Cohesion Policy: investing in the real economy

The contribution of cohesion policy to the real economy is proving to be essential in the current context of economic crisis. The Commission invites Member States to take full advantage of the possibilities of this policy.

ACT

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 16 December 2008 - Cohesion Policy: investing in the real economy [COM(2008) 876 - Not published in the Official Journal].

SUMMARY

Cohesion policy programmes contribute to the European Economic Recovery Plan. They support public investment at regional and local level, whilst facilitating aid to the people who are hardest hit by the economic crisis and access to funding for small and medium-sized enterprises (SMEs).

Cohesion Policy contributes to the long-term aims of the European Union's smart, sustainable and inclusive growth strategy.

Investing in the real economy

The Commission encourages the maintenance of public investment levels. It recommends adapting the aims of EU programmes with regard to areas with significant growth potential. Levels of public co-funding should be guaranteed by adjusting Union and national contributions according to these priorities.

The present strategy is accompanied by legislative proposals aimed at accelerating investments, by facilitating:

• the availability of public cash flow, in particular concerning the reimbursement of expenditure incurred for major projects and state aid schemes;
• access to funding, through new financial engineering instruments;
• implementation of projects using flat rates and lump sums for overhead costs;
• the promotion of energy performance and renewable energies in housing, in particular with the aim of contributing to social cohesion.

Sources of funding should be diversified to take into account the effects of the economic downturn on public budget resources. Financial incentives should combine Union and national measures. Investments should also be made by using repayable and revolving financial instruments.

Investment priorities

Human capital

Cohesion Policy contributes to protecting jobs, and to modernising labour markets and education systems. Member States should integrate flexicurity strategies and improve workers’ levels of qualification.

The use of European Social Fund (ESF) funding allows the following to be facilitated: adapting to change, transitions after job loss and the social integration of those who are most vulnerable to long term unemployment (older people, minorities, the low skilled).

Business

To promote an environment which is favourable to stability, competitiveness and the innovation potential of companies, Member States should take full advantage of EU financial aid and techniques.

In particular, this is the function of the initiatives developed jointly by the Commission and the European Investment Bank (EIB). The JEREMIE initiative thus procures joint European resources for micro-enterprises and SMEs, and the JASMINE initiative supports micro-finance institutions in Europe.

Infrastructure and energy

Investment in infrastructures and networks benefits cohesion in the European territory. Moreover, the EU should evolve towards a low-carbon economy and ensure sustainable use of energy resources. Supply sources should be diversified to guarantee the availability and stability of prices of resources.

National and EU programmes should be used to realise these objectives. The priorities of the European Regional Development Fund (ERDF) should be adapted to this end, as should the financial and technical capacities of the JESSICA initiative for sustainable development in urban areas and the JASPERS initiative for technical assistance to major infrastructure projects.

Research and innovation

The growth of the knowledge economy particularly depends on levels of investment in research and innovation. They should allow capacities, infrastructures and human capital to be strengthened, by aiming in particular at SMEs and areas with significant growth potential. Better synergy should be found between sources of EU funding in order to take these priorities into account.

Context

Cohesion Policy contributes to the European Economic Recovery Plan through programmes providing stable, secure and targeted financing to mitigate the slowdown of growth. Over the period 2007-13, EUR 347 billion were invested to stimulate growth and contribute to European economic and social cohesion.

RELATED ACTS

Communication from the Commission to the European Council of 26 November 2008 entitled A European Economic Recovery Plan - [ COM(2008) 800 final - Not published in the Official Journal].

Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Cohesion policy: Strategic report 2013 on programme implementation 2007-2013 [COM(2013) 210 final - not published in the Official Journal].

This report provides an overview of the performance of the EU's Structural Funds and covers the period up to end-2011 in most cases.

Through its three Funds - the European Regional Development Fund (ERDF), the European Social Fund (ESF), and the Cohesion Fund - over the 2007-2013 period, EU cohesion policy is investing €347 billion in programmes across the Union. This represents 35% of the total EU budget for the same period (€975 billion).Since the beginning of the economic crisis in 2008 and the resulting fiscal consolidation in many Member States, cohesion policy's role has become even more crucial in investing in national and regional economies.

EU Structural Funds over this period have invested in innovation and job creation in SMEs, R&D, labour markets and human capital, by building key network infrastructures, protecting the environment, enhancing social inclusion and building administrative capacity.

The report shows that, over time, implementation has accelerated, making important contributions to many areas necessary for sustaining growth and creating jobs. Likewise, there appears to have been clear progress towards the objectives set at the beginning of the period.

Results cited in the report to end 2011 include:

• 1.9 million more people now have broadband access;
• 2.6 million more people are served by water supply, 5.7 million more by waste water projects;
• there are 460 km of TEN-T roads and 334 km of TEN-T rail; and
• 2.4 million people assisted by the European Social Fund found a new job.

In addition, 53 240 RTD projects and 16 000 business-research projects received investment and 53 160 start-ups have been supported.

As funds are utilised and projects get off the ground, the report also points to the large increase in the number of people supported in the area of employment (from around 10 million annually before 2010 to some 15 million on an annual basis since then).

There has been a significant acceleration of results since 2010 in the area of support for SMEs, with almost 400 000 jobs created (half of these in 2010/11) including 15 600 research jobs and 167 000 jobs in SMEs.

The policy has also demonstrated its capacity to adapt to changing circumstances and to respond effectively to the crisis. Until the end of 2015, significant and additional results are still expected and the Commission stresses the need to maintain and even redouble the efforts made to date.

Last updated: 07.03.2014