European Regional Development Fund (2014-2020)

KEY POINTS

Eligibility

All regions in EU countries are eligible but the aid granted depends on EU priorities and the type of region.

Key themes

The ERDF concentrates its investments on 4 key themes:

• innovation and research;
• information and communication technologies (ICT);
• support for small and medium-sized enterprises (SMEs);
• promoting a low-carbon economy.

Types of investment

• in SMEs to create and safeguard sustainable jobs,
• in all types of enterprise in the fields of innovation and research, the low-carbon economy, as well as ICT where SMEs are involved,
• in infrastructure providing basic services in energy, environment, transport, and ICT, but also in social, health and educational infrastructure,
• working capital in SMEs where necessary as a temporary measure to provide an effective response to a public health crisis (following the outbreak of the COVID-19 pandemic), and
• in the development of endogenous potential.

Overall budget

The budget for 2014-2020 is over €185 billion.

Policy and budget priorities

• The 4 key themes listed above are very significant for the allocation of ERDF funding which varies depending on the category of region.
• The regions are defined in terms of their GDP expressed as a percentage of an EU average:
  • more developed regions: GDP more than 90%
  • transition regions: GDP 75%-90%
  • less developed regions: GDP less than 75%
• In more developed regions, (transition regions), (less developed regions), at least 80% (60%) (50%) of total ERDF funds in each country must be allocated to 2 or more of the 4 key themes, namely innovation and research, SMEs, ICT and a low-carbon economy; because of its importance, at least 20% (15%) (12%) of total ERDF funds in each country must be channelled specifically towards low-carbon economy projects.
• A minimum of 5% of ERDF funding is earmarked for sustainable urban development. An urban development network is to be set up at EU level to promote networking and exchange of experience on sustainable urban development.

Implementation

• ERDF is implemented at national level by means of 7-year programmes as part of a Partnership Agreement between the EU country and the EU which involves the 5 European Structural and Investment Funds (ESI Funds):
  • ERDF,
  • European Social Fund (ESF),
  • Cohesion Fund,
  • European Maritime and Fisheries Fund (EMFF) and
  • European Agricultural Fund for Rural Development (EAFRD).
• This agreement is prepared by each EU country with the involvement of partners representing regional and local public authorities, as well as a wide range of social, economic, environmental and other interests.

Coronavirus Response Investment Initiative

The Coronavirus Investment Initiative, introduced by Regulation (EU) 2020/460, offers EU countries access to €37 billion from the ESI Funds to strengthen health systems and support small and medium-sized enterprises, short-time working schemes and community-based services.

Coronavirus special measures: more flexibility in the use of ESI fund

Amending Regulation (EU) 2020/558 allows EU countries to transfer resources between the European Regional Development Fund, the European Social Fund and the Cohesion Fund, between the different categories of regions and between the 3 funds’ specific priority areas.

From 1 July 2020 to 30 June 2021, cohesion policy programmes related to COVID-19 can be financed exceptionally through 100% EU funding during the accounting year. The measures also simplify programme approval to speed up implementation, make financial instruments easier to use and simplify audits.