Archive:EU policies for regions and cities

Planned article update: September 2020.

Highlights

Regional European policymaking for the 2014-2020 funding period has changed to recognise the important role that may be played by promoting an urban agenda and sustainable development goals.

EU cohesion policy for the period 2021-2027 is designed to focus resources on five principal objectives: a smarter Europe; a greener, carbon-free Europe; a more connected Europe; a more social Europe; a Europe that is closer to its citizens.

European policymaking is inherently multidimensional: on the one hand, it has to encompass a broad framework providing objectives for the European Union (EU) as a whole, while on the other it needs to acknowledge the often specific needs of national and subnational territories. Recent challenges such as the global financial and economic crisis, the impact of globalisation, increasing levels of income inequality, widespread disillusionment with the political class, or security concerns from terror attacks provide just a few examples of the two-sided need to deliver both global and local solutions in a coherent manner.

One of the EU’s main challenges is to ensure that all policy developments are scrutinised to ensure that they take account of the considerable geographical diversity within the EU. The territorial dimension of EU policy is increasingly recognised, as growth and job creation depend on making the best use of all assets, while ensuring that common resources are used in a coordinated and sustainable way.

This chapter provides an overview of some of the main EU policy developments that have a territorial impact. It starts with information on how the EU attributes its cohesion policy funding with the goal of reducing socioeconomic disparities between regions, before providing information on a range of policy developments which influence life in Europe’s regions, cities and rural areas.

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Cohesion policy

What is cohesion policy?

EU cohesion policy is designed to promote an overall harmonious development of the EU by strengthening its economic, social and territorial cohesion. In doing so it promotes job creation, business competitiveness, economic growth and sustainable development across regions and cities, aiming to improve the overall quality of life experienced by people in the EU.

The bulk of cohesion policy funding is concentrated on less developed regions of the EU, with the goal of helping to reduce economic, social and territorial disparities. Cohesion policy is established on the basis of seven-year funding periods; the current period covers 2014-2020, for which expenditure of EUR 352 billion has been allocated — this is equivalent to almost one third of the total EU budget.

Cohesion policy is delivered through a number of funds: the European regional development fund (ERDF) and the cohesion fund. Together with the European social fund (ESF), the European agricultural fund for rural development (EAFRD) and the European maritime and fisheries fund (EMFF), they make up the European structural and investment funds (ESIF).

The European regional development fund concentrates its actions on innovation and research, the digital agenda, support for small and medium-sized enterprises (SMEs) and the low-carbon economy. The resources allocated to each of these depends upon the region concerned: for example, in more developed regions, at least 80 % of any funding should focus on at least two of these priorities, whereas in less developed regions this share falls to 50 %.

The cohesion fund supports EU Member States whose gross national income (GNI) per inhabitant is less than 90 % of the EU average. During the period 2014-2020 it has allocated a total of EUR 63.4 billion to a range of investment projects primarily in relation to trans-European networks (TENs) and the environment, through a focus on the following areas: the shift towards a low-carbon economy; promoting climate change adaptation and risk prevention; preserving and protecting the environment and promoting resource efficiency; promoting sustainable transport and removing key bottlenecks and missing links in network infrastructures; enhancing institutional capacity.

The European social fund aims to improve employment and education opportunities in the EU, as well as the situation of the most vulnerable people. More than EUR 80 billion has been earmarked for human capital investment across the EU Member States during the period 2014-2020. It focuses on supporting four thematic objectives: promoting employment and supporting labour mobility; promoting social inclusion and combating poverty; investing in education, skills and lifelong learning; enhancing institutional capacity and an efficient public administration.

For more information:

Directorate-General for Regional and Urban Policy — regional policy, the EU’s main investment policy

Cohesion policy: how is the budget decided?

The total budget for cohesion policy and the rules associated with its allocation are jointly decided by the Council and the European Parliament. A legislative package for cohesion policy for 2014-2020 was adopted on 17 December 2013. This included a common provisions regulation (CPR) which lays down general provisions and the simplification of European structural and investment funds; the CPR was amended in October 2015 to take account of the unique situation of Greece resulting from the global financial and economic crisis and its subsequent sovereign debt crisis.

The NUTS classification — an objective basis for the allocation of cohesion policy funding

Statistics from regional accounts are used in the allocation of European structural and investment funds, with the NUTS classification providing the basis for regional boundaries and geographic eligibility.

During the period 2014-2020, eligibility for the European regional development fund and the European social fund was calculated on the basis of regional GDP per inhabitant (in PPS) averaged for the period 2007-2009. NUTS level 2 regions were ranked and split into three groups:

less developed regions, where GDP per inhabitant was less than 75 % of the EU-27 average;
transition regions, where GDP per inhabitant was 75 %-90 % of the EU-27 average; and
more developed regions, where GDP per inhabitant was more than 90 % of the EU-27 average.

Eligibility for the cohesion fund was initially calculated on the basis of GNI per inhabitant (in PPS) averaged over the period 2008-2010. It was subsequently revised, based on information for GNI per inhabitant averaged over the period 2012-2014. Bulgaria, Czechia, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovenia and Slovakia are all eligible for cohesion fund support as of 1 January 2017.

The bulk of the total budget for cohesion policy in the EU is provided to regions whose development lags behind the EU average; indeed, more than half of the total budget for cohesion policy was given over to less developed regions that were predominantly located in the south or the east of the EU, the Baltic Member States and several outermost regions.

Cohesion policy: implementation

European structural and investment funds are attributed through a process which involves EU, national, regional and local authorities, as well as social partners and organisations from civil society. Each EU Member State produces a draft partnership agreement and draft operational programme, which provides information for their regional strategy and a list of proposals for programmes. Having negotiated the contents of these with the European Commission, national/regional managing authorities in each of the Member States then select, monitor and evaluate the projects. The European Commission commits funds to allow the managing authorities to start spending funds on their programmes; payments are made on the basis of certified expenditure and a series of reports.

The rules for cohesion policy funding during the period 2014-2020 have been simplified and harmonised so that the same rules now apply to all of the different funds. Procedures have been adapted so they are based upon a results-orientated approach with more transparent controls, less red tape, the introduction of specific preconditions before funds can be released, and the introduction of measurable targets for better accountability.

Cohesion policy: integrated into broader policy goals

Regional policy and funding help deliver many of the EU’s overall policy objectives, for example, cohesion policy is (in the current funding period) closely integrated with the Europe 2020 strategy and the EU’s investment plan for Europe. During the period 2014-2020, cohesion policy programming is, for the first time, embedded within overall economic policy coordination, in particular the European semester, which is a regular cycle of economic policy coordination that is designed to coordinate the individual efforts of EU Member States. These links between cohesion policy and broader economic reforms has been strengthened such that the European Commission may suspend regional funding to any Member State which does not comply with the EU’s economic rules.

Cohesion policy: future plans?

At the time of writing, European institutions are in the process of discussing the delivery and implementation of cohesion policy post-2020; a range of proposals for regulations covering the period 2021-2027 are already in place and these are designed to focus resources on five principal objectives: a smarter Europe; a greener, carbon-free Europe; a more connected Europe; a more social Europe; a Europe that is closer to its citizens.

For more information:

Regional development and cohesion — proposals for legal texts covering the period 2021-2027

Other policy areas that impact on regions

While the EU’s regional policy can play an important role in delivering broader policy goals in range of socioeconomic fields, such as education, the labour market, energy, research and development or the environment, other EU policy areas can, in a similar way, have an impact on regions across the EU.

Urban development policy in the EU

The various dimensions of urban life — economic, social, cultural and environmental — are closely inter-related. Successful urban developments are often based on coordinated/integrated approaches that seek to balance these dimensions through a range of policy measures such as urban renewal, increasing education opportunities, preventing crime, encouraging social inclusion or environmental protection.

Urban development policy seeks to promote the economic, social and environmental transformations of cities through integrated and sustainable solutions. It can play a valuable role in the implementation of the Europe 2020 strategy, through a range of initiatives, extending the territorial coverage of the strategy to an additional level of governance. Indeed, a number of commentators and stakeholders have argued that cities need to be more involved in the conception and implementation of EU policies, as, despite their economic weight, there is no explicit urban dimension to the Europe 2020 strategy or its targets, although three flagship projects — the digital agenda, the innovation union and youth on the move — each address particular urban challenges.

During the 2014-2020 funding period, European policymakers recognised the important role that could be played by the urban dimension of regional policy, in particular measures designed to assist the fight against poverty and social exclusion. By doing so, the EU placed urban development at the heart of cohesion policy, directing at least half of the resources foreseen under the European regional development fund (ERDF) to be invested in urban areas. The European Commission estimates that during this six-year period some EUR 10 billion from the ERDF will be allocated to sustainable urban development, covering around 750 different European cities, by:

focusing investment priorities on issues such as sustainable urban mobility, the regeneration of deprived communities, or improved research and innovation capacity;
committing at least 5 % of the ERDF to integrated sustainable urban development;
setting-up an urban development network to be responsible for reviewing the deployment of European funds;
encouraging cities to promote community-led local developments for urban regeneration.

In July 2014, a European Commission Communication The urban dimension of EU policies — key features of an EU urban agenda (COM(2014) 490 final) discussed a range of options for developing an urban agenda for the EU, including:

a role for the EU institutions as a facilitator of urban development;
further integration of sectoral policies so that these are better adapted to urban realities;
an instrument to involve cities and their political leaders in EU policymaking and policy implementation;
a tool to integrate the goals of the Europe 2020 strategy with cities’ own strategies.

At the end of May 2016, a meeting of ministers responsible for urban matters was held in Amsterdam, the Netherlands. It reached an agreement on an urban agenda for the EU, as established by the Amsterdam pact. The agreement foresaw the development of 12 priority themes as partnerships between European institutions, EU Member States, European cities and other stakeholders; each has the goal of ensuring that the urban dimension of policymaking is strengthened. The themes include: the inclusion of migrants and refugees; air quality; urban poverty; housing; the circular economy; jobs and skills in the local economy; climate adaptation; energy transition; sustainable land use; urban mobility; digital transition; public procurement.

The urban agenda is designed to maximise the growth potential of cities, while tackling the social challenges associated with urban areas. It seeks to promote cooperation, economic growth, the quality of life and innovation across European cities through the creation of European partnerships, which:

promote the involvement of cities in EU policymaking (´urban friendly´ legislation);
ensure better access to and utilisation of European structural and investment funds;
improve the EU’s urban knowledge base, thereby leading to cities increasing their level of cooperation and sharing of best practices.

For more information:

Urban development policy in the EU

Urban agenda for the EU

Rural development policy in the EU

Having outlined EU policy developments in relation to cities and urban areas, this next section looks at policy developments for rural areas. There are considerable differences between the EU Member States as regards their territorial make-up: for example, Ireland, Sweden and Finland are very rural, whereas the Benelux Member States and Malta are characterised by much higher levels of urbanisation. Equally, within individual Member States there can be a broad range of different typologies: for example, the densely-populated, urbanised areas of Nordrhein-Westfalen in the west of Germany may be contrasted with the sparsely-populated, largely rural areas of Mecklenburg-Vorpommern in the north-east.

The EU’s rural development policy is designed to help rural areas meet a wide range of economic, social and environmental challenges. The European agricultural fund for rural development (EAFRD) provides finance for the EU’s rural development policy, promoting sustainable development and contributing towards the goals of the Europe 2020 strategy for smart, sustainable and inclusive growth. For the period 2014-2020, the EAFRD has been allocated EUR 99.6 billion. If national contributions are included, the funding available for this second pillar of the common agricultural policy (CAP) amounts to EUR 161 billion, with France (EUR 11.4 billion) and Italy (EUR 10.4 billion) the largest beneficiaries.

The EAFRD is intended to help develop farming and rural areas, by providing a competitive and innovative stimulus, at the same time as seeking to protect biodiversity and the natural environment. There are six priority areas, namely, to promote:

knowledge transfer and innovation in agriculture and forestry;
the viability and competitiveness of all types of agriculture and support sustainable forest management;
the organisation of the food production chain, animal welfare and risk management in farming;
the restoration, preservation and enhancement of agricultural and forest ecosystems;
the efficient use of natural resources and support the transition to a low-carbon economy;
social inclusion, poverty reduction and economic development in rural areas.

As with other structural and investment funds, from 2014 onwards, rural development policy is based on the development of multiannual partnership and operational programmes which are designed at a national/regional level by individual EU Member States (see above for more details).

For more information:

Rural development policy in the EU

The Europe 2020 strategy

The Europe 2020 strategy was designed as the successor to the Lisbon strategy; it was adopted by the European Council on 17 June 2010. The Europe 2020 strategy is the EU’s common agenda for this decade, placing emphasis on promoting a growth pact designed to create a ‘smart, sustainable and inclusive economy’, in order to overcome structural weaknesses, improve Europe’s competitiveness and productivity, and underpin a sustainable social market economy.

The Europe 2020 strategy seeks to achieve the following five targets by 2020:

Employment — increase the employment rate among people aged 20-64 years to at least 75 %.
Research and development — increase combined public and private investment in R & D to at least 3.00 % of gross domestic product (GDP).
Climate change and energy sustainability —
- reduce greenhouse gas emissions by at least 20 % compared with 1990 levels;
- increase the share of renewable energy in final energy consumption to 20 %;
- achieve a 20 % increase in energy efficiency.
Education —
- reduce the rate of early leavers from education and training to less than 10 %;
- increase the proportion of people aged 30-34 years having completed tertiary education to at least 40 %.
Fighting poverty and social exclusion — lift at least 20 million people out of the risk of poverty and social exclusion.

In March 2015, the European Commission proposed a new set of Broad guidelines for the economic policies of the Member States and of the Union (COM(2015) 99 final) which focused on: boosting investment; enhancing growth through the implementation of structural reforms in the EU Member States; removing key barriers to growth and jobs; improving the sustainability and growth-friendliness of public finances. At the same time, the Commission also proposed a set of Guidelines for the employment policies of the Member States (COM(2015) 098 final): boosting demand for labour; enhancing labour supply and skills; enhancing the functioning of labour markets; ensuring fairness, combatting poverty and promoting equal opportunities.

The European Commission has set-up an annual cycle for coordinating economic policies known as the European semester. Its main purpose is to foster structural reforms and to create more jobs and growth in line with the Europe 2020 strategy, while boosting investment, ensuring sound public finances and preventing excessive macroeconomic imbalances. At the end of 2018, the European Commission presented its Annual growth survey 2019: for a stronger Europe in the face of global uncertainty (COM(2018) 770 final), which highlighted six consecutive years of uninterrupted economic growth, the return of convergence across EU Member States, and the continued decline of national government deficits. The survey also found that to reinforce the social dimension of the EU and foster further convergence and better living standards and working conditions, it would be necessary to turn the principles outlined in the European pillar of social rights (see below for more details) into action, at European and national levels.

There has been a growing volume of work — for example, by the European Commission’s Directorate-General for Regional and Urban Policy, the Joint Research Centre (JRC), the European Committee of the Regions and the European Parliament — on the relationship between regional development and the Europe 2020 strategy. Although the Europe 2020 strategy does not specifically refer to regional policy, the European Commission has underlined that it may be neither realistic nor desirable that all regions seek to attain the same national targets. Rather, it was considered important for the EU Member States to take account of their different needs and to draw up national and regional programmes that reflect local specificities so as to promote smart, sustainable and inclusive growth.

Highlighting regional and territorial aspects, there have been a number of calls to align regional funding more closely with the Europe 2020 strategy and to monitor in more detail the performance of European regions with respect to Europe 2020 targets. The Joint Research Centre and the European Commission’s Directorate-General for Regional and Urban Policy have released three studies based on composite indicators linked to the socioeconomic performance of EU regions. These provide a set of subnational analyses in relation to the Europe 2020 strategy and broader measures of competitiveness. Their work was supported by the findings of the mid-term review of the Europe 2020 strategy, which noted that there was growing evidence of regional divergence in several of the EU Member States. More practically, the Directorate-General for Regional and Urban Policy has increased its efforts to align the various dimensions of regional funding more closely to the Europe 2020 targets.

For more information:

European semester

European pillar of social rights

The European pillar of social rights was jointly signed by the European Parliament, the Council and the European Commission in November 2017. It aims to take account of changing realities in the world of work, to promote the renewal of economic convergence across the EU, and to deliver new and more effective rights for citizens. The pillar is built around three main headings:

Equal opportunities and access to the labour market (education, training and lifelong learning; gender equality; equal opportunities; active support for employment).
Fair working conditions (secure and adaptable employment; wages; information about employment conditions and protection in case of dismissals; social dialogue and involvement of workers; work-life balance; healthy, safe and well-adapted work environment and data protection).
Social protection and inclusion (childcare and support to children; adequate protection for workers; unemployment benefits; minimum income; old age income and pensions; healthcare; inclusion of people with disabilities; long-term care; housing and assistance for the homeless; access to essential services).

The three main headings are subsequently broken down into a set of 20 key principles — cross-references to individual principles are provided through this publication (as and when relevant).

In order to monitor the progress being made in terms of strengthening the social dimension of Europe through the pillar of social rights, the European Commission has established a social scoreboard for monitoring the performance of individual EU Member States; the information collected is also used for economic policy coordination as part of the European semester. In a similar vein to the Europe 2020 strategy, and despite the European pillar of social rights not making any specific reference to regional policy, policymakers have shown a growing interest in analysing information at a more detailed, subnational level. Many of the indicators in the social scoreboard may be provided by Eurostat for a range of territorial typologies — principally, by NUTS region or by degree of urbanisation.

For more information:

European pillar of social rights — European Commission

European pillar of social rights — Eurostat dedicated section

Sustainable development goals

Sustainable development has long been part of the political agenda within the EU. However, this subject area was given fresh impetus with the adoption of the 2030 sustainable development agenda in September 2015 by the United Nations (UN) General Assembly. At the core of the agenda, there is a set of 17 sustainable development goals (SDGs), which provides a global policy framework for stimulating action until the year 2030 in areas of critical importance related to people, the planet, prosperity, peace and partnership.

The 2030 sustainable development agenda came into force on 1 January 2016 and, under the auspices of the inter-agency and expert group on SDG indicators (IAEG-SDG), a global list of indicators was developed to measure the goals and targets of the 2030 agenda. These indicators cover the three main dimensions of sustainability: social solidarity, economic efficiency and environmental responsibility.

On 22 November 2016, the European Commission adopted a Communication, Next steps for a sustainable European future (COM(2016) 739 final). It details the significance of the SDGs, identified EU policies that contribute to the implementation of SDGs, and announced plans for regular monitoring within an EU context.

The EU has made a firm commitment towards delivering on the SDGs and on the Paris Agreement on climate change. With a broad range of challenges ahead, the EU highlighted further actions required to help secure a sustainable future in a reflection paper released by the European Commission in January 2019, Towards a sustainable Europe by 2030. The paper highlighted that some of the most important global challenges to be faced in the coming years include issues around social equality, solidarity and environmental protection. It also underlined a range of actions that would be required to secure the well-being of EU citizens, such that future generations may continue to inherit a better world. These actions included plans to tackle increases in global greenhouse gas emissions, the threat to biodiversity and ecosystems, and technological, structural, and demographic changes in a globalised world.

For more information:

The EU’s approach to sustainable development

European Committee of the Regions

The European Committee of the Regions (CoR) — as the EU’s assembly for regional and local representatives — provides a voice for regions and cities across the EU. It was created in 1994 and is composed of 350 members who are regional presidents, mayors or elected representatives from the 28 Member States of the EU; successive European treaties have broadened its role. The CoR works closely with the European Commission, the European Parliament and the Council of the EU, as well as with various tiers of authority inside each of the EU Member States to promote multi-level governance and to ensure that European policy developments uphold the principles of subsidiarity and proportionality. The CoR promotes economic, social and territorial cohesion through autonomy for regional and local authorities.

On June 26 2019, the CoR adopted a set of proposals for the next legislative mandate of the EU strengthening the democratic foundation of the EU and improving its governance; improving the competitiveness of the EU; recalling the importance of cohesion policy as the EU’s main investment and solidarity policy; calling for a long-term strategy for increased sustainability at all levels of government; developing a comprehensive EU migration policy with the same standards, driven towards integration and with clear communication of costs and benefits; putting EU values into practice in its external policies. With this in mind, the CoR has set up a monitoring platform to observe the involvement of local and regional authorities in the European semester and the Europe 2020 strategy.

The #CohesionAlliance is a coalition of people who believe that the role of EU cohesion policy should be strengthened after 2020. The alliance was created through cooperation between leading European associations of cities and regions and the European Committee of the Regions.

By the end of May 2019, more than 400 local and regional authorities, federations of local and regional authorities and civil society organisations and over 11 000 individual signatories had joined the #CohesionAlliance. The local and regional authorities and their national federations from across the EU that have officially signed up to the alliance represent around 97 % of the EU’s population (excluding the United Kingdom).

European week of regions and cities-RYB19.png

The European Week of Regions and Cities is an annual four-day event which allows regions and cities to showcase their capacity to encourage growth and job creation, implement EU cohesion policy, and provide evidence of the importance of the local and regional level for good European governance.

Organised by the Committee of the Regions and the European Commission’s Directorate-General for Regional Policy, it has become a networking platform for regional and local development, which is viewed as a key event for policy practitioners. The 17th European Week of Regions and Cities will be held under the title, Strong cohesion policy for the future, with three principal themes:

the future of the EU and the roles of the regions and cities;
a Europe closer to citizens;
a greener Europe.

For more information:

European Committee of the Regions

European Week of Regions and Cities

Archive:EU policies for regions and cities

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Cohesion policy

Other policy areas that impact on regions

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