes (in particular, the plans and the European 
Competitiveness  Fund). The option would also  severe the link with  reforms  that would 
nonetheless  be  important  for  the  completion  of  cross-border  infrastructure  investments 
(e.g. public procurement). 

8.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

This  initiative will be monitored through the performance framework for the post-2027 
budget, which is examined in a separate impact assessment. The performance framework 

36  For  the  CEF  I  programme  (2014-2020),  see  also  the  Mid-term  evaluation  of  the  Connecting  Europe 
Facility (CEF) - SWD(2018) 44 final/2. 

37  Source:  Commission  Staff  Working  Document:  Cost-benefit  analysis  for  the  delegation  of  the 
management of the 2021-2027 EU programmes to executive agencies, SWD(2021)20 final of 12.02.2021 

 
 
 
 
provides  for  an  implementation  report  during  the  implementation  phase  of  the 
programme,  as  well  as  a  retrospective  evaluation  to  be  carried  out  in  accordance  with 
Article 34(3) of Regulation (EU, Euratom) 2024/2509. The evaluation shall be conducted 
in accordance with the Commission's Better Regulation Guidelines and will be based on 
indicators relevant to the objectives of the programme. 

The  Performance  Regulation  will  provide  ca.  900  performance  output  and  result 
indicators  that  will  enable  to  monitor  the  performance  of  the  budget.  The  list  of 
performance  indicators  will  be  structured  around  a  number  of  policy  areas  –  such  as 
energy, housing and infrastructure, environment and climate, agriculture, fisheries – and 
related intervention fields expected to be funded by the EU budget, including the national 
and  regional  partnership  plans.  This  list  of  indicators  will  enable  to  monitor  the 
performance of the Fund against outputs and results vis-à-vis the specific objectives set 
in  the  national  and  regional  partnership  plans  regulation.  The  list  of  performance 
indicators  will  be  structured  around  a  number  of  policy  areas  and  related  intervention 
fields  expected  to  be  funded  by  the  EU  budget,  including  the  national  and  regional 
partnership plans.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 1: PROCEDURAL INFORMATION 

1.  LEAD DG, DECIDE PLANNING/CWP REFERENCES 

The  lead  DGs  are  DG  REGIO,  DG  EMPL,  DG  AGRI,  DG  MARE,  DG  HOME,  DG 
MOVE. 

There  is  no  DECIDE  reference  number.  The  proposals  for  the  post-2027  Multiannual 
Financial  Framework  are  listed  as  Item  44  in  Annex  I  of  the  Commission  Work 
Programme 2025, under the headline “Delivering together and preparing our Union for 
the future”. 

2.  ORGANISATION AND TIMING 

Given the time constraints, no call for evidence was published for this initiative. 

This  impact  assessment  was  coordinated  by  an  Inter-Service  Steering  Group  (ISSG), 
involving  the  following  Commission  services:  Secretariat-General  (SG);  Legal  Service 
(SJ);  Directorate-General  for  Agriculture  and  Rural  Development  (AGRI);  Directorate-
General  for  Budget  (BUDG);  Directorate-General  for  Climate  Action  (CLIMA); 
Directorate-General for Competition (COMP); Directorate-General for Communications 
Networks,  Content  and  Technology  (CNECT);  Directorate-General  for  Education, 
Youth,  Sport  and  Culture  (EAC);  Directorate-General  for  Economic  and  Financial 
Affairs  (ECFIN);  Directorate-General  for  Employment,  Social  Affairs  and  Inclusion 
(EMPL); Directorate-General for Energy (ENER); Directorate-General for Environment 
(ENV);  Eurostat  (ESTAT);  Directorate-General  for  Migration  and  Home  Affairs 
(HOME);  Directorate-General  for  International  Partnerships  (INTPA);  Joint  Research 
Centre  (JRC);  Directorate-General  for  Justice  and  Consumers  (JUST);  Directorate-
General  for  Maritime  Affairs  and  Fisheries  (MARE);  Directorate-General  for  Mobility 
and  Transport  (MOVE);  Directorate-General  for  Regional  and  Urban  Policy  (REGIO); 
Directorate-General for Health and Food Safety (SANTE), Reform and Investment Task 
Force (SG REFORM). 

The Inter-Service Steering Group met four times in 2025: on 23 January, 7 February, 21 
March, 23 April. It was consulted throughout the different steps of the impact assessment 
process; notably on the questionnaire for the open public consultation and the draft staff 
working document. 

3.  CONSULTATION OF THE RSB 

The  draft  report  was  submitted  to  the  RSB  on  7  July  2025.  The  RSB  opinion  was 
received on 10 July  2025, where the Board decided, exceptionally, to  issue an Opinion 
without qualification. 

The recommendations of the Board were taken into account as outlined in this table. 

Key issue and recommendation  Changes to the impact assessment report 

On  scope:  The  report  should 
better  cover  policy  substance  in 
the  context,  problem  definition 

The  policy  context  of  the  impact  assessment  was 
to 
introduction, 
in 
clarified 
financial 
future  multiannual 
demonstrate 

in  particular 

the 
the 

 
 
and  objectives,  beyond  covering 
the financial architecture. 

On  problems  and  on  the  use  of 
evaluations:  The  identification  of 
problem drivers and problems are 
not  sufficiently  supported  by 
evidence. 

On  the  intervention  logic  and 
objectives:  The 
report  should 
establish a clear link between the 
specific  objectives,  the  problems 
and the problem drivers [and their 
relation  to  the  Performance  and 
Monitoring Framework. 

On  options:  The  report  does  not 
adequately  identify  the  full  range 
of  options  to  address  all  the 
problem drivers. 

On the comparison of options and 
cost-benefit  analysis:  The  report 
does  not  adequately  assess  the 

framework is an opportunity to facilitate the delivery 
of  the  policy  objectives  of  the  EU  and  its  Member 
States,  by  ensuring  a  closer  alignment  with  the 
financial architecture of the EU budget. 

The scope of the impact assessment was clarified in 
the  introduction,  including  regarding  the  3  HOME 
funds, CEF and LIFE programmes. 

The  summary  of  options  was  revised  to  reflect 
adequately  the  role  of  cross-border  projects  in  the 
intervention logic. 

More  developed  analysis  was  included  in  the 
problem  definition,  notably  on  the  link  between 
reforms  and  investments  (Problem  4),  the  limited 
uptake of financial instruments (Problem 1), the low 
uptake of cross-border problems (Problem Driver 7) 
and  the  need  for  quality  data  at  regional/local  level 
to ensure meaningful involvement at the subnational 
level (Problem Driver 4). 

The  report  clarified  the  link  between  the  problems, 
problem drivers and objectives (Section 4.2). 

The  link  with  the  Performance  Regulation  was 
clarified. 

The presentation of choices was more closely linked 
to  the  policy  challenges  facing  the  various  policies 
and sectors. 

A  description  of  the  main  elements  of  the  common 
set of rules for the Plans was included. 

On the options on the scope, the report clarified that 
it  does  not  aim  to  discuss  whether  existing  (sub-
streams)  of  programmes  are  intended  to  be  re-
oriented or discontinued but rather to assess whether 
they  could  fit  within  the  scope  of  the  plans  from  a 
policy  perspective.  Additional  clarifications  were 
introduced  regarding  the  digital  strand  of  CEF, 
which  is  covered  in  the  impact  assessment  for  the 
European Competitiveness Fund. 

The  analysis  was  revised  in  line  with  the  Board’s 
recommendations.  

 
 
 
 
costs  and  benefits  of  the  options. 
is  not  sufficiently 
Efficiency 
considered  in  the  comparison  of 
the options. 

nationally 

On  coherence:  The  report  does 
not  sufficiently  specify  how  the 
pre-
funds  with 
allocated  envelopes 
link  with 
other parts of the post-2027 MFF, 
like  the  Competitiveness  Fund, 
and  External 
Single  Market 
Action. 

On  governance:  The  report  does 
not 
the 
sufficiently  describe 
governance mechanisms. 

On 
and 
future  monitoring 
evaluation: The report is not clear 
what  monitoring  and  evaluation 
arrangements will be put in place 
to measure the achievement of the 
objectives. 

In particular, regarding the impacts of the options on 
the  delivery  model,  the  report  further  elaborated  on 
the  analysis  of  shared  management,  in  particular 
with regards to securing meaningful involvement of 
regional  and  local  authorities  and  reducing  burden. 
The  report  also  acknowledged  the  limits  in  relying 
on result indicators considering the timeframe of the 
plans  and  explained  how  these  limitations  could  be 
mitigated. 

The  report  elaborated  on  the  links  between  internal 
coherence and applying the same delivery model and 
management mode to the plans. 

The  report  further  specified  how  the  funds  with 
nationally  pre-allocated  envelopes  link  with  other 
funding instruments of the post-2027 MFF – notably 
the European Competitiveness Fund, the Connecting 
Europe Facility and the Global Europe Fund. 

The report explained how alignment between the EU 
priorities  and  Member  States’  individual  priorities 
would  be  achieved  through  the  dual  system  driving 
the programming of the plans. 

The  report  clarified  that  the  governance  and  set-up 
of the steering mechanism is not within the remit of 
this impact assessment. 

The  report  clarified  the  monitoring  and  evaluation 
arrangements  of  this  initiative,  in  line  with  the 
Performance Regulation. 

4.  EVIDENCE, SOURCES AND QUALITY 

The impact assessment is based on several sources. This includes: 

•  9th report on economic, social and territorial cohesion;  
•  The mid-term evaluation of the Recovery and Resilience Facility; 
•  Report of the Strategic Dialogue on the future of EU agriculture; 
•  Spending review for the 2021-2027 multiannual financial framework; 
•  Ex post evaluation of the 2014-2020 cohesion policy; 
•  ESF+ mid-term evaluation [ongoing]; 

 
 
 
•  Mid-term evaluation of the ERDF, CF, JTF [ongoing]; 
•  Study on the assessment of the administrative costs and administrative burden in 

the management of the CPR funds 2021-2027 [ongoing]; 
•  Study on the new delivery model of the CAP [ongoing]; 
•  Study  on  simplification  and  administrative  burden  for  farmers  and  other 

beneficiaries under the CAP, published on 14 May 

•  Mario Draghi’s report on the future of EU competitiveness; 
•  Enrico Letta’s report on the future of the Single Market; 
•  Niinistö  Report  on  Strengthening  Europe’s  Civilian  and  Military  Preparedness 

and Readiness 

•  Commission Communication on a Competitive Compass for the EU; 
•  The open public consultation, carried out between 12 February 2025 and 6 May 

2025.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT) 

1.  Overview of the stakeholder consultation activities   

The  Commission  undertook  different  activities  to  engage  stakeholders  and  gather  their 
views to inform this impact assessment. The following activities have taken place or are 
planned, including workshops and ongoing studies:     

•  Public  consultation  –  running  from  12  February  to  7  May  2025  (midnight 

Central European Time).    

•  Citizens’  panel  on  the next  European budget:  From  March  to  May  2025,  the 
Commission organised a Citizens' Panel on a New European Budget as a way for 
citizens  to  engage  with  EU  institutions  and  have  their  say  on  the  EU 
policymaking process. The event included three sessions gathering 150 randomly 
selected  citizens  to  help  the  EU  decide  how  to  spend  its  money  in  the  future, 
including an in-person session from 28-30 March, a second online session (April 
25-27), and a third and final session in Brussels (May 16-18), where 2 volunteers 
officially  handed  over  their  recommendations  to  the  Commissioner  for  Budget, 
Anti-Fraud and Public Administration. The  participants, coming from all 27 EU 
countries and representing the EU’s diversity, reflected on where the EU Budget 
could  bring  the  most  added-value  to  Europeans.  In  parallel,  the  Citizens' 
Engagement  Platform,  an  online  discussion 
forum,  enabled  additional 
contributions from the general public.      

•  Annual Budget Conference: The event on 20 and 21 May 2025 brought together 
high-level  speakers  –  European  and  global  policymakers, 
researchers, 
representatives of think tanks,  civil  society and businesses  leaders – to  debate a 
broad range of topical questions on the next long-term budget.       

•  Tour d’Europe:  During  the first  half of 2025,  Commissioner for Budget,  Anti-
Fraud and Public Administration, Piotr Serafin, travelled across the EU to consult 
decision-makers, regions, citizens, businesses and other relevant stakeholders on 
the EU budget. These trips featured visits of many EU-funded projects in diverse 
fields – from education to research, defence to agriculture and more.   

• 

In January 2023, the Commission established the Group of high-level specialists 
on the Future of Cohesion Policy, whose work significantly contributed to the 
reflections on the future of cohesion policy, and which handed recommendations 
to inform the policy’s future direction.   

•  Position  papers:  Stakeholders  have  been  sharing  their  position  papers  with  the 
Commission throughout the last years, which the Commission used to inform the 
policy-making of the future of cohesion policy.    

 
 
• 

In  June  2024,  the  Commission  launched  a  preparatory  study  on  the  future  EU 
funding  in  the  areas  of  employment,  skills  and  social  inclusion,  entailing 
extensive targeted stakeholder consultations and a survey.   

•  The  Commission  also  conducted  several  consultation  activities  to  gather 

stakeholder views on the CAP post 2027.  

2.  Summary of the open public consultation  

The  public  consultation’s  questionnaire  was  based  on  both  closed  and  open  questions, 
addressing  policy  challenges,  obstacles  to  budget  implementation,  the  effectiveness  of 
current EU policies across various funding areas, and potential measures to improve the 
efficiency and effectiveness of the EU budget. The questionnaire also included targeted 
questions on the continued support of all regions and communities, effective stakeholder 
involvement and  administrative and institutional  capacity. Finally, stakeholders had the 
opportunity  to  submit  additional  documents.  An  external  contractor  (EY  Advisory 
S.p.A.) helped process and analyse the stakeholder replies to this public consultation. For 
the  analysis,  both  quantitative  and  qualitative  methods  were  used  to  ensure  a 
comprehensive and systematic interpretation of the survey responses.   

The Public Consultation received 2501 replies (1) and 613 position papers. The highest 
number of  replies  (17%  of  replies) comes  from  Romania followed by Germany (16%), 
Belgium (8.3%), Poland (7.9%), France (7.6%) and Italy (6.7%). Member States with the 
lowest number of replies are Cyprus, Malta and Ireland. Among the respondents, around  
34.5%  are  public  authorities,  of  which  local  authorities  account  for  around  35%.  EU 
citizens  make  up  26.2%.  NGOs  (12.3%),  academic/research  institutions  (6.8%), 
companies/businesses  (5.3%)  and  business  associations  (4.6%)  are  also  represented. 
Replies  from  non-EU  citizens,  trade  unions,  and  environmental  organisations  are  less 
numerous, with  a rate of less than 1% of the replies each. Most replying organisations, 
close to half of the sample (47%), have more than 250 employees. Additionally, 38.3% 
are  medium  or  small  sized,  with  between  50  and  250  employees.  Finally,  around  15% 
have fewer than 10 employees. Overrepresentation of specific countries was considered 
when  interpreting  findings;  the  analysis  ensured  that  diverse  perspectives  from  less-
represented  stakeholder  types  and  countries  were  given  equal  analytical  weight  and 
proportionately reflected in the conclusions.   

Main conclusions  

There  is  broad  agreement  across  stakeholders  on  the  need  for  simplification, 
greater  flexibility,  and  support  for  all  regions  based  on  their  specific  needs. 
However, interpretations of these themes may vary depending on the stakeholder type.   

Simplification  and  flexibility  are  the  most  frequently  cited  enablers  of  a  more 
effective and efficient EU budget. Across virtually all questions, stakeholders called for 
fewer, clearer and simpler rules (supported “to a large extent” by 75.7% of respondents), 
and  for  greater  flexibility  to  tailor  funding  instruments  to  local  needs  and  to  react  to 
crises and emerging needs (supported “to a large extent” by 44.4% of respondents). This 

 
 
is particularly emphasised by public authorities, trade unions and businesses, with similar 
support  among  citizens,  and  public  authorities’  respondents  too  (35  and  38% 
respectively).  Nonetheless,  calls  for  simplified  access  to  funding  and  streamlining 
programme  management  were  voiced  across  all  types  of  stakeholders.  Smaller 
municipalities,  SMEs,  NGOs,  and  grassroots  actors  were  identified  as  particularly 
affected  by  the  complexity  of  EU  funds.  Suggestions  linked  to  this  theme  included  the 
following:   

For simplification:   

• 

Introducing fewer, clearer and more harmonised rules across instruments,   

•  Expanding  the  use  of  simplified  cost  options  and  reducing  verification  layers, 

and    

•  Deploying  digital  tools  for  application,  reporting  and  monitoring  processes, 
including for example one-stop shops and a unified digital portal for applicants.   

For flexibility:   

• 

Increasing the ability to reallocate funds across objectives and programmes,   

•  Embedding adaptive programming mechanisms to respond to crises or transitions, 

and    

•  Providing longer planning horizons with stable, predictable rules.   

The need for enhancing administrative capacity is a recurrent observation. Limited 
capacity at all levels is viewed as a key obstacle to fund absorption and effectiveness. 
A majority of  respondents  emphasised the need for tailored training, long-term  support 
for  local  administrations,  and  investment  in  public  sector  skills  aligned  with  digital, 
green, and inclusive transitions. Calls to reduce administrative burdens were widespread, 
particularly from SMEs, NGOs and regional governments. Key takeaways linked to this 
theme included:   

• 

Investing in tailored training and technical assistance for public officials,   

•  Supporting international exchange schemes and communities of practice, and   

• 

Improving sustainability and predictability of capacity-building efforts.   

Addressing  structural  disparities,  including  persisting  social,  economic,  regional 
and  territorial  disparities,  remains  a  top  concern.  This  includes  addressing  both 
territorial disparities and social exclusion. Stakeholders - particularly NGOs and regional 
authorities  -  emphasised  the  need  to  reduce  intra-  and  inter-regional  inequalities, 
including  disparities  in  access  to  services,  employment,  education,  and  housing  for 
vulnerable  groups.  EU  citizens  also  pointed  to  the  importance  of  ensuring  that  EU 
funding  supports  people  in  structurally  disadvantaged  areas,  such  as  the  long-term 
unemployed,  youth,  migrants,  and  ageing  populations.  The  majority  of  respondents 

 
 
converged around the view that support should be based on context-specific needs. A few 
of the suggestions linked to this theme included:   

•  Targeting support based on needs and challenges,   

•  Maintaining place-based approaches to address regional challenges, and    

•  Strengthening support for lagging regions and structurally disadvantaged areas.   

Enhancing  multilevel  governance  and  stakeholder  participation  also  emerged  as  a 
clear  priority.  Respondents  advocated  for  deeper  and  earlier  involvement  of  regional 
and  local  authorities,  civil  society  organisations,  SMEs  and  citizens  in  the  design  and 
delivery of EU funding  (reported by 50.4% of responses). This  includes the systematic 
use  of  participatory  tools  and  co-creation  processes,  reflecting  strong  support  for  the 
partnership  principle.  In  particular,  NGOs  and  trade  unions  advocated  for  stronger 
participation in governance, calling for recognition as co-creators of EU programmes, not 
just  implementers.  Public  authorities  and  businesses,  while  supportive  of  stakeholder 
involvement,  tended  to  favour  more  structured  consultation  mechanisms  rather  than 
opening  formal  governance  roles  to  civil  society  actors.  Some  saw  expanded 
participation  as  potentially  slowing  decision-making  or  complicating  accountability 
frameworks. The main suggestions linked to this theme included:   

•  Systematising the involvement of local and regional authorities in programming,   

•  Expanding  co-creation  processes,  participatory  budgeting  and  feedback  loops, 

and   

•  Enhancing visibility and recognition of civil society and SMEs as co-creators.   

Additionally,  other  cross-cutting  priorities  emerged  across  stakeholder  groups  and 
Member States. These included the need to:    

• 

increase transparency, communication, and accessibility of funding (in particular 
through centralised portals and simplified guidance),   

•  maximise  impact  through  stronger  performance  orientation,  flexibility  and 

territorial tailoring,    

• 

• 

foster  inclusive  and  participatory  governance  to  enhance  legitimacy,  ownership, 
and local impact, and   

improve  coherence  across  instruments  and  ensure  alignment  with  national 
reforms  through  partnership-based  planning  and  –  whenever  appropriate  – 
regionalised implementation.    

Stakeholders also provided their views on the most pressing policy challenges to be 
addressed  in  the  future,  and  support  for  the  green  and  digital  transitions, 
addressing  social  and  regional  disparities  and  ensuring  a  fair  and  stable  access  to 
energy supply were identified as key priorities for future investment. Climate change 

 
 
emerged  as  the  most  pressing  challenge  (deemed  “very  important”  by  58.2%  of 
respondents), especially for academia, NGOs and citizens. Respondents also emphasised 
the need to upskill public administrations and to strengthen regional capacities for green 
and digital transformation. Stakeholders stressed the importance of policies that promote 
innovation and address the digital divide, particularly for SMEs and rural areas, as well 
as  the  digitalisation  of  the  public  administration,  services  and  justice  systems. 
Contributions also underline the need to better align cohesion policy with strategic EU-
level  goals,  particularly  the green  and digital transitions  and inclusiveness.  In the same 
question,  the  other  challenges  most  frequently  identified  as  very  important  by  the 
majority  of  respondents  were:  “securing  an  affordable,  sustainable  and  secure  energy 
supply”  (51%  of  the  total  respondents)  and  persisting  social,  economic,  regional  and 
territorial disparities” (50.3% of respondents, 49% of the public authorities and 52% of 
the EU citizens replying to  the consultation). The security and price of energy supplies 
was flagged as a source of significant concern for businesses and for citizens, with 86.5% 
and  84%  of  these,  respectively,  considering  this  challenge  as  very  important  or 
important.   

Suggestions linked to the green and digital transformation included:   

• 

Investing in regional green and digital infrastructure and innovation ecosystems,   

•  Upskilling and reskilling public administrations and workforce, and   

•  Mainstreaming green and digital priorities across all EU funding instruments.   

Respondents,  in  particular  trade  unions,  business  associations  and  public  authorities, 
highlighted  “labour  and  skills  shortages,  the  need  for  upskilling  and  reskilling,  and  the 
unpreparedness of education and training systems for the 21st century” as very important 
challenges  (considered  “very  important”  by  49.2%  of  the  total  respondents).  By 
stakeholder  group  replying  to  the  consultation,  this  was  considered  very  important  by 
54%  of  the  businesses  associations,  51.56%  of  the  public  authorities  and  46.3%  of  the 
EU  citizens.  Issues  of  equality  and  inclusion  were  also  often  raised  in  open-ended 
questions inviting respondents to elaborate on policy challenges. NGOs and EU citizens 
emphasised  the  importance  of  aligning  EU  policies  with  the  European  Pillar  of  Social 
Rights (EPSR) and ensuring the rights of persons with disabilities. Migration and asylum 
management were also highlighted, particularly the need to address labour shortages by 
supporting training and integration for migrants and asylum seekers.    

Moreover,  stakeholders  shared  their  views  on  other  specific  obstacles  to  the  EU 
budget  achieving  its  objectives,  with  more  than  half  of  respondents  considering  the 
following as influencing “somewhat” or “to a large extent”:    

•  overly  complicated  governance  and  distribution  of  funds  (78%  of  the  public 
authorities replying to the consultation,  77% of the EU citizens and 77% of the 
businesses  associations, 
the  homogeneous  perception  among 
stakeholders).    

showing 

 
 
• 

the  lack  of  consistency  and  effectiveness  to  deliver  on  EU  policy  priorities 
(considered as an obstacle by 54.5% of respondents, more predominantly among 
EU citizens and business associations, with 60% and 58% of them, and by 50% of 
the public authorities), and   

•  national regulatory environments rendering EU funding less effective (considered 
by  55%  of  respondents,  with  predominance  among  public  authorities,  62.5%  of 
them, followed by 56% of the business associations, and 53% of the EU citizens 
replying).   

Additional obstacles were similarly highlighted by stakeholders. with more than 45% of 
stakeholders  indicating  the  insufficient  focus  on  achieving  results,  the  insufficient 
alignment with  national  policies, the insufficient  focus on projects  with  the highest EU 
added  value,  and  the  low  absorption  of  funds  and  insufficient  number  of  high-quality 
projects  as  obstacles  to  some  or  to  a  large  extent.  An  insufficient  focus  on  achieving 
results was more predominantly seen “somewhat” and “to a large extent” as an obstacle 
among the citizens replying to the consultation (53.8% of them) followed by businesses 
associations (48.6%) and public authorities (49% of them). Other main obstacles raised 
in open text fields included bureaucracy and administrative burdens (by 64 open replies), 
inadequate  involvement  of  local  and  regional  actors  in  the  governance  of  EU  funding, 
often  leading  to  a  misalignment  of  projects  with  local  needs  (mentioned  in  51  open 
replies),  and  a  lack  of  flexibility  and  adaptability  in  the  design  and  execution  of  EU 
funding instruments (mentioned in 29 replies). Furthermore, a lack of continuity in EU-
funded  projects  was  highlighted  as  a  barrier  to  the  EU  budget's  ability  to  achieve  its 
objectives.   

In their open contributions and position papers, stakeholders indicated the importance of 
maintaining cohesion policy as a dedicated and autonomous pillar of the EU budget post-
2027.  At  the  same  time,  they  clearly  emphasised  the  need  for  simplification  and 
improved access to EU funding and pointed to reducing fragmentation of EU funding and 
rules  through  harmonisation,  alignment  and  streamlining  of  instruments  and  timelines; 
ensuring  coherence  between  EU  priorities  and  national/regional/local  reforms;  or 
targeting  the  support  where  it  can  generate  the  greatest  impact.  At  the  same  time, 
proposals  for  centralising  access  to  EU  funds received  a more mixed response.  Several 
contributions  also  underlined  the  need  for  improving  coordination  between  authorities, 
including coordination across governance levels and institutions, and respondents called 
for more inclusive  and participatory policymaking that reflects  the needs  of all societal 
groups  at  all  stages  of  the  policy  cycle  and  for  the  active  involvement  of  regional  and 
local authorities in designing, managing and implementing EU funding programmes.   

Overall,  the  public  consultation  findings  point  to  a  broad  consensus  on  the 
importance of maintaining the principles of partnership, subsidiarity and cohesion, 
while  adapting  the  EU  budget  to  be  more  accessible,  responsive,  impactful  and 
better  aligned  with  long-term  transformation  needs.  Views  among  citizens  and 
public  authorities  are  similar,  reinforcing  the  challenges  perceived  and  the  policy 
priorities.   

 
 
3.  Main takeaways from the Citizens’ Panel on the next EU budget  

On 16-18 May 2025, the third and final session of the European Citizens' Panel on the 
new  EU  long-term  budget took  place  in  Brussels.  A  group  of  150  randomly  selected 
citizens from all 27 EU Member States were given the opportunity to share their ideas for 
a  sustainable  and  flexible  long-term  EU  budget.  This  diverse  panel  discussed  which 
priorities and actions bring the most added value to Europeans through the  EU Budget. 
The  panellists  agreed  on  a  final  set  of  22  recommendations  to  the  European 
Commission, as well as 11 guiding recommendations that function as key principles 
to guide the European Commissioner for Budget, Anti-Fraud and Public Administration. 
Commissioner  Serafin  was  given  these  recommendations  during  the  last  day  of  the 
panel.   

The  11  guiding  recommendations  ask  the  EU  to  consider  a  strong  future-ready  EU 
budget which:   

•  Strengthens  our  shared  values  by  promoting  and  reinforcing  common 
principles  and  beliefs  to  unite  the  European  community  and  safeguard  the  EU 
project.   

•  Ensures  solidarity  between  Member  States  by  fostering  mutual  support  and 
cooperation to address common challenges and promote collective well-being.   

•  Reduces  inequalities  by  addressing  disparities  within  and  between  Member 

States, with special attention to more vulnerable groups.   

•  Considers the environmental and climate impact by prioritising sustainability 
and  the  protection  of  the  ecosystems  and  their  biodiversity,  while  taking  into 
account the different needs of European regions.   

•  Strengthens  competitiveness  of  the  economic  sector  across  Member  States  by 
allowing each Member State to allocate funds based on their specific needs.   

•  Enables  swift  and  flexible  action  by  ensuring  the  EU  can  respond  quickly  to 
urgent  challenges,  unforeseen  needs,  as  well  as  to  opportunities,  while 
maintaining long-term focus.   

•  Ensures  transparency  and  accountability  at  all  levels  by  providing  clear 
information  on  investment  criteria,  spending,  and  impact,  to  prevent  corruption 
and misuse of EU funds.   

•  Promotes  decentralisation  with  strong  and  transparent  oversight  by  tailoring 
policies to regional needs while ensuring robust EU-level control to avoid abuse.   

• 

Improves communication and citizen engagement by making EU actions more 
visible and understandable, actively involving citizens in decisions and reflecting 
their needs in the budget. The EU should also promote its projects and wins more 
openly.   

 
 
•  Ensuring  that  the  needs  and  interests  of  the  European  Union,  its  Member 
States  and  its  citizens  are  met.  Internal  stability  and  prosperity  should  be 
considered while also extending support to non-EU countries.   

•  Guarantees feasibility, efficiency, and maximised impact by ensuring projects 
are  realistic,  cost-effective,  and  benefit  as  many  citizens  and  Member  States  as 
possible, with clearly defined goals and measurable outcomes.   

The 22 final recommendations encourage the new European budget to focus on:   

•  Ensuring environmental protection and economic success at the same time.   

•  Protecting  nature  and  natural  resources  through  environmental  education  and 

other measures.   

•  Reducing  regional  disparities  through  the  expansion  of  essential  infrastructures 

and services.   

•  A future in the countryside: Combating rural exodus through education, jobs, and 

housing.   

•  Meaningful  and  sustainable  inclusion  of  migrants  and  refugees  for  a  stronger 

Europe.   

•  Budget  support  for  equal  access  to  healthcare,  medicine  production,  and  cross-

border care in the EU.   

•  Supporting  mental  health  for  all  age  groups  through  integrated  EU  budget 

actions.   

•  A strong and secure EU against digital threats.   

•  A more independent EU in the field of defence.   

•  Ensuring  that  all  young  people  have  the  opportunity  to  enter  the  labour  market 

under fair and decent working conditions.   

•  Supporting the development of small and medium-sized enterprises (SMEs) and 

start-ups.   

•  Strengthening the food system by making large food companies more sustainable 

and support small producers.   

•  Empowering people in using digital technologies, including AI.   

•  Sovereignty of the EU in digital technologies.   

•  Promoting inclusive, high-quality education for all through targeted EU support.   

•  Fostering a common European identity through education and awareness.   

 
 
•  The simplification, harmonization and digitalisation of administrative procedures 

across Member States.   

•  Building stronger connections between citizens and EU for a better tomorrow.   

•  Developing renewable energy to secure our energy sovereignty.   

•  Strategic strength: Europe's industrial response to global disruption.   

•  Strengthening EU diplomatic alignment via shared values   

•  A holistic diplomatic EU plan    

4.  Other stakeholder consultation activities  

A  number  of  other  consultation  activities  were  carried  out  to  gather  stakeholder  views 
and inputs on specific topics and funds covered in this Impact Assessment.   

For instance, following the publication of the 8th Cohesion Report and its announcement 
at  the  Cohesion  Forum  in  March  2022,  the  Commission  set  up  a  group  of  high-level 
specialists  on  the  future  of  cohesion  policy,  composed  of  representatives  of  academia, 
national,  regional  and  local  politicians,  socio-economic  partners  and  representatives  of 
civil  society.  The  group  published  the  report  ‘Forging  a  sustainable  future  together: 
Cohesion for a competitive and inclusive Europe’ (2). According to the report, Cohesion 
Policy must move from being a 'support' mechanism to a central driver of growth, jobs, 
equality,  and  opportunities,  particularly  in  vulnerable  areas,  as  well  as  human  capital 
development  and  better  institutions.  Doing  this  involves  balancing  the  focus  on  results 
and performance with the need for flexibility, adaptability and the capacity to respond to 
its  foundational  goals.  To  enhance 
current  challenges  without  compromising 
effectiveness, the report recognises the need to foster synergies between Cohesion Policy, 
other EU policies, and Member State initiatives.    

In  addition,  through  the  ESF+  Committee,  a  drafting  committee  was  established  in 
February 2024 to issue an opinion on technical items regarding the future of the ESF (3).   

Consultation  activities  related  to  future  EU  funding  in  the  areas  of  employment,  skills 
and social inclusion   

The Commission commissioned a preparatory study on the future EU funding in the 
areas  of  employment,  skills  and  social  inclusion.  Parts  of  this  study  were  targeted 
stakeholder consultations. A total of 285 stakeholders were interviewed, representing 197 
different  organisations  based  in  all  EU  Member  States.  Additionally,  a  survey  was 
launched  with  81  responses,  and  4  focus  groups  were  organised.  The  main  policy 
challenges  identified  in  the  mentioned  areas  included  unemployment  of  vulnerable 
groups (incl. youth), barriers in accessing essential services (incl. housing), and the need 
of  upskilling  and  reskilling  the  workforce.  Stakeholders  identified  the  following  areas 
that  deserve  attention  as  far  as  EU  funds  in  the  areas  of  employment,  skills  and  social 

 
 
 
inclusion  are  concerned:  administrative  complexity,  persistent  barriers  for  vulnerable 
groups in accessing funding, a rigid programming architecture, a limited focus on results, 
the sustainability of interventions and limited involvement of local actors.    

In  their  suggestions  for  future  EU  funding  in  the  mentioned  areas,  stakeholders 
highlighted  the  need  to  strengthen  capacity  building  for  managing  authorities  and 
beneficiaries,  maintain  people-oriented  and  place-based  approaches,  ensure  that  the 
ESF+  is  aligned  with  national  needs,  enhance  synergies  between  ESF+  and  other  EU 
funds, increase flexibility, and strengthen the involvement of local actors in the planning 
and implementation of projects.    

Consultation activities carried out related to the CAP post 2027   

Launched  in  January  2024,  a  strategic  dialogue  on  the  future  of  EU  agriculture (4) 
brought  together  29  major  stakeholders  from  the  European  agri-food  sectors,  civil 
society,  rural  communities  and  academia  to  reach  a  common  understanding  and  vision 
for the future of EU's farming and food systems. On 4 September 2024, the final report of 
the  strategic  dialogue  was  published  presenting  an  assessment  of  challenges  and 
opportunities and a set of recommendations. In relation to the future CAP, the Strategic 
Dialogue highlighted the need to continue providing socio-economic support targeted to 
the  farmers  who  need  it  most;  promoting  positive  environmental,  social,  and  animal 
welfare  outcomes  for  society;  and  invigorating  enabling  conditions  for  rural  areas. 
Reaching  the  EU’s  objectives  in  terms  of  agriculture  and  food  production,  rural 
development,  climate  neutrality,  and  biodiversity  restoration  requires  a  more  strategic 
approach  to  ensure  that  all  ambitions  are  matched  in  a  balanced  and  efficient  manner. 
Such principle is essential for making the transition economically profitable, promoting 
generational  renewal,  invigorating  rural  areas  and  supporting  farms  at  a  competitive 
disadvantage, yet essential for agricultural diversity in the EU.  .  These topics have been 
further discussed in a dedicated conference “Shaping the future of farming and the agri-
food sector” organised by the Commission on 8 May 2025, bringing together more than 
one thousand participants between Member States and EU/national stakeholders. 

Furthermore,  in  the  framework  of  the  recently  established  European  Board  for 
Agriculture  and  Food  (EBAF)38,  bringing  together  organisations  representing  the 
farming  community,  other  actors  of  the  food  supply  chain,  and  civil  society,  dedicated 
discussions  took  place  on  19  May  2025  and  19/20  June  2021  on  how  to  better  target 
direct payments and move from conditions to incentives in the CAP post-2027.     

Furthermore,  the  Commission  collected  additional  inputs  on  the  future  of  the  CAP 
through  dedicated  meetings  organized  in  the  framework  of  existing  EU  stakeholders 
platforms, including a fully dedicated Civil Dialogue Group on the future of the CAP on 
the 25 June 2025.  

 
 
 
 
At the same time, two Youth dialogues chaired by the Commissioner for Agriculture and 
Food (december 2024 and may 2025) stressed the need to reinforce the toolbox in favour 
of  generational  renewal  in  agriculture  and  the  first  Implementation  Dialogue  on  the 
current  CAP  (June  2025)  highlighted  the  need  to  improve  existing  tools  to  make  them 
more efficient and impactful.  

The  Commission  also  carried  out  a  series  of  technical  workshops  between  December 
2023 and May 2024 bringing together Member States and EU stakeholders to discuss key 
strategic  policy  questions,  taking  into  account  ongoing  and  future  challenges  and 
opportunities for EU agriculture and rural areas and possible CAP policy response. The 
topics  covered  were  resilience,  food  security,  sustainability,  CAP  governance  and 
performance, and solidarity and rural areas and conclusions from the workshops included 
calls for stability, flexibility and simplification (in particular for farmers) and support for 
more integrated policy responses in view of the breadth of rural challenges.    

ANNEX 3: WHO IS AFFECTED AND HOW? 

1.  PRACTICAL IMPLICATIONS OF THE INITIATIVE 

The different policy options for this initiative propose to simplify the current landscape 
of  EU  funds  for  nationally  pre-allocated  envelopes  through  a  plan  for  each  Member 
State,  combining  a  strategic  agenda  of  reforms  and  investments  targeted  to  Member 
States’  needs  while  supporting  EU  priorities.  With  the  different  policy  options  for  this 
initiative,  there  would  be  one  framework  setting  out  the  rules  governing  the  plans’ 
funding for pre-allocated envelopes.   

National  and  regional/local  administrations  will  be  directly  affected  by  the  different 
policy options for this initiative as they will have to implement the new framework and 
adjust  from  the  status  quo.  Recipients  of  EU  funds  (including  businesses)  would  also 
need  to  adjust  to  the  new  framework.  Overall,  the  different  policy  options  for  this 
initiative provide a major simplification of EU funds (one common set of rules) which is 
expected,  over  the  short  to  medium  term,  to  reduce  costs  for  national/regional/local 
administrations as well as businesses (see Annex 5 on Competitiveness and Annex 6 on 
SMEs).  

Bringing together different EU funds also provides the opportunity to increase synergies 
and  flexibility  in  the  use  of  EU  resources,  which  is  conducive  to  a  better  allocation  of 
resources  and  a  more  efficient  EU  budget,  with  macroeconomic  and  society-wide 
benefits in the long term. The focus on EU priorities, while taking into account national 
and regional needs, is also expected to contribute to a more efficient use of EU resources.  

While  one-off  adjustment  costs  are  expected  for  national  and  regional  authorities  and 
beneficiaries (including businesses) to adjust to the new set-up, recurrent compliance and 

 
 
 
 
 
administrative costs are expected to be reduced compared to the status quo thanks to the 
simplification efforts. 

2.  SUMMARY OF COSTS AND BENEFITS 

I. Overview of Benefits (total for all provisions) 

Description 

Efficiency  gains  of  EU 
budgetary resources 

Amount 

Direct benefits 

High 

Reduction  of  compliance 
costs to access EU funds 

Reduction  of  administrative 
costs to access EU funds 

High 

High 

Reduction  of  compliance 
costs to access EU funds 

Indirect benefits 

High 

Reduction  of  administrative 
costs to access EU funds 

Moderate 

Improved 
conditions 

framework 

High 

Comments 

reforms 

With  a  plan  per  Member  State, 
the 
proposed  options  enable  to  better  support 
EU priorities through a strategic agenda of 
investments  and 
linking  EU, 
national  and  regional  levels,  to  exploit 
synergies  across  programmes  currently 
spread  and 
to 
to  provide 
(re)allocate funds as needs emerge  - which 
are  all 
to  provide 
turn  expected 
efficiency gains for the EU budget. 

flexibility 

in 

One common set of rules for pre-allocated 
envelopes  (instead  of  separate  rules  per 
programme) 
reduce 
compliance  costs  for  national  and  regional 
administrations. 

expected 

to 

is 

One common set of rules for pre-allocated 
envelopes (for example on reporting, audit, 
to  reduce 
communication) 
administrative  costs 
for  national  and 
regional administrations (cf. Annex 10). 

is  expected 

One  common  set  of  rules  for  pre-allocated 
envelopes  is  expected  to  translate  into  a 
simplified  framework  for  beneficiaries 
(including businesses) to access EU funds 

Instead  of  having  investment  opportunities 
scattered  across  various  programmes,  the 
plans  would  provide  businesses  with  a 
comprehensive  overview  of  investment 
opportunities per Member States. 

EU  support  for  the  implementation  of 
structural  reforms  tailored  to  Member 
States’  and  regional  needs  is  expected  to 
benefit citizens and businesses. 

All  the  options  proposed  would  trigger  the  benefits  presented  in  the  table  above. 
However, the magnitude of these benefits will depend on the extent of the plans’ scope, 
as discussed in the impact assessment. 

II. Overview of costs 

Citizens/Consumers 

Businesses 

Administrations 

One-off 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

For 

the  Direct adjustment 

N/A 

N/A 

N/A 

N/A 

Adjustment 

N/A 

 
 
 
 
most 
pertinent 
policy 
options   

costs 

Direct 
administrative 
costs 

Direct regulatory 
fees and charges 

N/A 

N/A 

N/A 

N/A 

Direct 
enforcement costs 

Indirect costs 

N/A 

N/A 

N/A 

N/A 

cost to 
adapt to 
new set-up 

N/A 

N/A 

See table 
below and 
Annex 10 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

Reduction 
compared to 
status-quo 

N/A 

N/A 

N/A 

N/A 

Adjustment 
costs to adjust 
to new set-up  

The  estimated  total  administrative  costs  for  the  most  pertinent  policy  options  are  presented  below  (cf. 
Annex  10).  It  shows  that  both  option  1  and  option  2  would  massively  reduce  administrative  costs  for 
Member States compared to the status quo. Options 1 and 2a would bring the biggest reduction, followed 
by Option 2b. 

Option 

Status quo 

Option 1 

Option 2a 

Option 2b 

Total administrative costs per million EUR spent 

37,968 

18,984 

22,781 

26,578 

III. Application of the ‘one in, one out’ approach  

One-off 

Recurrent 

Total 

[M€] 

(annualised total net present 
value over the relevant period) 

(nominal values per year) 

Businesses 

New administrative 
burdens (INs) 

Removed administrative 
burdens (OUTs) 

Net administrative 
burdens 

Adjustment costs 

Citizens 

N/A 

N/A 

Businesses  will  have  to  comply 
with the framework to implement 
the plans.   

Businesses will no longer have to 
comply  with  the  various/diverse 
frameworks  set-up  to  implement 
the current separate programmes   

Adjustment cost 

Reduced  

Reduced 

Businesses will have to adjust 
to the new rules to implement 
the plans.   

 
 
 
 
 
 
 
 
 
New administrative 
burdens (INs) 

Removed administrative 
burdens (OUTs) 

Net administrative 
burdens* 

Adjustment costs** 

Total administrative 
burdens*** 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

Reduced 

Reduced 

All the options on the scope are relevant for the “one in, one out approach”. Compared to 
the  baseline  (where  EU  funds  with  nationally  pre-allocated  envelopes  are  governed  by 
separate  fund-specific  regulations  and  implemented  through  different  programmes),  the 
proposed  options  would  replace  the  current  multiple  existing  regulations  with  one 
framework. The extent of the “one in, one out”  will depend on the plans’ scope. 

3.  RELEVANT SUSTAINABLE DEVELOPMENT GOALS 

The proposal is expected to contribute to all Sustainable Development Goals (SDGs), as 
it supports a broad spectrum of investments and reforms across the EU. These areas are 
already partially covered by existing funds, each contributing to various SDGs. The final 
list of SDGs to which the different policy options for this initiative will contribute will 
ultimately depend on the scope of the plans. 

The  proposed  approach  integrates  performance-oriented  delivery  within  a  shared 
management  framework,  built  on  the  partnership  principle.  This  enhances  coherence 
between  EU,  national,  and  regional  priorities,  ensures  better  coordination  of  funding 
sources, and reinforces Member States’ ownership. 

Crucially, the impact on SDGs is expected to be significantly strengthened due to several 
design features: 

•  A stronger link with SDG-relevant policy priorities, as the plan is embedded in 
a unified reference framework and guided by a common steering mechanism that 
aligns investments and reforms with strategic EU objectives; 

•  Increased support for reforms, which are essential for addressing root causes of 

underperformance and for unlocking lasting impact across multiple SDGs; 

•  Simplified  implementation  rules,  which  enhance  accessibility  for  a  broader 
range  of  beneficiaries,  including  smaller  stakeholders,  thereby  expanding  the 
reach and inclusiveness of EU funding. 

Together,  these  elements  will  not  only  facilitate  monitoring  of  progress  but—more 
importantly—help accelerate the achievement of the SDGs. In particular, reforms under 
the  new  model  will  serve  as  a  critical  lever  to  deliver  tangible  results  and  address 
persistent implementation gaps. 

The examples below illustrate how funding from pre-allocated envelopes can contribute 
to all SDGs within this more integrated, accessible, and performance-driven framework.  

 
 
 
 
 
IV. Overview of relevant Sustainable Development Goals  
Relevant SDG 

Expected progress towards the Goal 

SDG  1  -  End  poverty  in  all 
its forms everywhere 

To  be  determined  when  milestones/targets  and 
indicators are set 

To  be  determined  when  milestones/targets  and 
indicators are set 

To  be  determined  when  milestones/targets  and 
indicators are set 

Comments (examples) 

e.g. reforms and measures to combat poverty 
and  social  exclusion  and  address  material 
deprivation. 

e.g. reforms to support generational renewal 
in the agricultural sector (e.g. to ease access 
to  land/capital;  retirement  schemes;  fiscal 
incentives).   

Future  national  and  regional  partnership 
plans could for example include reforms that 
determines the primary care network on the 
basis  of  availability  of  doctors  and  up-to-
date capacity needs.  

-  End  hunger, 
SDG  2 
achieve  food  security  and 
improved 
and 
promote 
sustainable 
agriculture 

nutrition 

SDG  3  -  Ensure  healthy 
lives  and  promote  well-
being for all at all ages 

equitable 
and 

SDG  4  -  Ensure  inclusive 
quality 
and 
promote 
education 
lifelong 
learning 
opportunities for all 

SDG  5  -  Achieve  gender 
equality  and  empower  all 
women and girls 

SDG  6  -  Ensure  availability 
and sustainable management 
of  water  and  sanitation  for 
all 

SDG  7  -  Ensure  access  to 
reliable, 
affordable, 
sustainable 
and  modern 
energy for all 

SDG  8  -  Promote  sustained, 
inclusive  and 
sustainable 
economic  growth,  full  and 
productive  employment  and 
decent work for all 

SDG  9  -  Build  resilient 
promote 
infrastructure, 
inclusive  and 
sustainable 
industrialization  and  foster 
innovation 

- 

SDG 
10 
inequalities  within 
among countries 

Reduce 
and 

SDG  11  -  Make  cities  and 
human settlements inclusive, 
safe, 
and 
resilient 
sustainable 

SDG 12 - Ensure sustainable 
consumption  and  production 
patterns 

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g. investments in skills  

To  be  determined  when  milestones/targets  and 
indicators are set 

To  be  determined  when  milestones/targets  and 
indicators are set 

To  be  determined  when  milestones/targets  and 
indicators are set 

To  be  determined  when  milestones/targets  and 
indicators are set 

As  the  rest  of  the  EU  budget,  the  plans  are 
gender 
contribute 
expected 
to 
to 
mainstreaming 
IA  on 
(cf.  dedicated 
performance)  

e.g.  investments  into  water  management 
systems to incentivise sustainable water use 
in agriculture. 

E.g.  investments  into  energy  renovation  in 
housing 
lower-income 
households 

targeted 

to 

e.g.  investment  schemes  to  support  the 
digital 
by 
increasing 
their 
employees. 

transformation 
the  digital 

of  SMEs 
skills  of 

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g.  schemes  to  support  companies  in    in 
research  and  development 
investments, 
incentivising private sector innovation.  

To  be  determined  when  milestones/targets  and 
indicators are set 

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g. investments to ensure adequate access to 
transport  services  for  disadvantaged  and 
vulnerable persons. 

e.g.  measures  establishing  car  free  spaces 
and  promoting  the  regeneration  of  public 
spaces of village and town cores. 

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g. measures supporting the introduction of 
new,  cleaner  production  technologies  for 
energy-intensive industries. 

SDG 13 - Take urgent action  To  be  determined  when  milestones/targets  and  As  the  rest  of  the  EU  budget,  the  plans  are 

 
 
 
to  combat  climate  change 
and its impacts 

indicators are set 

expected 
to 
mainstreaming 
assessment on performance)  

contribute 
(cf. 

to 
dedicated 

climate 
impact 

SDG  14  -  Conserve  and 
sustainably  use  the  oceans, 
seas  and  marine  resources 
for sustainable development 

SDG  15  -  Protect,  restore 
and  promote  sustainable  use 
terrestrial  ecosystems, 
of 
sustainably  manage  forests, 
combat  desertification,  and 
land 
halt 
and 
degradation 
halt 
biodiversity loss 

reverse 
and 

SDG  16  -  Promote  peaceful 
and  inclusive  societies  for 
development, 
sustainable 
provide  access  to  justice  for 
effective, 
all 
and  build 
accountable  and 
inclusive 
institutions at all levels 

SDG  17  -  Strengthen  the 
implementation 
means  of 
and 
the  global 
partnership  for  sustainable 
development.  

revitalize 

To  be  determined  when  milestones/targets  and 
indicators are set 

  measures  aimed  at  ecological 

e.g. 
restoration and supporting coastal areas 

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g.  measures  aimed  at  nature  restoration, 
for instance in the agricultural sector  

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g.   reforms to improve the legal response 
to corruption.  

To  be  determined  when  milestones/targets  and 
indicators are set 

e.g. 
tax  reforms 
revenue collection. 

to 

improve  domestic 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 4: COMPETITIVENESS CHECK 

1.  OVERVIEW OF IMPACTS ON COMPETITIVENESS  

Dimensions of 

Impact of the initiative 

price 

Competitiveness 

Cost 
and 
competitiveness 

International 
competitiveness 

Capacity to innovate 

SME competitiveness  

+ 

+ 

++ 

+ 

References  to  sub-sections 
the  main  report  or 
of 
annexes 

Section 7 

Section 7 

Section 5.3 and section 7 

Section 7 and Annex 5 (SME 
check) 

2.  SYNTHETIC ASSESSMENT  

All options on the scope are fully in line with the Commission’s agenda to support EU 
competitiveness,  most  notably  the  Competitiveness  Compass  for  the  EU39  adopted  in 
January 2025, which calls for action on “horizontal enablers” including simplifying the 
regulatory  environment,  reducing  burden  favouring  speed  and  flexibility,  as  well  as  a 
refocused EU budget and a better coordination of policies at EU and national level.  

39 A Competititive Compass for the EU 

 
 
 
 
 
 
 
 
 
 
 
 
 
By  relying  on  a  steering  mechanism  to  identify  the  reforms  and  investments  to  be 
included  in  each  plan,  this  initiative  helps  steer  the  EU  budget  towards  supporting  EU 
competitiveness,  focusing  on  commonly  agreed  priorities,  while  being  tailored  to 
Member States’ specific needs.  

Cost  and price  competitiveness:  The  options  on  the  scope  are  not  expected  to  have  a 
direct  impact  on the cost  of inputs, capital  or labour, nor on the price of  outputs in  the 
EU. The options are, however, expected to reduce administrative and compliance costs to 
access EU funds for both national/regional/local authorities and businesses by having one 
framework setting out the rules governing the plans’ funding for pre-allocated envelopes 
(instead  of  separate  rules  per  programme).  The  options  are  also  expected  to  have  a 
positive impact  on cost/price  competitiveness  as it supports a more efficient use of EU 
budgetary resources.  

International  competitiveness:  The  options  on  the  scope  are  not  expected  to  have  a 
direct impact on EU market shares. However, they are expected have a positive impact 
on  EU  firms  with  respect  to  non-EU  competitors,  through  improved  framework 
conditions. The plans are expected to have a long-term impact on EU competitiveness by 
supporting  the implementation  of structural  reforms  in  Member States in  diverse areas, 
from  reforms  improving  skills  to  labour  market  or  tax  reforms,  or  reforms  removing 
long-standing  regulatory  barriers.  By  supporting  investments  in  key/strategic  sectors 
(broadband, digital technologies, R&D, etc.) and favouring synergies, not only between 
investments  and  reforms,  but  also  between  investments  across  different  sectors,  the 
options on the scope are also expected to improve the competitive position of EU firms 
compared to non-EU competitors in the long run.  

Capacity to innovate: The options on the scope are expected to have a direct impact on 
the EU’s capacity to innovate, thanks to the direct support provided for both investments 
and  reforms  in  various  sectors  conducive  to  innovation,  such  as  in  R&D,  in  digital 
technologies,  in  decarbonisation,  etc.  The  plans  would  also  favour  synergies  between 
reforms  and  investments  in  all  areas  and  across  sectors,  which  is  expected  to  support 
innovation/to have a positive impact on the capacity to innovate. 

SME  competitiveness:  All  options  on  the  scope  of  the  plans  are  expected  to  have  a 
positive impact on SMEs, driven by simplification. Indeed, instead of having investment 
opportunities  scattered  across  various  programmes,  the  plans  would  provide  a 
comprehensive  overview  of  investment  opportunities  per  Member  States.  At  the  same 
time,  the  plans  would  also  propose  one  common  set  of  rules  (for  example  on  audit, 
eligibility,  collection  of  data  or  reporting  rules)  to  access  EU  funds  under  nationally 
allocated  envelopes.  This  simplification  is  expected  to  indirectly  benefit  SMEs,  which 
often  have  limited  resources  compared  to  larger  companies  to  navigate  complex, 
heterogeneous  programme-specific  rules.  However,  the  extent  of  the  simplification  for 
SMEs will also depend on the rules that national/regional/local authorities will set. In the 
short-term,  SMEs  may  nonetheless  face  transition  costs  to  adjust  to  the new  rules  (e.g. 
performance-based delivery model), but their extent is expected to be limited. 

SMEs  will  also  benefit  from  improved  framework  conditions,  as  the  plans  will  include 
support for reforms in diverse areas that matter for SMEs, from business environment to 
labour market reforms. The recent experience of the RRF (see scoreboard fiche on SME 
support)  has  shown  for  example  that  SMEs  have  benefited  from  a  wide  spectrum  of 
reforms,  from  reforms  improving  the  business  environment  and  reducing  red  tape  to 

 
 
reforms  supporting  the  digitalisation  of  public  administration.  This  goes  beyond  the 
measures  targeting  SMEs  directly  (for  example  with  investments  supporting  the 
digitalisation of SMEs under the RRF) or the support provided for SMEs under cohesion 
policy. 

3.  COMPETITIVE POSITION OF THE MOST AFFECTED SECTORS 

The  options  on  the  scope  do  not  directly  affect  the  competitive  position  of  a  specific 
sector  (nor  do  the  other  options  proposed).  However,  the  plans  would  bring  together 
various sectors that are all relevant for EU competitiveness. This would enable to better 
exploit  synergies  between  reforms  and  investments  within  and  across  sectors,  which  is 
expected  to  have  a  positive  impact  on  their  competitiveness.  The  plans  would  also 
provide flexibility  to  (re)allocate funds as needs  emerge, which may be instrumental  to 
support the competitiveness of a specific sector in case of a shock. 

 
 
 
 
ANNEX 5: SME CHECK [FOR SME RELEVANT AND HIGHLY 
RELEVANT INITIATIVES] 

OVERVIEW OF IMPACTS ON SMES 

Relevance for SMEs  

While  this  initiative  does  not  feature  in  the  list  selected  by  the  SME  Envoy  network 
(SME filter) of relevant  initiatives for SMEs, it can be considered to be of relevance to 
SMEs for the reasons outlined below. 

(1) 

IDENTIFICATION OF AFFECTED BUSINESSES AND ASSESSMENT OF RELEVANCE 

Are SMEs directly affected? (Yes/No) In which sectors? 

No 

Estimated number of directly affected SMEs 

N/A 

Estimated number of employees in directly affected SMEs 

N/A 

Are  SMEs  indirectly  affected?  (Yes/No)  In  which  sectors?  What  is  the  estimated 
number of indirectly affected SMEs and employees? 

Yes, in all sectors potentially. By supporting reforms and investments tailored to Member 
States’ needs, all EU SMEs and their employees could potentially benefit from enhanced 
simplification and improved framework conditions. 

(2) CONSULTATION OF SME STAKEHOLDERS 

How has the input from the SME community been taken into consideration? 

SMEs  were  consulted  in  the  context  of  the  public  consultation,  carried  out  between  12 
February and 7 May 2025 (see annex 2). 

SMEs  emphasized  the  need  for  simplified  access  to  EU  funding,  clearer  guidance  on  the 
application  process,  and  greater  inclusion  in  the  co-design  of  EU  programs.  In  particular, 
respondents  stressed  that  SMEs  should  be  recognised  not  only  as  beneficiaries  but  also  as 
strategic  partners  in  delivering  EU  objectives,  particularly  in  areas  such  as  sustainability, 
innovation,  and  regional  development.  They  highlighted  the  importance  of  implementation 
practicality,  stressing  that  administrative  burden  should  be  reduced,  and  suggesting  that  the 
EU should prioritize the development of user-friendly tools and platforms that facilitate their 
participation.  The  overall  message  delivered  is  that  more  SME-sensitive  approaches  are 

 
 
 
 
 
 
needed  to  ensure  effective,  inclusive,  and  territorially  balanced  access  to  EU  funding.  The 
design  of  the  plans  takes  into  account  these  elements,  notably  the  need  to  provide  simplify 
access to EU funding. 

Are SMEs’ views different from those of large businesses? (Yes/No) 

N/A 

(3)  ASSESSMENT OF IMPACTS ON SMES40 

What are the estimated direct costs for SMEs of the preferred policy option? (Fill in only if 
step 1 flags direct impacts) 

N/A 

What  are  the  estimated  direct  benefits/cost  savings  for  SMEs  of  the  preferred  policy 
option41? 

N/A 

What are the indirect impacts of this initiative on SMEs? (Fill in only if step 1 flags indirect 
impacts) 

The  plans  would  provide  better  visibility  to  SMEs  on  the  various  investment  opportunities  per 
Member State. Furthermore, the plans would replace the current system made up of different set 
of  rules  by  one  framework  setting  out  the  rules  governing  the  plans’  funding  for  pre-allocated 
envelopes (e.g. the audit, eligibility and reporting rules). In this regard, all options on the scope 
are expected to indirectly benefit SMEs through simplification. At the same time, the extent of 
simplification  for  SMEs  will  also  depend  on  the  rules  that  Member  States  will  put  in  place  at 
national/regional/local level to access EU funds. 

(4) MINIMISING NEGATIVE IMPACTS ON SMES 

Are SMEs disproportionately affected compared to large companies? (Yes/No) 

If yes, are there any specific subgroups of SMEs more exposed than others? 

No 

Have mitigating measures been included in the preferred option/proposal? (Yes/No)  

The analysis of the options did not identify any specific negative impacts on SMEs. 

CONTRIBUTION TO THE 35% BURDEN REDUCTION TARGET FOR SMES 

40 The costs and benefits data in this annex are consistent with the data in annex 3. The preferred option 
includes the mitigating measures listed in section 4.  
41 The direct benefits for SMEs can also be cost savings. 

 
 
 
 
 
 
 
Are there any administrative cost savings relevant for the 35% burden reduction target 
for SMEs? 

N/A 

ADDITIONAL INFORMATION  

(See Competitiveness check - section on SME competitiveness)  

All  options on the scope of the plans are expected to  have a positive impact  on SMEs, 
driven  by  simplification.  Indeed,  instead  of  having  investment  opportunities  scattered 
across  various  programmes,  the  plans  would  provide  a  comprehensive  overview  of 
investment  opportunities  per  Member  States.  At  the  same  time,  the  plans  would  also 
propose one common set of rules (for example on audit, eligibility, collection of data or 
reporting  rules)  to  access  EU  funds  under  nationally  allocated  envelopes.  This 
simplification is expected to indirectly benefit SMEs, which often have limited resources 
compared  to  larger  companies  to  navigate  complex,  heterogeneous  programme-specific 
rules. However, the extent of the simplification for SMEs will also depend on the rules 
that national/regional/local authorities will set. In the short-term, SMEs may nonetheless 
face transition costs to adjust to the new rules (e.g. performance-based delivery model), 
but their extent is expected to be limited. 

SMEs  will  also  benefit  from  improved  framework  conditions,  as  the  plans  will  include 
support for reforms in diverse areas that matter for SMEs, from business environment to 
labour market reforms. The recent experience of the RRF (see scoreboard fiche on SME 
support)  has  shown  for  example  that  SMEs  have  benefited  from  a  wide  spectrum  of 
reforms,  from  reforms  improving  the  business  environment  and  reducing  red  tape  to 
reforms  supporting  the  digitalisation  of  public  administration.  This  goes  beyond  the 
measures  targeting  SMEs  directly  (for  example  with  investments  supporting  the 
digitalisation of SMEs under the RRF) or the support provided for SMEs under cohesion 
policy.  

 
 
 
 
 
ANNEX 6: EU FUNDS WITH NATIONALLY PRE-ALLOCATED 
ENVELOPES 

➢  Cohesion Policy Funds 

Cohesion policy aims to reduce regional disparities and promote economic, territorial and 
social  cohesion  as  well  as  convergence  among  Member  States  and  regions  (Treaty 
objective). The budget allocated to cohesion policy is close to a third of the current MFF 
budget. Around two thirds of the cohesion policy budget is dedicated to less developed 
regions. It also provides targeted support for areas that are geographically disadvantaged 
(remote, islands, mountainous or sparsely populated areas) with dedicated financing.  

Over  the  past  decades,  Cohesion  Policy  has  evolved  to  meet  the  changing  socio-
economic, environmental, and the EU’s policy priorities, such as the transition towards a 
smart, green, and digital Europe. The policy is also aligned with the European Semester. 
In  the  2021  –  2027  period,  Cohesion  Policy  has  an  increased  focus  on  achieving  a 
greener EU and ensuring a just transition, addressing contemporary challenges affecting 
differently all regions, and supporting the EU's broader goals of sustainable development 
and inclusivity.  

Cohesion policy is implemented under ‘shared management’ between the Member States 
and  the  Commission  through  the  different  funds  described  below,  with  funding  mainly 
disbursed based on incurred costs:   

•  The European Regional Development Fund (ERDF) - to invest in the 
economic and social development of all EU regions and cities. It also 
provides funding for the European Urban Initiative and Interregional 
Innovation Investments (directly managed by the Commission). 

•  The  Cohesion  Fund  (CF)  –  to  invest  in  environment  and  transport 
infrastructure  in  the  less  prosperous  EU  countries.  It  supports  EU 
convergence by design, as the instrument focuses on Member States 
with a GNI per capita below 90% of the EU average. A share of the 
CF  budget  is  transferred  and  implemented  through  the  transport 
strand of the Connecting Europe Facility. 

•  The  European  Social  Fund+  (ESF+)–  to  support  jobs,  education, 
skills and create a fair and socially inclusive society in EU countries 
in line with the European Pillar of Social Rights. ESF+ also promotes 
the horizontal principles of gender equality, respect for fundamental 
rights, equal opportunities, and non-discrimination. The biggest part 
of the ESF is  implemented under shared management but  there is  a 
small part reserved for direct and indirect management which is not 
pre-allocated  (the  Employment  and  Social  Innovation  strand  (EaSI) 
and support to transnational cooperation)42.  

42 The EaSI strand does not have nationally pre-allocated envelopes. 

 
 
 
•  The  Just  Transition  Fund  (JTF)-  to  mitigate  the  socio-economic 
impact  in  the  territories  most  affected  by  the  transition  towards 
climate-neutrality. The fund invests in SMEs, clean energy projects, 
smart  and  sustainable  local  mobility,  research  and  innovation  and 
social 
to  supporting  economic 
diversification, reskilling of workers, land and ecosystem restoration, 
and promoting environmental sustainability.  

infrastructure  with  a  view 

• 

Interreg  –  funded  by  the  ERDF  but  with  its  own  dedicated  budget 
and  Regulation,  Interreg  aims  to  stimulate  cooperation  between 
regions  in  and  out  of  the  European  Union.  Interreg  is  implemented 
under shared management, through 86 dedicated programmes. 

➢  The Recovery and Resilience Facility (RRF) 

The RRF is the centrepiece of NextGenerationEU, the EU’s plan to emerge stronger and 
more resilient from the COVID-19 crisis. The legal basis of the RRF is partly the same as 
for Cohesion Policy (Article 175 of the TFEU). It was established in February 2021 as a 
temporary instrument set to last until end 2026 to help Member States recover from the 
crisis and make their economies and societies more resilient and better prepared for the 
green  and  digital  transitions.  It  is  implemented  through  “direct  management”  by  the 
Commission.  Furthermore,  in  the  context  of  the  REPowerEU  plan  presented  by  the 
Commission in May 2022 to respond to the socio-economic hardships and global energy 
market disruption caused by Russia's invasion of Ukraine, Member States could benefit 
from additional resources to introduce REPowerEU chapters in their RRPs. The aim of 
these  chapters  is  to  boost  reforms  and  investments  that  diversify  the  EU’s  energy 
supplies, accelerate the green transition and support vulnerable households. 

The  RRF  is  the  EU’s  first  major  performance-based  funding  programme,  disbursing 
funds to Member States against progress made towards both reforms and investments put 
forward in their national recovery and resilience plans (RRPs). Rather than considering 
the  costs  incurred  for  the  implementation  of  projects,  funds  are  unlocked  upon  the 
achievement  of  milestones  and  targets,  which  represent  concrete  steps  in  the 
implementation  of  reforms  or  investments  by  Member  States,  with  a  results-based  or, 
also-called, performance-based approach. One of the RRF’s key innovative features is its 
use  of  financial  incentives  to  promote  reforms,  including  key  reforms  identified  in  the 
context  of  the  European  Semester.  These  reforms  draw  on  priorities  highlighted  in  the 
European  Semester’s  country  specific  recommendations  endorsed  by  the  European 
Council.    Overall,  reforms  and  investments  must  be  in  line  with  the  EU  priorities 
identified  in  the  RRF  Regulation  and  in  the  European  Semester  for  economic  and 
employment  policy  coordination  through  addressing  all  or  a  significant  subset  of  the 
Semester’s country-specific recommendations (CSRs).  

➢  Common Agricultural Policy (CAP):  

The  Common  Agricultural  Policy  (CAP),  mostly  implemented  in  shared  management, 
ensures  long  term  food security in  the EU by safeguarding a  fair standard of living for 
farmers – as enshrined in the Treaties – through various instruments. In this context, the 
CAP is a key policy for supporting the economic, environmental and social sustainability 
of rural areas. Almost a third of the current EU budget is allocated to the CAP and most 
of  this  budget  is  dedicated  to  income  support,  both  within  the  first  and  second  pillar 

 
 
funds, for which farmers are the direct beneficiaries. The CAP has evolved over the years 
to address geo-political, socio-economic, environmental and climate challenges and meet 
citizens’ expectations. The latest CAP reform, which came into effect in 2023, introduced 
a new, more performance-based delivery model based on strategic programming, which 
provided  Member  States  with  increased  flexibility  and  responsibility  in  addressing 
national/regional/local  specificities  and  needs  within  a  set  of  common  EU  rules  and 
objectives.  The  new  delivery  mechanism  covers  under  the  single  umbrella  of  the  CAP 
Strategic Plans the funding for direct income support, rural development and support for 
certain sectors. 

The CAP is financed through two funds (also referred to as the first and second pillar of 
the CAP): 

•  The European Agricultural Guarantee Fund (EAGF), which provides, 
inter alia, direct payments to farmers as well as measures to support 
and  stabilise  agricultural  markets,  including  in  crisis/exceptional 
situations through the agricultural reserve.  

•  The  European  Agricultural  Fund  for  Rural  Development  (EAFRD), 
which  provides  support  to  farmers’  incomes  through  a  series  of 
interventions  (such  as  remuneration  for  environmental  and  climate 
services,  support  for  on-farm  investments,  risk  management  tools, 
young  farmers  and  farmers  operating 
in  areas  with  natural 
constraints,  knowledge  exchange)  and  supports  investments  in  rural 
areas as well as cooperative approaches (LEADER43). 

➢  European Maritime, Fisheries and Aquaculture Fund (EMFAF): 

It supports the EU common fisheries policy (CFP), and the EU agenda for international 
ocean  governance.  It  provides  support  for  ensuring  sustainable  fisheries,  aquaculture, 
processing  and  the  wider  blue  economy.    This  includes  for  example,  developing 
innovative projects for more selective fishing and sustainable aquaculture, delivering the 
energy  transition  of  the  sector,  and  providing  support  for  closure  periods  for  the 
protection of biodiversity, and ensuring that coastal and rural communities dependent on 
fisheries  can  go  from  strength  to  strength.  Support  from  the  fund  also  ensures  that 
appropriate levels of controls and data collection are in place to inform policy decisions, 
notably  to  the  deliver  on  the  protection  of  marine  biological  resources  –  an  exclusive 
competence  of  the  EU  The  majority  of  the  programme  is  implemented  under  shared 
management, through national programmes, for which the CPR 2021-2027 is applicable. 
The Commission also directly manages a part of the programme, by supporting, amongst 
others, interventions relating to the blue economy, scientific advice, fisheries control and 
enforcement,  market  intelligence  and  provides  financing  to  the  activities  of  regional 
fisheries management organisations.  

➢  Home Affairs Funds: 

43 LEADER involves local actors in rural areas in the development of their own regions by forming Local Actions Groups (LAGs) 
and designing and implementing strategies. 

 
 
 
There are three EU funds in the field of home affairs: 

• 

• 

• 

the Asylum, Migration and Integration Fund (AMIF) – contribute to 
the  efficient  management  of  migration 
the 
implementation,  strengthening  and  development  of  the  common 
policy on asylum and the common immigration policy.  

flows  and 

to 

the Border Management and Visa Instrument (BMVI)  –  to  ensure a 
strong  and  effective  European  integrated  border  management  at  the 
Union’s  external  borders,  thereby  contributing  to  ensuring  a  high 
level  of  internal  security  within  the  Union  while  safeguarding  the 
free movement of persons within it; 

the  Internal  Security  Fund  (ISF)  –  to  contribute  to  ensuring  a  high 
level of security in the EU, in particular by preventing and combating 
terrorism and radicalisation, serious and organised crime, corruption 
and cybercrime, by assisting and protecting victims of crime, as well 
as  by  preparing  for,  protecting  against  and  effectively  managing 
security-related incidents, risks and crises.   

The  three  Home  Affairs  Funds  combine  all  management  modes.  More  than  half  of  the 
total  funding  for  all  three  Funds  is  implemented  under  shared  management,  through 
national programmes (one per fund for each Member State) under the rules of the CPR. 
Under each Fund an amount is to be allocated following a mid-term review. That amount 
corresponds to approx. 10 % of the total budget and will be distributed to Member States 
based on the same allocation criteria as the initial allocations but on the basis of updated 
statistical  data  (covering  years  2021-2023).  Those  mid-term  allocations  for  2025-2025 
will be allocated only to the Member States that by end 2024 fulfilled specific conditions 
and will go to their national programmes.  

The  remaining  part  of  the  financial  envelope  of  each  Home  Affairs  Fund  is  not  pre-
allocated  and  is  centrally  managed  by  the  Commission  through  multiannual  work 
programmes under the form of a Thematic Facility (in total, there are three – one for each 
Fund).  Funding  can  be  implemented  under  all  management  modes  –  direct,  shared, 
indirect.  

➢  LIFE Programme 

The  LIFE  programme  is  the  Commission’s  dedicated  funding  for  environment,  climate 
action and the transition to clean energy.  

Approximately  one-third  of  the  LIFE  budget,  is  pre-allocated  to  Member  States  on  an 
indicative  basis  for  the  implementation  of  'strategic  nature  projects'44  and  'strategic 
integrated  projects'  45,  as  outlined  in  the  LIFE  Multiannual  Work  Programme46.  This 

44  ‘Strategic  nature  projects’  are  initiatives  that  help  achieve  the  EU's  nature  and  biodiversity  goals  by  implementing  coordinated 
programmes of actions in Member States, integrating these objectives into other policies and funding. 

45  ‘Strategic  integrated  projects’  are  large-scale  projects  that  implement  environmental  or  climate  strategies,  required  by  EU  law, 
across regions or countries, involving stakeholders and combining multiple funding sources. 

 
 
 
pre-allocation  reinforces  the  programme's  commitment  to  implementing  environmental 
law in the Member States. Beyond the indicatively pre-allocated envelopes for strategic 
nature  and  integrated  projects,  other  LIFE  projects  address  EU  priorities  by  promoting 
innovation and stakeholder involvement. 

➢  Connecting Europe Facility 

The  Connecting  Europe  Facility  (CEF)  is  a  key  EU  funding  instrument  to  promote 
growth, jobs and competitiveness through targeted infrastructure investment at European 
level.  It  is  a  centrally  managed  programme  that  supports  the  development  of  high 
performing,  sustainable  and  efficiently  interconnected  trans-European  networks  in  the 
fields  of  transport,  energy  and  digital  services.  For  transport,  an  amount  has  been 
transferred  from  the  Cohesion  Fund  to  the  CEF.  During  the  first  three  years  of 
implementation, the selection of projects supported from that transfer had to respect the 
national  allocations  under  the  Cohesion  Fund  with  regard  to  70%  of  the  resources 
transferred;  the  remaining  amount  has  been  made  available  on  a  competitive  basis 
amongst cohesion Member States.  

➢  Food safety strand of the Single Market Programme: 

The food safety strand of the Single Market Programme covers food safety, animal and 
plant  health,  antimicrobial  resistance,  reduction  of  food  waste,  official  controls,  food 
fraud,  animal  welfare  and  sustainability.  Funding  is  provided  via  direct  and  indirect 
management,  mainly  through  grants  and  procurement,  but  also  via  contribution 
agreements, administrative arrangements and service level agreements. While it does not 
have  any  funding  pre-allocated  nationally,  the  main  beneficiaries  are  Member  States’ 
competent authorities. Furthermore, there are strong synergies in terms of scope with the 
Common Agricultural Policy.  

Instruments funded by revenues from the auctioning of emission allowances under 
the EU Emissions Trading System (EU ETS): 

to  spend  earmarked  national  ETS  revenues  for 

•  The  Modernisation  Fund  is  an  off-budget  instrument  for  Member 
States 
the 
modernisation  of  their  energy  sector  from  2021  to  2030.  A  small 
percentage  of  ETS1  allowances  are  auctioned  to  support  13  lower-
income  Member  States  in  the  energy  transition.  The  Modernisation 
Fund  operates  under  the  responsibility  of  the  beneficiary  Member 
States, who work in close cooperation with the European Investment 
Bank (EIB) and the Commission. The disbursement of funds is based 
on an ad hoc procedure, including EIB assessment and Commission 
approval (and State aid clearance).  

•  The forthcoming Social Climate Fund (SCF) will provide, as of 2026 
until  2032,  Member  States  with  dedicated  funding  so  that  the  most 
affected vulnerable groups, such as households in energy or transport 
poverty, are directly supported and not  left behind during the green 

46 LIFE Multiannual Work Programme 2021-2024 

 
 
 
transition. The SCF, will be funded from the revenues sourcing from 
the auctioning of ETS2 allowances, and will be directly managed by 
the Commission, and funding will be disbursed to Member States on 
a performance basis. The SCF Regulation foresees the integration of 
the  fund  in  the  next  multiannual  financial  framework  in  the  event 
revenue  generated  from  the  auctioning  the  ETS2  allowances  is 
established as an own resource.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 7: FURTHER ANALYSIS SUPPORTING THE 
IDENTIFICATION OF PROBLEM DRIVERS 

Problem driver 1: Some programmes overlap or have a similar scope 

Table X: Objectives covered by the different EU instruments with nationally pre-allocated envelopes. 

ERDF  CF  ESF+ JTF CAP EMFAF AMIF BMVI ISF RRF 

Modern-
isation 
fund 

LIFE 

SCF CEF 

* 

* 

* 

* 

* 

Objectives*/ 
funds 

Economic, 
social and 
territorial 
cohesion   

* 

*  *  * 

Employment, 
and social 
affairs   

Education and 
skills 

* 

* 

*  * 

* 

* 

Climate action   * 

*  *  *  * 

Agriculture, 
food and rural 
development   

Research and 
innovation   

Health  

Digital 
connectivity 
infrastructures 

Sustainable 
energy 
infrastructures   

* 

* 

* 

* 

* 

Transport 

infrastructures  * 

Environment 

Tourism and 
local 
development   

* 

* 

*  * 

* 

* 

  *  * 

*  * 

* 

  * 

  * 

  * 

* 

* 

* 

* 

* 

* 

  * 

  * 

* 

* 

  * 

  * 

* 

*  *  * 

  * 

  * 

  * 

  * 

* 

  * 

  * 

  * 

* 

*  *  * 

* 

* 

  *  * 

  * 

  * 

  * 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Migration  

Border 
management 

Security  

* 

* 

* 

* 

* 

  * 

Problem  driver  2:  The  programming  of  EU  funds  with  nationally  pre-
allocated envelopes is too fragmented 

Looking  only  at  those  EU  funds  jointly  managed  by  the  Commission  and  Member 
States, the number of programmes amounts to 511 programmes of which 232 national 
programmes, 194 regional programmes and 85 Interreg ones. 

➢  Cohesion policy 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At the start of the programming period, Member States must first prepare a partnership 
agreement (which also covers other policy areas; the EAFRD and EMFAF in 2014-2020 
and only the latter in 2021-2027). Partnership agreements are overarching documents in 
which the Member States describe how coordination, demarcation and complementarities 
are  ensured  between  the  funds  programmes  the  policy  objectives  of  their  funds  or  the 
preliminary  financial  allocation  of  each  of  the  funds.  These  are  strategic  documents 
which set out the broad orientations but do not specify in detail what types of actions and 
investments are to be undertaken.  

Together  with  the  partnership  agreements,  Member  States  can  start  submitting 
programmes, setting out a strategy to achieve the objectives and identifying the types of 
planned activities and investments.  They are free to  choose the number of programmes 
they  want  to  have  and  whether  they  prefer  national  or  regional  programmes  (or  a 
combination  of  both).  Additionally,  Interreg  programmes  pursuing  the  European 
Territorial  Cooperation  goal  are  also  implemented.  For  the  period  2021-2027,  the 
cohesion  policy  funds  are  delivered  through  379  programmes.  The  involvement  of 
regional and local  authorities and other stakeholders is strong throughout  programming 
and  implementation  due  to  the  long-standing  partnership  and  multi-level  governance 
arrangements under the policy. 

➢  The Common Agricultural Policy 

The  move  towards  single  programming  is  one  of  the  main  novelties  of  the  new  CAP, 
which  has  entrusted  each  Member  State  with  the  drafting  of  a  national  strategic  plan, 
combining  funding  for  direct  payments,  rural  development  and  market  measures,  all  of 
which  contribute  to  providing  income  support  to  farmers.  This  allowed  for  strategic 
planning under a single plan, both for the EAGF – which before did not have a specific 
plan  –  and  for  the  EAFRD  –  where  the  previous  115  national  and  many  regional 
programmes are now combined under one single umbrella.47  

➢  EMFAF 

EMFAF funding is implemented through a single national programme at Member State 
level.  The  programme  is  negotiated  under  the  partnership  agreement,  as  set  out  above 
under cohesion policy.  

➢  Home Affairs Funds 

When  it  comes  to  the  Home  Affairs  Funds  for  migration,  border  management  and 
internal security, programming is done per Fund, with one national programme per Fund. 
Yet,  these  programmes  are  often  managed  by  the  same  managing  authorities  in  each 
Member State. 

➢  Recovery and Resilience Facility 

To  access  financial  support  under  the  Facility,  Member  States  had  to  prepare  RRPs 
setting  out  a  national  agenda  of  reforms  and  investments  to  be  implemented  gradually 
until  31  August  2026.  The  selected  reforms  and  investments  are  in  line  with  their 

47 With the exception of BE, which has two CAP Strategic Plans – one for Wallonia and one for Flanders. 

 
 
 
priorities and needs, ensuring a targeted country-specific approach while supporting EU 
common  policies.  Once  a  RRP  is  approved  by  the  Council  upon  proposal  by  the 
Commission,  the  plan’s  content  becomes  a  legally  binding  act  that  includes  the 
milestones and targets against the fulfilment of which payments should be made. While 
the  RRF  Regulation  sets  out  overarching  criteria  that  the  plans  need  to  comply  with, 
Member States are responsible for designing their plans and deciding on the reforms and 
investments  to  put  forward,  creating  a  sense  of  ownership,  commitment,  and 
accountability, which facilitates implementation.  

Problem driver 3: Heterogeneous programme-specific rules may lead to a 
suboptimal use of resources 

Two  of  the  areas  where  rules  differ  amongst  programmes  are  co-financing  rates  and 
conditionality, which are further explained below.  

Example 1: Co-financing rules 

Different  funds  have  different  co-financing  rates,  which  in  specific  cases  are  further 
differentiated  within  the  funds  and  programmes  according  to  the  level  of  regional 
development or for specific actions. While this allows targeting interventions to achieve 
specific policy objectives, the current system of co-financing is complex and may lead to 
“subsidy-shopping” and  inefficiencies in  the  allocation of  resources in  situations where 
Member  States  have  the  choice  of  implementing  certain  actions  under  several 
programmes. While co-financing rates are defined in the CPR for cohesion policy funds, 
this is not the case for other EU funds under the CPR such as the Home Affairs Funds or 
EMFAF, where co-financing rules are defined in sectoral legislation. Other EU funds do 
not require co-financing, such as direct payments under the CAP or support through the 
RRF. The Social Climate Fund will rely on co-financing at the level of the plan, based on 
the ex-ante costing of the interventions planned by Member States.  

Table  X:  Overview  of  co-financing  rates  in  EU  programmes  with  nationally  pre-
allocated envelopes 

EU  fund  with 
nationally 
pre-allocated 
envelopes 

Co-financing 

(yes/no  &  where  it  is 
defined) 

ERDF 

Yes – CPR 

Co-financing rates (if applicable)48 

to  85%,  depending  on 

the 
From  40 
category  of  regions;  80%  for  Interreg. 
Several  derogations  have  been  introduced, 
which allow for a co-financing rate of up to 
100% (e.g. STEP) 

CF 

Yes – CPR 

Up  to  85%  depending  on  the  category  of 

48  In  certain  cases  to  address  crises  situations  or  pursue  STEP  objectives  it  is  possible  to 
increase the EU co-financing rates to 100% under cohesion policy. 

 
 
 
JTF 

Yes – CPR 

From  50 
category of regions 

to  85%,  depending  on 

the 

regions 

ESF+ 

Yes  –  CPR  and  sectoral 
legislation, which may set 
higher co-financing rates 

From 40 to 95% 

EMFAF 

Yes  –  CPR  and  sectoral 
legislation 

Up  to  70%  (100%  of  additional  costs  for 
Outermost Regions) 

EAGF 

No 

EAFRD 

AMIF 

BMVI 

ISF 

RRF 

Yes  –  established  in  the 
CAP 
Plan 
Strategic 
Regulation 

From 20% up to 80-100% 

Yes – sectoral legislation  From 75% to 90-100% 

Yes – sectoral legislation  From 75% to 90-100% 

Yes – sectoral legislation  From 75% to 90-100% 

No 

LIFE 

Yes – sectoral legislation 

100% EU funded (and interest payments on 
loans are excluded from net expenditure) 

60%  for  strategic  nature  projects  and 
strategic integrated projects  

SCF 

CEF 

Yes – sectoral legislation  Member States shall “contribute at least to 
25%  of  the  estimated  total  costs  of  their 
plans” 

Yes – sectoral legislation  CEF  Transport:  30-50% 

in  general 
envelope;  up  to  85%  for  projects  funded 
from the transfer from the Cohesion Fund. 

rule 

CEF Energy: up to 50% of eligible costs as 
in 
a  general 
exceptional  cases  of  projects  scoring  high 
in terms of security of supply, solidarity or 
innovation) 

(and  up 

to  75% 

Example 2: Conditionality  

The  sound  financial  management  of  the  Union  budget  is  protected,  among  others,  by 
imposing certain conditions that must be respected for the disbursement of EU funds to 
be  used,  usually  referred  to  as  the  ‘conditionality’  mechanisms.  The  conditionalities  in 
the  current  Multiannual  Financial  Framework  can  be  divided  between  those  that  are 

 
 
 
 
applicable to all programmes of the EU budget and those additional requirements that are 
programme-specific.  On  the  former,  while  the  Conditionality  Regulation  applies  to  all 
programmes  of  the  current  multiannual  financial  framework,  regardless  of  the 
management  mode,  it  does  not  apply  to  the  Modernisation  Fund  –  an  off-budget 
programme.  This  can  create  reputational  risks  for  the  Commission.  On  the  latter,  there 
are  significant  divergences  in  the  application  of  conditionality  between  EU  spending 
programmes with nationally pre-allocated envelopes, which brings additional complexity 
for  the  Commission  and  Member  States’  authorities.  Furthermore,  the  effectiveness  of 
the  different  programme-specific  requirements  needs  to  be  assessed  –  for  example,  the 
macro-economic conditionality in cohesion has never been triggered. 

At the same time, while there are no conditionality rules linked to EU values or Rule of 
Law  in  the  CAP,  a  dedicated  system  of  conditionality  rules  links  CAP  support  to  the 
compliance of farmers with basic standards concerning the environment, climate change, 
public  health,  plant  health  and  animal  welfare,  as  well  as  working  and  employment 
conditions for farm workers and occupational safety and health. The same applies to the 
EMFAF and the admissibility rules based on compliance with Common Fisheries Policy 
and environmental legislation. 

Applicable across all programmes of the EU budget 

Legal basis 

Condition 

•  Breaches of the rule of law principles directly affect or 
financial 
seriously 
management  of  the  Union  budget  or  of  the  financial 
interests of the Union in a sufficiently direct way.  

affecting 

sound 

risk 

the 

Conditionality 
regulation 

Not  applicable  to  the 
Modernisation Fund  

It  will  apply 
to 
Social Climate Fund 

the 

Applicable to certain programmes of the EU budget 

Legal base 

Condition 

CPR applicable to: 

Horizontal enabling conditions (Article 15 and Annex III): 

•  Cohesion  policy 
programmes 
(ERDF,  ESF+, 
CF, JTF) 

•  European 
maritime, 
fisheries 
and 
aquaculture  fund 
(EMFAF) 

•  Home 

Affairs 

•  Effective  monitoring  mechanisms  of 

the  public 

procurement market 

•  Tools  and  capacity  for  effective  application  of  State 
aid rules (not applicable to the home affairs funds) 

•  Effective  application  and 

implementation  of 

the 

Charter of Fundamental Rights 

• 

Implementation and application of the UN Convention 
on the rights of persons with disabilities 

 
 
 
Funds 
ISF, BMVI) 

(AMIF, 

Thematic  enabling  conditions  (Article  15  and  Annex  IV, 
applicable to ERDF, ESF+ and CF), such as the obligation 
to  have  a  national  or  regional  broadband  plan,  or  a 
comprehensive transport planning at the appropriate level.  

Macro-economic  conditionality  –  applies  to  ERDF  (except 
Interreg),  Cohesion  Fund,  JTF    (not  to  ESF+,  EMFAF  or  
HOME funds) 

CAP Regulation  

Statutory  management  requirements  (SMRs)  (Article  12  and 
Annex  III)  –  compliance  with  relevant  provisions  of  EU 
legislation such as the Directive on water policy.   

Standard  for  good  agricultural  and  environmental  conditions 
(GAECs) (Article 12 and Annex III) such as protect wetlands 
and peatlands or crop rotation in arable land. 

Social conditionality (Article 14 and Annex IV) – compliance 
with  relevant  provisions  of  EU  Directives,  such  as  the 
Directive on minimum safety and health requirements for use 
of work equipment by workers. 

Possibility  to  include ‘super milestones’ as a prerequisite for 
any payment under the RRF, ensuring that disbursements are 
contingent  upon  the  fulfilment  of  adequate  measures  related 
to the protection of the Union’s financial interests. 

Macro-economic conditionality applies to RRF funds 

RRF Regulation 

Problem driver 4: Persistent weak administrative capacity and governance 
at national, regional and local levels  

Technical assistance 

In the 2021-2027 programming period, Member States have access to a significant 
amount  of  technical  assistance.  Estimates  suggest  at  least  EUR  14  billion  in  pre-
allocated technical assistance, along with an additional EUR 1.8 billion in public reform 
support from the RRF. This brings the total estimated technical assistance as a share of 
pre-allocated national envelopes to at least EUR 15 billion.  

The  scope  of  technical  assistance  varies  across  funds  and  is  covered  by  different 
rules across EU programmes with nationally pre-allocated envelopes. Different funds 
have varying maximum thresholds, co-financing rates, forms of the EU contribution (flat-
rate  or  eligible  costs),  and  eligible  scope  (administrative  costs  only,  capacity  building 
included,  beneficiary/partner  assistance  included).  In  addition  to  the  complexity  in 
implementing  the  rules,  this  undermines  visibility  of  what  is  financed  by  each 
programme.  

Furthermore,  today,  the  bulk  of  technical  assistance  of  the  Member  States  consists 
mostly of  administrative costs for the management of EU funds and focus on capacity-

 
 
 
building or knowledge transfer is limited. Hence, the technical assistance is not designed 
to address gaps related to administrative capacity and implement the necessary measures 
to address them. 

Technical support 

The  technical  support  provided  by  the  Commission,  directly  by  its  services  or  via 
external  consultants,  faces  several  issues  that  hinder  its  ability  to  effectively 
strengthen the administrative capacities of Member State administrations. 

In  the  current  period,  the  EU  budget  provides  technical  support  to  public 
administrations  through  at  least  14  different  internal  policy  programmes.  These 
programmes  offer  assistance  either  directly  or  through  external  consultants  but  operate 
with varying procedures and rules, often addressing overlapping sectors. The fragmented 
structure  makes  it  difficult  for  administrations  to  fully  understand  and  access  the 
available support. This limits the visibility of these resources and disperses the financial 
means  dedicated  to  technical  support,  ultimately  preventing  the  programmes  from 
reaching their full potential impact.  

The demand-driven nature of the TSI also entails some limitations to the potential 
for fully aligning technical support with EU priorities. Efforts such as the introduction 
of flagship projects49 and the inclusion of Country Specific Recommendations relevance 
as part of the assessment for selecting TSI projects aim to strengthen this alignment with 
key  EU  priorities.  However,  these  mechanisms  face  limitations,  as  Member  State 
requests do not always correspond to reforms identified at the EU level as critical.  

Finally, it is difficult to follow-up on the results of technical support and assistance 
and  to  complete  the  reform  efforts.  In  particular,  the  instrument  providing  technical 
support in the research domain, i.e. the Horizon Policy Support Facility’s (PSF) had its 
ability  to  induce  changes  in  national  systems  constrained  because  Member  States  were 
free  to  decide  the  extent  to  which  they  would  implement  the  reforms  identified  in  the 
context  of  the  Facility.  Similarly,  as  indicated  in  the  supporting  external  study  of  TSI 
mid-term evaluation, changes in government and political agendas may have a negative 
effect on the sustainability of technical support. 

Problem driver 5: Budgetary allocations are too rigid 

Categories of regions & financial and thematic concentrations 

In  order  to  ensure  that  resources  are  spent  to  deliver  on  the  Treaty  objective  for 
economic,  social  and  territorial  cohesion  and  effectively  reduce  interregional 
disparities,  regions  have  been  differentiated  based  on  their  level  of  development 
since 1988. The current three categories (less developed, transition and more developed) 
were introduced for 2014-2020 and have been maintained (with different thresholds).  

The  level  of  development  of  the  regions,  along  with  other  indicators,  plays  an 
important role in the allocation methodology of cohesion policy funds  – the policy 

49 For example, the 2025 flagship ’Supporting the Resilience of Natural Resources’. 

 
 
 
rationale being that the poorer need more support. Allocations are aggregated at the 
level of the categories of regions and need to be spent for the corresponding category of 
region.  However,  Member  States  are  free  to  decide  which  regions  of  a  same  category 
receive how much of the resources.  

The  categories  of  regions’  system  have  been  made  more  flexible  over  the  past 
programming  periods,  with  higher  level  of  transfers  between  categories  enabled, 
removing restrictions on the location of the operations, among others. Yet, it still comes 
with  some  complexity  in  the  management  of  the  programmes.    Finally,  the  lack  of 
alignment  between  EU  and  national  funding  also  deserves  to  be  analysed.  Other  EU 
programmes  with  a  territorial  dimension  follow  a  similar  approach  as  under  cohesion 
policy funds – for instance, in the EAFRD, where categories of regions are not applied, 
but different co-financing rates are used depending on the level of development.  

Other  requirements  are  imposed  via  various  thematic  concentration  mechanisms. 
For  example,  while  these  have  proven  useful  to  make  sure  cohesion  policy  funds 
contribute to specific policy objectives in the context of already pre-allocated budgets by 
fund,  some  Member  States  argue  that  the  rigidity  introduced  by  this  approach  may 
undermine  their  capacity  to  address  strategic  issues  and  emerging  needs  relevant  to 
economic, social and territorial cohesion. When combined altogether, the possibilities for 
the  Commission,  Member  States  and  regions  to  redirect  funding  to  tackle  existing  and 
emerging  new  needs  and  priorities  outside  these areas  are  limited.  The  current  detailed 
rules at EU level also limit the degree to which the specificities and diversity of regions 
can be considered, and hence undermine the place-based approach of cohesion policy.  

Limited use of budgetary flexibilities 

Most EU funds allocate national envelopes upfront at the start of the programming 
period.    This  leaves  little  room  to  allocate  funding  to  account  for  new  needs  (without 
reopening the regulatory framework) or to those Member States achieving better results.  

Efforts  have  been  made  in  the  current  programming  period  to  address  emerging 
needs. The mid-term  review of cohesion  policy seeks to  cater for Member States’ new 
needs  but  without  reallocating  funding  across  Member  States.  For  the  2021-2027 
programming period, this mid-term review will be carried out by each Member State by 
31 March 2025 and will include a definitive commitment of the flexibility amounts (50% 
of  the  amounts  for  2026  and  2027).  Compared  to  the  2014-2020  period,  the  financial 
resources associated have increased (14% compared to  6% of total  allocations) and the 
review will follow a more qualitative approach, which should better reflect the low levels 
of  implementation  in  many  Member  States  and  ensure  a  better  link  to  EU  policy 
priorities, and the Semester in particular. 

The  CAP  strategic  plans  allow,  within  limits,  for  budgetary  transfers  between  the 
two  pillars  of  the  CAP  as  well  as  for  revisions  of  the  Member  States’  planning  to 
take  new  developments  and  priorities  into  account.  However,  stakeholders  and 
Member  States  demand  increasing  flexibility  to  shift  budgetary  allocations  within  the 
CAP plans to respond to current geopolitical uncertainties and the increased level of risks 
and shocks that agricultural activity is confronted with, while also emphasizing the needs 
for  long-term  predictability  and  stability  of  overall  CAP  funding  for  the  final 

 
 
beneficiaries50- a concern also echoed in cohesion policy, given the long-term nature of 
investments.  

The  mid-term  review  of  the  Home  Affairs  Funds  follows  a  different  approach:  it 
provides  an  additional  financial  allocation  to  Member  States  fulfilling  a  specific 
requirement  at  the  mid-term  stage,  based  on  the  same  allocation  criteria  as  the  initial 
allocations but with an updated statistical data. As such, it will aim to provide additional 
funding to Member States taking into account changes in needs. 

Furthermore,  programming  the  entirety  of  Member  States’  allocations  prevents 
effectively  addressing  new  needs  or  priorities  both  in  the  Member  State  but  also 
from the Commission’s perspective. In this regard, the three Thematic Facilities under 
the  Home  Affairs  Funds  are  an  innovation,  with  their  multiannual  scope  (allowing  to 
cater  for  both  short  and  long-term  needs),  mix  of  actions  (ranging  from  Emergency 
Assistance  to  support  for  strategic  priorities  such  as  resettlement)  and  because  they 
combine all three management modes (direct/indirect/shared). The combination of these 
elements has allowed the Commission to optimise the use of EU funds when having to 
address both structural needs triggered by e.g. a new security situation or new legislation, 
and  emergencies  such  as  providing  support  to  Member  States  most  impacted  by  the 
influx  of  displaced  persons  from  Ukraine.  Overall,  stakeholders  find  that  the  Thematic 
Facilities provide flexibility, focus on the key priority needs and key target populations 
and make it possible to address emergency situations. However, flexibility has also come 
at  the  expense  of  higher  administration  burden,  including  for  the  Commission,  with 
dozens of Common Implementing Decisions adopted every year to approve amendments 
to the national programmes. 

The agricultural reserve is one of the main novelties of the current CAP, aiming to 
provide  additional  support  to  farmers  in  the  event  of  unforeseen  crises.  While 
resources in  the reserve were exhausted in  the first  year of implementation  of the CAP 
(2023),  allocations  were  not  exhausted  to  their  full  extent  in  2024,  reflecting  the 
unpredictability of crises affecting the agricultural sector. While Member States agree on 
the need for better crisis management, many call for a stronger focus on prevention rather 
than  ad-hoc  crisis  management  and  for  more  transparent  criteria  in  the  management  of 
the agricultural reserve.  

Limited use of transfers 

Transfers can be requested up to 20% of the initial allocation by fund between the ERDF, 
the  ESF+  or  the  Cohesion  Fund  (or  up  to  25%  for  Member  States  with  unemployment 
rate below 3%). 18 Member States have used this flexibility to a certain extent, however, 
the negotiations on some of these were very lengthy and complicated. Transfers do not 
exceed 3% of the EU allocation of ERDF and ESF+ funds, with the notable exception of 
Belgium, which transferred 8% of its funds from ERDF to ESF+.  

On the other hand, Member States may request to transfer up to 5% of the initial national 
allocation  of  each  fund  to  any  other  instrument  under  direct  or  indirect  management 
where  a  landing  clause  exists.  Only  two  Member  States  decided  to  transfer  financial 

50  Council  conclusions  on  a  farmer-focused  post  2027  Common  Agricultural  Policy.  Link: 
https://data.consilium.europa.eu/doc/document/ST-16694-2024-INIT/en/pdf 

 
 
 
allocations  between  CPR  funds  and  EU  funds  and  instruments  in  their  Partnership 
Agreements; amounts are therefore marginal.  

Hence, while transfers of resources between the two CAP funds or among cohesion 
policy funds seem to be working quite well, there continues to be very little appetite 
from  Member  States  to  transfer  resources  to  other  EU  programmes,  even  if  these 
share  similar  policy  objectives  or  concern  policy  areas  with  higher  needs.  Several 
reasons have been given to account for this low uptake of transfer flexibilities:  

• 

• 

• 

the  limited  budget  available  in  the  programme  concerned  to  achieve  the 
increasing set of objectives, coupled with a growing concern that transfers could 
undermine the programme’s objectives as well as the stability and predictability 
for beneficiaries;  

the  lack  of  flexibility  at  national  level  to  move  resources  once  they  have  been 
divided  between  authorities,  coupled  with  the  preference  of  Member  State  to 
exploit the flexibilities available within the national programmes themselves;  

the  lack  of  experience  of  managing  authorities  with  transfers  –  for  example, 
although  several  Member  States  were  facing  challenges  in  their  migration  and 
border management systems at the time of establishing their initial Home Affairs 
programmes,  and  have  subsequently  requested  additional  support  for  these 
systems, only one Member State (EL) used the opportunity offered by the CPR 
to  transfer  funds  from  the  Cohesion  policy  Funds  to  the  Home  Affairs  Funds 
when establishing its initial programmes.  

•  Misalignment in the type of instruments used by different programmes (for e.g., 
InvestEU  focuses  on  guarantees,  while  many  CAP-supported  financial 
instruments are loans).  

•  The lack of motivation for transfers from programmes under shared management 
to programmes directly managed by the Commission, linked to the preference of 
Member States’ administrations to focus on projects of national relevance (which 
they  can  select  themselves  )  rather  than  EU-level  projects  such  as  cross-border 
projects,  where  the  benefits  are  shared  with  other  Member  States  (and  which 
depend on the selection from the Commission).  

Low uptake of financial instruments 

Financial  instruments  help  to  trigger  investments  on  the  ground  for  revenue-
generating  and  cost-saving  activities  while  maximising  private  investment  with 
minimum public support. Financial instruments can provide support for investment in 
the form of loans, guarantees, equity and other risk-sharing mechanisms.  

In  cohesion  policy,  financial  instruments  play  an  important  role  in  advancing 
payments to the Member States, providing a performance-based financing, as their 
management  fees  are  exclusively  performance-based.  In  a  context  of  scarce  EU 
resources, their use can better leverage investments and enhance the effectiveness of the 
EU  budget. While  their  uptake  has  slightly  increased  over  time,  their  use  remains 
limited.  For the sake of comparison,  in  the 2021-2027 programming  period, more than 
EUR 17.8 billion (constant prices – 2018 (tbc)) from the EU budget is allocated under the 

 
 
ERDF and CF to financial instruments, representing around 7.3% of the ERDF and CF. 
This  is  more than in  2014-2020, when EUR 16.7 billion or 6.7% of the ERDF and CF 
was allocated but remains still very limited. Looking at cohesion policy more broadly, in 
the  2021-2027  programming  period,  only  about  EUR  19  billion  (in  constant  prices  – 
2018 (tbc) will be allocated via financial instruments, representing only around 6% of the 
total resources of ERDF, CF, JTF and ESF+.  

The uptake in Member States is also very uneven:  

Financial instruments under cohesion policy 2021-2027 | Cohesion Open Data 

 Several factors account for the limited uptake of financial instruments:  

- 

availability  of  grants  in  all  areas  and  sectors  even  where  financial  instruments 
proved  to  be  efficient  and  impactful  like  support  to  SMEs  or  energy  efficiency. 
Grants  are  still  the  most  desired  form  of  support,  although  some  positive 
experience  is  in  place  when  it  concerns  combining  grants  and  financial 
instruments  in  a  single  financial  instrument  operation,  as  for  example  the 
Alternative  Fuels  Infrastructure  Facility  under  the  Connecting  Europe  Facility 
combining  grants  with  financial  support  from  financing  institutions  for  the 
development of charging/refuelling points for alternative fuels.  

-  Detailed rules set out in the CPR. Although some aspects were simplified in the 
2021-2027 programming period, over-regulation and complexity of rules still lead 
to  inflexible and inefficient use of funds, also  stemming  from  avoiding any risk 
linked to the audit procedures51 

-  Member States’ lack of administrative capacity especially in Member States with 
weaker institutions such as national promotional banks can still hinder greater use 
of  financial  instruments,  especially  those  tailor-made  which  require  expertise, 
skills and administrative capacity not only in the area of EU funds management 
but also banking sector; 

51 European Parliamentary Research Service, Briefing, Financial instruments in cohesion policy, October 
2019, p. 7. 

 
 
 
 
- 

Institutions  such  as  the  European  Investment  Bank  (EIB),  which  has  a  50% 
climate  expenditure  target,  and  the  European  Investment  Fund  (EIF)  play  a 
crucial role in  supporting EU priorities through  financial instruments. However, 
their  capacity  to  manage  an  increasing  number  of  instruments  will  have  to  be 
strengthened  to  avoid  delays  in  negotiating  setups,  processing  applications  and 
disbursing funds.  

-  Although  tailor-made  instruments  are  more  popular  among  national  or  regional 
managing authorities, they are more complex than the off-the-shelf ones or those 
implemented by the EIB group. On one hand, it is linked to the fact of different, 
simpler rules linked to state aid or public procurement that are required in case of 
EIB-led instrument. On the other hand, decentralisation of implementation has led 
in  some  Member  States  to  compartmentalisation  of  the  offer  of  financial 
instruments which are too small, too differentiated in order to bring economies of 
scale and attract more private capital.  

-  On the other hand, as experienced in the RRF, Member States sometimes used the 
flexibility  of  the  rules  on  financial  instruments  strategically  -  to  temporarily 
allocate funds which enabled them to  meet  the timeline requirements  of various 
EU programmes  While this approach provides flexibility and helps avoid the risk 
of losing allocated funds, it can delay high-impact investments and contributes to 
lower  transparency  regarding  the  absorption  at  the  level  of  final  recipient  , 
potentially  undermining the  effectiveness  of  EU  funding in  achieving long-term 
goals. 

Some  sectors,  such  as  nature,  have  to  rely  on  grants  due  to  difficulties  in  attracting 
private investment, and their small scale can also deter larger financing institutions52. On 
a smaller scale, financial instruments are also used under the EAFRD and the EMFAF or 
are  being  piloted  under  the  Home  Affairs  Funds.  For  instance,  the  EMFAF  mid-term 
evaluation showed that the uptake of financial instruments has been undermined by the 
complexity of the rules and small scale of the fisheries sector. Other, larger sectors with 
less  complexity  are  easier  to  cater  for  by  financial  instruments.  Under  the  EAFRD, 
compared with the past, support for financial instruments (EUR 1 billion) has increased - 
facilitating access to investments, with a focus on small and young farmers as well as on 
cooperatives  and  producer  organisations,  but  their  uptake  is  still  relatively  limited. 
Overall,  Member  States  and  beneficiaries  showed  limited  interest,  calling  for  further 
simplification to ensure a stronger uptake of financial instruments.  

Problem driver 6: The delivery models are too complex 

The  implementation  of  EU  funds  with  nationally  pre-allocated  envelopes  is  often 
hindered  by  gold  plating  practices  in  Member  States  particularly  on  management  and 
control  practices,  a  lack  of  mature  project  pipelines  against  the  backdrop  of  multiple 
funding  sources  and  weak  administrative  capacity.  The  complexity  of  EU  funding 
programmes and governance models also often hinders the smooth implementation of EU 

 
 
 
 
projects. This has resulted in bottlenecks in absorbing allocated funds effectively and on 
time or in an increased estimated level of error in spending from the EU budget. 

Simplification measures in in the CPR are not fully exploited  

Currently,  most  payments  in  EU  spending  programmes  under  the  CPR  umbrella 
policy continue to be based on real costs – i.e. Member States are reimbursed on the 
basis of beneficiaries´ expenditure. Relying on real costs brings complexity and burden 
for  Member  States’  authorities  and  beneficiaries  and  is  also  more  prone  to  errors. 
Furthermore, the focus  is on managing  invoices  rather than the results achieved by EU 
funding. The use of simplified cost options (SCOs) – unit costs, lump sums and flat rates 
– has increased but remains limited. Unit costs and lump sums retain a link to costs of the 
particular action because the amounts are calculated ex-ante as an approximation of the 
actual  costs.  However,  these  costs  are  not  checked  afterwards,  and  the  pre-defined 
amount  is  paid  once  the  output  is  delivered.  The  impact  on  performance  is  indirect, 
driven by simplification  –  instead of managing  invoices, beneficiaries can focus on the 
implementation  of  investments.  As  a  rule,  mandatory  use  of  SCOs  applies  to  all 
operations below EUR 200,000. 13% of the ERDF expenditure (supplemented by 3% of 
CF expenditure and close to 12% of JTF expenditure) is reimbursed via SCOs at Member 
State/beneficiary  level.  While  take-up  is  still  low,  overall,  the  amount  of  expenditure 
covered  is  steadily  increasing  with  the  pace  of  programme  implementation  and  has 
almost  doubled  compared  to  the  2014  –  2020  period. Interreg  cross-border  cooperation 
programmes  are  obliged  to  use  simplified  cost  options  when  supporting  small  projects 
where  the  public  contribution  from  the  EU  or  national  funds  does  not  exceed  EUR 
100,000. This is largely perceived as a major simplification for beneficiaries.  

ESF+ is the frontrunner in the use of simplified cost options.  While one-third of the 
ESF  budget  was  implemented  through  SCOs  during  2014-2020,  at  the  time  of  writing, 
some  40%  of  the  2021-2027  ESF+  budget  is  implemented  through  SCOs  and  FNLC. 
Stakeholders  consider  that  the  use  of  SCOs  reduces  administrative  burden  for 
beneficiaries  and  managing  authorities,  simplifies  management  process  and  facilitates 
payments, and is less error prone. Member States represented in the ESF Simplification 
Transnational Network have adopted an opinion calling for abandoning real costs.    

Under Financing Not Linked to Costs (FNLC), payments are conditional upon the 
achievement of  results  and the fulfilment of conditions.  The use of FNLC at  micro-
level  remains  sporadic.  Despite  the  simpler  payments  and  delivery  it  offers,  only  12 
FNLC  schemes  (mostly  in  the  ESF+)  have  been  approved  by  the  Commission  in  9 
Member  States,  amounting  to  EUR  4.5  billion  and  additional  5  FNLC  schemes  in  5 
Member  States  are  currently  under  preparation  for  EUR  0.7  billion.  Another  recent 
example of FNLC for specific actions was the almost EUR 400 million made available 
under  the  Asylum,  Migration  and  Integration  Fund  (AMIF)  and  the  BMVI  to  support 
Member  States  in  welcoming  Ukrainian  refugees.  Payments  were  linked  to  the 
achievement  of  pre-defined  targets  (e.g.  number  of  additional  “first  capacity”  places 
created for refugees from Ukraine) to allow Member States to receive EU funds quickly 
and flexibly – without needing to develop projects with detailed cost estimates. 

Overall,  the  lack  of  experience  and/or  capacity  in  Member  States’  managing 
authorities, coupled with the difficulties in accessing relevant, quality data to define 
the  appropriate  performance  indicators,  continue  to  be  seen  as  bottlenecks  in 
implementing simplified forms of funding. Time constraints related to implementation 
of parallel EU funds and programmes and divergent legal interpretations among relevant 

 
 
actors – from the Commission to Member States’ managing authorities or the European 
Court of Auditors – further complicate their uptake.  

The CAP: a delivery model based on performance and costs 

The Common Agricultural Policy has moved closer to a performance-based delivery 
model, whereby all interventions are planned ex-ante and linked to specific output 
and result indicators in the CAP Strategic Plans. The CAP retains elements of a cost-
based delivery model as the amounts reimbursed are the actual costs incurred by Member 
States when reimbursing beneficiaries. These costs can be based on costs incurred by the 
beneficiary, unit costs or lump sums implemented by Member States.   

The  move  towards  a  more  performance-based  delivery  model  has  been  welcomed 
by  stakeholders  but  came  with  high  transition  costs  and  a  steep  learning  curve. 
Furthermore, it did not always translate into simplification for Member States authorities 
or farmers. For instance, Member States still need to ensure the regularity and legality of 
EU  funds  spending  at  beneficiary  level.  The  challenge  has  been  even  greater  for 
regionalised  Member  States  who  needed  to  redefine  the  cooperation  mechanisms 
between the regional and national levels.  

In  this  context,  the  Commission  launched  a  simplification  exercise  in  2024  to 
provide more flexibility for Member States’ authorities and farmers. Other actions to 
reduce  the  administrative  burden  are  under  way  and  include,  among  others,  reducing 
reporting  obligations,  as  well  as  removing  the  annual  performance  clearance,  while  the 
outcomes  of  two  studies  on  the  administrative  burden  for  farmers  and  on  the  new 
delivery  model  will  help  identify  further  actions  to  simplify  policies  for  farmers 
(expected in 2025). 

RRF: faster disbursements but administrative burden remains high  

The  RRF  is  the  first  large-scale  programme  with  a  performance-based  delivery 
model. Under the Facility, the justification for receiving payments is not directly related 
to  the  costs  incurred  on  the  ground:  it  depends  on  the  satisfactory  fulfilment  of  pre-
defined  milestones  (e.g.  adoption  of  a  law)  and  targets  (e.g.  number  of  people  trained) 
capturing the key implementation stages of the investments and reforms laid down in the 
national RRPs. Costs have been estimated once ex-ante but are not reassessed at the time 
of payments. In this delivery mechanism, the milestones and targets included in the plans 
can  cover  the  full  lifespan  of  the  supported  measure  and  may  cover  interim  steps  (e.g. 
launch of calls, completion of half of the projects). As noted in the mid-term evaluation 
on the RRF, this allows for faster disbursements and can help Member States get funds 
upfront  to  finance  some  of  their  investments.  The  fulfilment  of  milestones  linked  to 
reforms  –  which  do  not  necessarily  involve  costs  as  such  –  also  impacts  the  level  and 
timing of disbursements that have been negotiated with Member States with the view to 
provide a strong incentive to frontload reforms.  

However, in the same evaluation some national authorities also found the definition 
of  milestones  and  targets  too  detailed  and  the  fixed  composition  of  groups  of 
milestones  and  targets  for  each  instalment  too  rigid. While  subsequent  revisions  of 
the plans made milestones and targets more focused and simpler to implement, and the 
broader use of partial suspension mechanisms improved the delivery model's flexibility, 
these  adjustments  came  at  a  high  resource  cost,  and  significant  challenges  persist. 
Moreover, in most Member States, the disbursement from Member States’ authorities to 

 
 
beneficiaries  for  measures  supported  by  the  RRF  in  the  Member  States  is  almost 
exclusively  done  based  on  expenditure  which  strongly  limits  the  simplification  for 
beneficiaries. 

The  analysis  of  problem  driver  7  is  fully  covered  within  the  main  body  of  this  impact 
assessment. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 8: OVERVIEW OF THE DELIVERY MODEL AND 
MANAGEMENT FUNDS OF CURRENT EU FUNDS WITH 
NATIONALLY PRE-ALLOCATED ENVELOPES 

Delivery model 

Name of the fund  

Delivery system  

Cohesion policy (ERDF, CF, ESF+, JTF, Interreg) 
European Maritime, Fisheries and Aquaculture Fund 
Social Climate Fund  
Modernisation Fund  
CAP (European Agricultural Fund for Rural 
Development & European Agricultural Guarantee 
Fund) 
Home affairs funds (AMIF, BMVI, ISF) 
LIFE 

CEF 

Cost-based  
X  
X  

Performance-based  
X* 

Sui generis  

X  

X  

X  

X  
X 

X 

*    A  number  of  Member  States  receive  funding  based  on  performance  achieved  and 
conditions fulfilled on the ground (FNLC), especially under the ESF+. 

Management mode 

Name of the fund  

Management mode  

Cohesion policy (ERDF, CF, ESF+, JTF, Interreg) 
European Maritime, Fisheries and Aquaculture Fund 
Social Climate Fund  
Modernisation Fund  
CAP (European Agricultural Fund for Rural Development 
& European Agricultural Guarantee Fund)  
Home affairs funds  
LIFE 

CEF 

Shared53  
X  
X  

X  

X  

Sui generis 

Direct  

X  

X  
X 

X 

53  Many  of  the programmes  that  are  mainly  implemented  under  shared management  also  include  strands 
that are directly managed by the Commission (e.g. EaSI strand in ESF+; directly managed funding under 
EMFAF). However, since these only represent a minor part of the total budget of the programmes, the table 
only focuses on the main type of management mode.  

 
 
  
  
  
 
 
 
 
 
  
  
 
 
 
 
 
ANNEX 9: SUMMARY OF THE IMPACT OF COHESION POLICY 
INTERVENTIONS 

Europe  has  experienced  a  significant  dynamic  of  upward  convergence  over  the  last  20 
years as GDP per capita growth has often been higher in the less developed regions of the 
EU. In 2000, GDP per capita (PPS) in the less developed regions was around 51% of the 
EU average while by 2022, it had increased to more than 64% of the EU average.  

However, growth and development seem to stagnate in a number of EU regions. A group 
of transition  (middle income) regions even started diverging  from  the EU average  after 
2008,  mostly  in  Southern  Europe  (e.g.  Italy  and  Greece)  but  also  in  North-Western 
Europe  (France  or  Germany).  In  2022,  GDP  per  capita  in  the  transition  regions  had 
declined to around 85% of the EU average, from 91% in 2000. 

Overall,  disparities  remain  high  in  the  EU.  In  2002,  GDP  per  capita  in  the  most 
developed  region  is  almost  10 times as high  as in the least  developed  regions. It  is  3.3 
times  higher  in  the  10%  most  developed  regions  of  the  EU  than  in  the  10%  least 
developed  regions.  Fostering  economic,  social  and  territorial  cohesion  is  therefore 
important  as  ever.  It  is  a  key  condition  to  keep  the  citizens’  support  to  the  European 
values and avoid the polarization of EU societies and several studies (e.g. Dijkstra et al., 
2020)  have  demonstrated  how  Eurosceptic  voting  is  linked  to  so-called  “regional 
development trap” and how places which feel left behind are faced with disengagement 
and discontent in the long term.  

Place based policies are best suited to tackle disparities and enhance cohesion. Indeed, as 
interventions  aiming  at  boosting  economic 
emphasized  by  numerous  analyses, 
performance, competitiveness and development must be tailored to the local context to be 
successful.  The  EU  cohesion  policy  has  often  been  put  forward  as  exemplifying  such 
kind  of  policies,  notably  for  addressing  fundamental  market  failures  that  prevent 
adjustment  mechanisms  from  working  effectively,  so  that  disparities  may  be  persistent 
(Venables,  2023).  Sub-national  levels  of  government  (regions  or  localities)  have  been 
shown to play a critical role for economic development (Barca, 2009; Barca et al., 2012; 
Beer et al., 2020; McCann, 2015). In particular, subnational tiers of government are key 
stakeholders  in  the  design  and  the  implementation  of  contextually  tailored  economic 
development  strategies  that  reflect  local  socioeconomic,  institutional  characteristics, 
conditions, and realities  (Rodrigues-Posé and Wilkie, 2017). At the same time, this has 
not  prevented  cohesion  policy  to  mainstream  some  key  EU  priorities  in  the  Member 
States and their regions by earmarking investments to fields of interventions aligned with 
those priorities.  

The  recent  ex-post  evaluation  of  the  2014-2020  programmes  has  gathered  a  wealth  of 
evidence demonstrating the capacity of cohesion policy to boost economic performance, 
improve social cohesion and reduce development gaps.  

Some achievements of the 2014-2020 programmes:  

-  Over 2.36 million enterprises had received support by the end of 2022;  
-  228 000 new enterprises were created and 84 000 enterprises developed new-to-

market or new-to-firm-products/services;  

 
 
-  7.88 million additional households had access to broadband; 
-  17.3 million people benefiting from the flood protection measures supported; 
- 
- 

 Nearly 6 000 megawatts of renewable energy capacity created; 
 3 560 km of new roads being constructed by the end of 2020, mostly on the 
TEN-T network, with another 8 400 km of road being renovated and 2 100 km of 
rail being reconstructed again mostly on the TEN-T network; 
 7.4 million participants in EU-funded schemes targeting employment and labour 
market integration, education, and social inclusion had found a job and 10.2 
million had obtained a qualification; 
 24.6 million children and young people had benefited from the childcare 
facilities and education infrastructure that had been built.    

- 

- 

At  the  macroeconomic  level,  results  of  model  simulations  suggest  that  cohesion  policy 
interventions  have  positive  effects  on  the  EU  economy  and  has  good  value  for  money. 
The potential impact of 2014-2020 programmes could be to raise EU GDP by up to 0.6% 
by  the  end  of  their  implementation.  The  policy  enhances  the  structure  of  the  EU 
economies  and  its  impact  are  still  felt  in  the  long  run.  Analysis  suggests  that  25  years 
after the end of the programming period, each euro affected to the policy could generate 
around 3 euro of additional GDP in the EU, the equivalent of a yearly rate of return of 
about 4%.  

The  impact  of  the  policy  is  particularly  high  in  the  less  developed  regions  of  the  EU, 
which are its main beneficiaries (Eastern Member States and regions as well as Portugal 
and Greece). By the end of the implementation period, GDP in the less developed regions 
will  be  3.4%  higher  in  2023  thanks  to  cohesion  policy  investments.  Cohesion  policy 
therefore  contributes  to  reduce  disparities  in  the  levels  of  development  between  EU 
regions, both across the Union and within Member States. For instance, at the end of the 
implementation  period,  the  2014-2020  programmes  are  estimated  to  have  reduced  the 
gap  between  the  10%  top  and  bottom  regions  in  terms  of  GDP  per  head  by  more  than 
3.5%.        

To  enhance  cohesion  and  keep  reducing  disparities,  investing  in  the  less 
developed regions of the EU must remain a priority. It is sometimes argued that 
growth created by investing in more developed regions would trickle down to less 
developed  regions  and  hence  indirectly  foster  convergence,  but  recent  analysis 
(Barbero  et  al.,  2024)  has  shown  that,  if  indeed  less  developed  regions  may 
benefit  from  spillovers  originating  from  more  developed  regions,  these  are  not 
strong enough to actually reduce the extent of regional disparities.   

References 

 Barca,  F.  (2009),  “An  Agenda  for  A  Reformed  Cohesion  Policy:  A  Place-Based 
Approach  to  Meeting  European  Union  Challenges  and  Expectations”,  Independent 
Report  prepared  at  the  Request  of  the  European  Commissioner  for  Regional  Policy, 
Danuta Hübner, European Commission, Brussels. 

Barca,  F.,  McCann,  P.  and  Rodríguez-Pose,  A.  (2012),  The  Case  for  Regional 
Development  Intervention:  Place-Based  versus  Place  Neutral  Approaches,  Journal  of 
Regional Science, 52: 134-152. 

 
 
  
Barbero, J., Christou, T., Crucitti, F., Rodríguez, A. G., Lazarou, N. J., Monfort, P. and 
Salotti, S. (2024), A spatial macroeconomic analysis of the equity-efficiency trade-off of 
the European cohesion policy, Spatial Economic Analysis, 1–17. 

Beer,  A.,  McKenzie,  F.,  Blazek,  J.,  Sotarauta,  M.  and  Ayrez,  S.  (2020),  Every  place 
matters:  Toward  effective  place-based  policy,  Regional  Studies  Policy  Impact  Books, 
Routledge. 

Casas,  P.,  Christou,  T.,  García  Rodríguez,  A.,  Heidelk,  T.,  Lazarou,  N.,  Monfort,  Ph., 
Salotti,  S.  (2024),  The  updated  RHOMOLO  impact  assessment  of  the  2014-2020 
European  cohesion  policy  (including  REACT-EU),  Munich  Personal  RePEc,  Archive 
paper 122873. 

Dijkstra,  L.,  Poelman,  H.  and  Rodríguez-Pose  A.  (2020),  The  geography  of  EU 
discontent, Regional Studies, 54:6, 737-753. 

McCann, P. (2015), The Regional and Urban Policy of the European Union: Cohesion, 
Results-Orientation and Smart Specialisation, 2015, Edward Elgar, Cheltenham. 

Rodríguez-pose, A. and Wilkie, C. (2017), Revamping Local and Regional Development 
Through  Place-Based  Strategies,  Cityscape:  A  Journal  of  Policy  Development  and 
Research, 19(1), 151–170. 

Venables, T. (2023), The case for place-based policies, Paper prepared for the Group of 
high-level specialists on the future of Cohesion Policy. 

 
 
 
 
 
ANNEX 10: IMPACTS ON ADMINISTRATIVE COSTS OF THE 
OPTIONS ON THE SCOPE OF THE PLANS 

Context 
The study on the assessment of the administrative costs and administrative burden in the 
management  of  the  CPR  funds  2021-2027  (DG  REGIO)  shows  that  the  administrative 
costs varies significantly across the CPR funds and Member States, with differences 
in time, staffing and outsourcing costs.  

There seems to be a negative correlation between the size of the programme and the 
level  of  administrative  costs  within  a  programme.  In  fact,  Interreg  programme 
authorities  reported  the  highest  administrative  costs,  reflected  in  significant  time 
requirements  and  high  outsourcing  costs.  BMVI  beneficiaries  also  reported  high 
outsourcing costs but lower time requirements, suggesting that external support is used 
for  specific  administrative  tasks.  In  contrast,  multi-fund  programmes,  as  well  as  ERDF 
and  ESFF+  have  lower  time  and  outsourcing  costs,  suggesting  more  streamlined 
application processes.  

• 
Interreg exhibits the highest median cost of 68 894 EUR per million EUR spent; 
•  Programmes under the ERDF, have a median cost of 21 214 EUR per million 
EUR  spent.  The  results  suggests  that  the  distribution  of  administrative  costs  is 
relatively  compact,  with  most  programmes  experiencing  low  costs  and  minimal 
variation; 

•  Cohesion  Policy  funds  have  a  median  cost  of  34  571  EUR  per  million  EUR 

spent; 

•  The JTF has a median cost of 30 939 EUR per million EUR spent, but the plot 

reveals even tighter variability compared to ERDF; 

•  The median costs of EMFAF programmes are 62 228 EUR per million EUR 

spent; 

•  The HOME-funds also has relatively high administrative costs, with a median of 

53 802 EUR.  

•  The ESF+ has the lowest median cost per EUR million spent (EUR 18 625 per 

EUR million spent).  

 
 
 
Source:  Assessment  of  the  administrative  costs  in  the  management  of  the  Common 
Provisions Regulation Funds 2021-27 (Second interim report), March 2025. 

Likewise,  FTEs  have  considerably  lower  variability  in  the  ERDF,  JTF,  ESF+  and 
Multi-fund  programmes  compared  to  HOME-fund,  EMFAF  and  Interreg 
programmes.  Especially  HOME-  and  Interreg  programmes  show  very  long  upper 
whiskers, suggesting the existence of strong outlier programmes with considerably more 
FTEs per million EUR spent. Similarly, median values for the CPR funds range between 
0,3  –  0,4  FTEs  per  million  EUR  spent,  while  programmes  of  other  funds  have  higher 
median values ranging from 0,84 (EMFAF) – 1,15 (Interreg) 

 
 
 
 
The  external  study  supporting  the  mid-term  evaluation  of  the  RRF  states  that  the 
administrative costs sustained by the European Commission for the RRF were budgeted 
at EUR 88.2 million. These encompassed costs related to the setup, RRP preparation and 
amendments,  audit  and  control,  payment  claim,  communication  and  performance 
management. At Member State level, administrative costs comprise staff costs and costs 
related to setting up the governance structure, drafting and amending RRPs, stakeholder 
consultations,  and  informal  and  formal  processes  related  to  the  plan  submission.  Since 
the assessment of milestones and targets is the Commission’s responsibility, the related 
costs are not  borne by the Member States. When comparing  administrative costs to  the 
total  planned  funding  (for  both  grants  and  loans),  variations  per  Member  State  are  not 
very pronounced. For all countries, the administrative costs per EUR million are less 
than EUR 2,500, which is considerably lower than the figures reported in the CPR 2021-
2027  study.  It  should  be  taken  into  account  that  in  implementing  their  plans  Member 
States  largely  relied  on  existing  governance  arrangements  and  structures  in  place  for 
shared management which were not considered additional costs in the RRF study. 

While the figures of this supporting study and the ongoing study on the second interim 
report  on  the  administrative  costs  in  the  management  of  the  CPR  funds  2021-2027  are 
not  directly  comparable  given  their  different  methodologies  and  management  modes, 
they provide a starting point to make assumptions for the quantification of the impacts on 
administrative burden. Indeed, it is possible to assume that moving to one plan, with a 
wide  eligibility  scope  and  the  same  rules  would  lead  to  a  substantial  reduction  in 
administrative costs over time. 

Two  studies  are  ongoing  regarding  the  CAP  –  one  on  the  administrative  burden  for 
farmers  and  one  on  the  new  delivery  model  of  the  CAP.  However,  neither  study  was 
mature enough to be taken into account in the impact assessment. 

 
 
 
 
 
 
Approach: baseline scenario and assumptions 

In the absence of a dedicated analysis of costs, this quantitative analysis is based on the 
data  of  the  second  interim  report  on  the  assessment  of  the  administrative  costs  and 
administrative  burden  in  the  management  of  the  CPR  funds  2021-2027.  It  should  be 
noted that the data used is therefore not final, as the study has not been published yet.  

A  reduction  factor  is  applied  to  Options  1  and  2,  reflecting  the  expected  simplification 
from  integrating  the  concerned  spending  programmes  into  the  plans  which  follow  the 
same  rules  (e.g.  delivery  model;  management  mode;  financial  management,  etc.).  The 
reduction factor varies between Options: 

- 

It  is  higher  for  Option  1  (50%)  considering  the  similarities  that  already  exist 
between these funds which are covered by the CPR; 

-  Option 2 also assumes a 40% reduction factor given the similarities that already 

exist between Pillar II of the CAP and cohesion policy. 

-  Option 2b assumes a 30% reduction factor, considering the need to cater for the 

specificities of direct payments. 

Setting  a  reduction  factor  is  inherently  difficult  and  represents  a  methodological 
assumption. However these factors rely on the existing data, in particular the fact that the 
differences  that  exist  per  fund  within  the  CPR  have  large  differences  between 
themselves, showing the potential for simplification: EUR 37 968 per EUR million spent 
for the total CPR funds vs EUR 18 625 per EUR million spent for the ESF+, the lowest 
figure for a fund in the category (a reduction factor of around 50%). While the ESF+ has 
a much stronger homogeneity in terms of interventions than other funds (e.g. ERDF), this 
does not seem to be the driving factor behind the lower administrative costs since other 
funds with a reduced scope (e.g. home funds) also report high administrative costs.  

To make sure these reduction factors are as realistic as possible, they are not based on the 
figures  calculated  in  the  RRF  mid-term  evaluations  as  the  methodologies  were  not 
equivalent  (CPR  funds  set  at  EUR  37,968  per  EUR  million  spent  and  RRF  with  EUR 
2,500 per EUR million spent) and also because the future plans will continue to rely on a 
multi-level governance structure and shared management. 

Option  3  is  not  included  in  the  quantitative  analysis  as  the  integration  of  the 
Modernisation  Fund  would  bring  additional  adjustment  costs  to  Member  States  (which 
currently only need to comply with simpler rules).  

Estimates 
Option 

Status quo 

Option 1 

Option 2a 

Option 2b 

Total  administrative  costs 
per million EUR spent 

37,968 

18,984 

22,781 

26,578 

 
 
 
 
 
 
 
 
 
From  the  above,  it  seems  that  both  Option  1  and  Option  2  would  massively  reduce 
administrative costs for Member States compared to the status quo. Options 1 and 2a 
would bring the biggest reduction, followed by Option 2b. 

ANNEX 11: RHOMOLO ANALYSIS OF THE THREE OPTIONS ON 
THE DELIVERY MODEL 

The  options  analysed  here  regarding  the  delivery  model  of  the  pre-allocated  envelopes 
post-2027 are the following:  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A) Cost-based finance model with the possibility to disburse funds based on performance 
(basically business-as-usual); 

B)  Delivery  against  pre-agreed  objectives  (payments  made  only  upon  fulfilment  of 
milestones and targets); 

C) Hybrid model (payments largely made only upon fulfilment of milestones and targets, 
but allowing for payments based on expenditure in some cases). 

On this basis, the modelling analysis has been carried out as follows.  

The RHOMOLO model (Barbero et al., 202454) has been used to simulate the impact of 
cohesion policy interventions for the period 2021–2027 in all scenarios. In the absence of 
information on the budget assigned to the Funds for the next programming period and the 
geographical  and  sectoral  distribution  of  investments,  as  well  as  the  nature  of  the 
investments  themselves,  this  analysis  is  based  on  the  evaluation  of  the  impact  of 
Cohesion Policy 2021-2027 presented by Christou et al. (202355).  

Therefore, in all scenarios, the policy interventions are introduced into the model with a 
combination of demand-side and supply-side shocks (as in Crucitti et al., 202456). Lump-
sum  contributions  proportional  to  the  GDP  weights  in  the  EU  are  also  introduced  to 
mimic the financing of the policy via the EU budget. The differences between the three 
scenarios lie in the time profile of the interventions and in the assumed efficiency of the 
supply-side effects. 

In  particular,  the  supply-side  effects  are  increased  by  10%  in  Scenario  B  compared  to 
Scenario A, and by 5% in Scenario C (due to the focus on results rather than spending). 
The time profiles of the spending in the three scenarios are as follows: 

Year à 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

Option 
A 

Option 
B 

Option 
C 

0% 

2% 

4% 

8% 

12% 

14% 

16% 

17% 

14% 

12% 

6% 

7% 

12% 

12% 

15% 

17% 

17% 

14% 

0% 

0% 

6% 

7% 

8% 

12% 

15% 

17% 

9% 

10% 

8% 

7% 

Source: European Commission’s Directorate-General for Budget (DG BUDG). 

54 Barbero, J., Christou, T., Crucitti, F., García  Rodríguez, A., Lazarou, N.J., Monfort, P., and Salotti, S. 
(2024).  A  spatial  macroeconomic  analysis  of  the  equity-efficiency  trade-off  of  the  European  cohesion 
policy. Spatial Economic Analysis 19(3), 394-410. 
55  Christou,  T.,  Crucitti,  F.,  Garcia  Rodríguez,  A.,  Lazarou,  N.,  Monfort,  P.,  and  Salotti,  S.  (2023).  The 
RHOMOLO  ex-ante  impact  assessment  of  2021-2027  cohesion  policy.  Territorial  Development  Insights 
Series no. JRC133844, European Commission, Joint Research Centre Seville. 
56 Crucitti, F., Lazarou, N.J., Monfort, P., and Salotti, S.  (2024). The impact of the 2014-2020 European 
Structural Funds on territorial cohesion. Regional Studies 58(8), 1568-1582. 

 
 
 
The  interventions  are  deployed  over  a  ten-year  period  in  all  three  cases.  However, 
Scenario  B  (and,  to  a  lesser  extent,  Scenario  C)  involves  faster  disbursement 
(frontloading) than Scenario A, the latter of which is based on the 2014–2020 payment 
profile of Cohesion Policy. 

The  modelling  results  presented  here  are  expressed  as  differences  from  the  cumulative 
15-year  GDP  multiplier  of  Scenario  a).  The  GDP  multiplier  is  a  figure  that  can  be 
interpreted as the number of euros of GDP generated over a given period for each euro 
spent on the policy. For example, a 15-year multiplier of 3 means that 15 years after the 
start of the policy, GDP has increased by 3 euro for every euro invested in the policy. As 
Scenario A represents the status quo, its specific GDP multiplier is not relevant and may 
correspond to the multiplier of one of the current EU policy programmes.  

The 15-year cumulative GDP multiplier for Scenario B is 29.5% higher than for Scenario 
A; 70% of this difference is due to frontloading investment and the remaining 30% is due 
to additional supply-side effects of 10%. 

Similarly,  the  15-year  cumulative  GDP  multiplier  of  Scenario  C  is  19.5%  higher  than 
that  of  Scenario  A,  with  79%  of  this  difference  being  attributable  to  frontloading 
investment and the remaining 21% to the additional 5% supply-side effects. 

Therefore, frontloading investments means the benefits to GDP of the interventions start 
to  materialise  earlier,  leading  to  larger  cumulative  GDP  gains  over  time.  Furthermore, 
larger supply-side effects lead to higher GDP multipliers.