The impact of EU investment on jobs and growth

This paper gives an overview of the EU’s reformed cohesion policy, a policy that guides nearly one third of the EU’s budget through measures that create economic growth, job creation and competitiveness, with the aim of reducing the imbalances between the EU’s 28 countries and 277 regions.

ACT

Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions: Sixth report on economic, social and territorial cohesion: investment for jobs and growth (COM(2014) 473 final of 23.7.2014).

SUMMARY

This paper gives an overview of the EU’s reformed cohesion policy, a policy that guides nearly one third of the EU’s budget through measures that create economic growth, job creation and competitiveness, with the aim of reducing the imbalances between the EU’s 28 countries and 277 regions.

WHAT DOES THIS COMMUNICATION DO?

• Gives a summary of the EU’s cohesion policy of the previous 7-year period (2007-13).
• Describes the elements of the reformed cohesion policy for the 2014-20 period.
• Describes the ongoing negotiations between the European Commission and EU countries in regard to investment programmes.

KEY POINTS

• The new cohesion policy is investing even more in people than previously by reinforcing the European Social Fund in placing greater emphasis on social fairness and tackling youth unemployment.
• The new policy involves a reduced number of investments, taking on a quality-over-quantity approach. The main focus areas are: innovation and research, digital technologies, support for small businesses and a more climate-friendly/less energy-consuming economy.
• In the reformed policy, cities are given more responsibility in designing investment programmes, since they are expected to be the targets for around half of the spending.
• There is increased territorial cooperation, making it easier for regions and cities to work together.
• To ensure money is spent more wisely, the reformed policy focuses even more on objectives and results than in the past, with greater emphasis placed on evaluations and incentives for effective projects.

BACKGROUND

Economic and social conditions in the EU differ from country to country, and region to region. The cohesion policy, which is reformed every 7 years, aims to reduce those differences. During the ongoing financial crisis, the policy has been instrumental in keeping investments flowing into the EU countries with shrinking budgets. The policy is in line with the EU’s Europe 2020 strategy for smart, sustainable and inclusive growth.

KEY TERMS

The EU’s cohesion policy has three different financial programmes:

• the European Social Fund (ESF), which invests in better education, better public administration, employment and social fairness;
• the European Regional Development Fund (ERDF), which invests in key priority areas like innovation and research or small businesses;
• the Cohesion Fund, which invests in the EU countries that have the lowest average incomes in order to diminish disparities.

last update 08.12.2014