EN Regional Policy EUROPEAN COMMISSION Third Cohesion Report February 2004 Convergence,...

ENENRegional Policy

EUROPEAN COMMISSION

Third Cohesion Report Third Cohesion Report February 2004February 2004

Third Cohesion Report Third Cohesion Report February 2004February 2004

Convergence, Competitiveness, Co-operation

Budapest, 19/2/2004

Regional Policy

EUROPEAN COMMISSION 19/02/2004Budapest

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Cohesion PolicyCohesion Policy

"A harmonious, balanced and sustainable development of economic activities" throughout the Union

(Article 2 of Treaty on European Union)

Economic and social cohesion is to be pursued with the aim of "Reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands, including rural areas"

(Article 158 of Treaty on European Union)

Context Proportions of

expenditure

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Context of Reform of Cohesion PolicyContext of Reform of Cohesion Policy

• enlarged Union requires enhanced solidarity

• leverage to the priorities adopted in Lisbon and Gothenburg

• higher profile as an international player

• citizenship and questions of justice and home affairs at heart of Community process

context of reform

context of reform

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Financial perspectives 2007-2013Financial perspectives 2007-2013

Promoting Europe's wealth - policy challenges and budgetary means of the enlarged Union

A refocusing in the financial perspectives.

Four political priorities for the Union:

• Sustainable development – competitiveness, cohesion (for growth and employment): +212%

• Conservation and management of natural resources: +3%

• Citizenship, freedom, security and justice: +182%

• The EU – a global partner: +40%

Commission proposal to maintain level of own resources at 1.24% Community GDP

Financial aspects

Financial aspects

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Financial perspectiveFinancial perspectiveProposal by CommissionProposal by Commission

• Average spending level of 1.14% of GNI per year

• 1.09% in 2006

• Maintaining current level of own ressources: 1.24% of GNI in payment appropriations

Financial Perspective

Financial Perspective

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Financial perspectivesFinancial perspectives

For information:

EU Budget 2000 - 2006 Total commitment allocations EU 25: € 108.5 billion p.a.

of which Structural Actions: € 37.0 billion p.a.

Financial Perspectives 2007-2013 Total commitment allocations EU 27: € 146.4 billion p.a. of

which Structural Actions: € 48.0 billion p.a.(excluding rural development)

Figures in 2004 prices

Financial aspects

Financial aspects

Regional Policy


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Cohesion PolicyCohesion Policy

• 1/3 of EU budget (€336 billion at 2004 prices)

• About 0.41% of Union GDP (0.46% with rural development & fisheries)

• Proposed 50-50 split between current and new Member States

• Appx. ¾ of the budget for regions and Member States lagging behind in development

• Therefore, concentration on less prosperous parts of EU

Context Proportions of

expenditure

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Categories of expenditure in Categories of expenditure in Structural FundsStructural Funds

Categories of expenditure in Categories of expenditure in Structural FundsStructural Funds

Context

Other2%

Human resources

23%

Productive

environment

34%Infrastructure

41%

Breakdown of Structural Fund allocation in Objective 1 regions: all Member States, 2000-2006

Source: DG REGIO

For 2007-2013 + strengthening administrative capacity For 2007-2013 + strengthening administrative capacity

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Importance of Cohesion ReportsImportance of Cohesion Reports

Every 3 years Commission analyses state of cohesion and impact of its policies (Art. 159 of Treaty):

1st report (1996) - the foundations for Agenda 2000

2nd report: (2001) - launched debate on Cohesion Policy after enlargement

3rd report (February 2004): presents proposals for reformed Cohesion Policy after 2007

contextcontext

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The Report contains 4 partsThe Report contains 4 parts

1. Analysis of situation and trends in the regions, and competitiveness factors

2. The contribution of national policies to cohesion

3. The contribution of other Community policies

4. The impact of Cohesion Policy

structurestructure

Regional Policy


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Observations of Cohesion ReportObservations of Cohesion Report

1. Cohesion Policy has achieved undeniable results:

• Significant convergence of cohesion countries

• Positive trend in Objective 1 regions overall:– GDP, employment and productivity growth above

European average– Modernisation of economic structures and

management methods– Better governance at regional level– Greater regional co-operation at European level

Part 1 situation and trends: some results

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GDP growth in Cohesion CountriesGDP growth in Cohesion CountriesGDP growth in Cohesion CountriesGDP growth in Cohesion Countries

Part I Situation

and trends

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

SpainPortugalGreeceCohesion 3

Ireland: GDP +8% p.a. compared with EU average 2% p.a.Ireland: GDP +8% p.a. compared with EU average 2% p.a.

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Unemployment rates 1996-2001Unemployment rates 1996-2001

Unemployment rates in EU15, 1996 and 2002(% of labour force)

1996 2002

EU15 10,7 7,8

Source: Eurostat, LFS

7,4

Cohesion countries 17,0 9,6

Other Member States 9,5 7,5

Greece 9,7 10,0Spain 22,3 11,4Ireland 11,9 4,3Portugal 5,1

Part I Situation and

trends


trends

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Impact of enlargement Impact of enlargement

2. Disparities in an enlarged Union will grow:

• Population of the Union grows from 380 to 454 million (EU 25) or 485 million (EU 27)

• New MS bring more dynamic growth (4% per year against 2.5% in EU 15

• GDP per head drops (-12.5% EU 25: -18% EU 27)

Part I

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Impact of enlargement Impact of enlargement

• Population in the convergence objective goes from 84 million to 123 million (153 million with Bulgaria and Romania)

• Development gap between regions doubles: average GDP in Objective 1 is 65%: new MS 46%

• Employment rate in EU 15 grew from 60% to 64% (1996 – 2002).

• In new Member States 10 it is 56% (59% in 1999)

Part I

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0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

200,0

LU DK AT BE SE DE CY PT SI SK EE LV BG

Average EU25

GDP per head PPS 2002GDP per head PPS 2002

Source: Eurostat, National Accounts

Index, EU25 = 100

Part I Situation

and trends

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RegionalRegionalGDP 2001GDP 2001


trends

GDP per head(PPS), 2001

< 5050 - 7575 - 9090 - 100100 - 125>= 125No data

Index EU 25 = 100

Source: Eurostat

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Employment rate 2002Employment rate 2002

< 56

< 56.0 – 60.2

< 60.2 – 64.4

64.4 – 68.6

>= 68.6

No data

% of population between 15-64

Standard deviation = 8.4

Source:Eurostat and NSI

EU-27 = 62.4

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EmploymentEmploymenthi-tech 2002hi-tech 2002

Regional competitive

factors

< 7.45

< 7.45 – 9.55

< 9.55 – 11.65

11.65 – 13.75

>= 13.75

No data

Sources: Eurostat

Average = 10.6Standarddeviation = 4.30

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The contribution of national policies The contribution of national policies

3. EU Cohesion Policy crucial supplement to national policies:

• National budgets are 47% of GDP on average

• The Cohesion budget is 0.46% of GDP

• National budgets give priority to basic services and income support

• The Structural Funds aim to improve the factors of regional convergence and support physical and human investment

Part II

Different approaches to

promote growth

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The contribution of other Community The contribution of other Community policiespolicies

4. Other Community policies can also contribute to cohesion

• Policies at specific objectives set out in the Treaty

• Do not always have cohesion as explicit objective

• Need to strengthen coherence between these policies and the objective of cohesion: – Research and development expenditure– Environment policy contributes to sustainable development– Trans-European Networks – Competition policy's role in strengthening competitiveness

• Opinion surveys show, nevertheless, that Cohesion Policy and Agricultural Policy are most visible

Part III

Need to promote coherence of

policies

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The impact of Cohesion policyThe impact of Cohesion policy

• Increase public and private investment in beneficiary regions (growth)

• Contribute to increasing GDP (convergence)

• Create jobs and maximise potential of human resources

• Increase physical and human capital

• Better regional and local governance

• Financial stability over 7 years

Part IV

Mobilising resources to

promote growth

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Proposals for Reform:Proposals for Reform:A new partnership for CohesionA new partnership for Cohesion

Why a new partnership?

• To reinforce Union's sustainable development priorities (Lisbon and Gothenburg)

• Because enlargement increases the need for Cohesion Policy (15 out of 27 Member States will be major beneficiaries)

• Because Cohesion Policy will be of concern to all States, regions and towns

• Because of reinforced budget – 32% more

Reform of the policy

Conclusions

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Priorities of the reform (I)Priorities of the reform (I)First objective: Convergence and First objective: Convergence and

competitivenesscompetitiveness

Who benefits?

• Regions less than 75% of EU 25 average GDP/head

• Statistical effect regions: less than 75% of EU 15 GDP/head but more than 75% of EU 25.

• States with less than 90% of EU 25 average GNI/head (Cohesion Fund)

How much?

• Budget about 78% of the total

• Clear priority to new Member States in terms of convergence effort


Conclusions

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Priorities of the reform (I)Priorities of the reform (I)First objective: Convergence and First objective: Convergence and

competitivenesscompetitiveness

What will be financed?

• ERDF - similar actions to present plus administrative capacity

• ESF - priorities of European Employment Strategy plus administrative capacity

• CF - transport and environment but emphasis on sustainable development (rail, multi-modal, ports, renewable energy and clean urban transport)


Conclusions

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Priorities of the reform (II)Priorities of the reform (II)Second objective: regional competitiveness Second objective: regional competitiveness

and employmentand employment

• Cohesion policy at the service of all other regions in the Union – no community zoning

Contains two elements:

• Employment (basis: European Employment Strategy)

• Regional competitiveness:- innovation and the knowledge society- accessibility and services of general interest- environment and risk protection would include responsibility

for cities delegated to the regions (URBAN+), no community initiative (Lisbon and Gothenburg strategy)

Budget: ca 18% of total FS= current objectives 2 and 3


Conclusions

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Priorities of the reform (III)Priorities of the reform (III)Third objective: European Territorial co-Third objective: European Territorial co-

operationoperation

The success of INTERREG - Community added value

Promotes harmonious and balanced integration

• Border regions, including sea borders

• Cross border co-operation (MS to propose changes to the 13 present zones of INTERREG III B)

• Interregional co-operation (also within mainstream)

• External cross-border co-operation – linked to the new European Neighborhood Instrument

Budget: around 5% of the total


Conclusions

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Implementation system: Implementation system: "evolution not revolution" "evolution not revolution"

• Confirmation of basic principles:– multi-annual programming; – partnership;– evaluation;– co-financing;– shared responsibility.

• Simplification - subsidiarity & decentralisation:– more strategic approach;

– strategic framework adopted by EC (based on convergence,

competitiveness & employment priorities);– operational phase – limited number of thematic & regional

operational programmes;


Conclusions

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Implementation system: Implementation system: "evolution not revolution" "evolution not revolution"

• Simplification and coherence of instruments:

– Reduce number of financial instruments (ERDF, SF & CF);– Single fund programmes only;– Single strategy for ERDF & CF for transport and environment;– ERDF & ESF to include programmes to reinforce

administrative capacity;– Maintain current co-financing (increment for rural zones,

mountain zones and islands).

• Simplification of financial management:– Proportionality principle;– Declaration of assurance;– Payments system – advances (7%) and N+2 rule maintained.


Conclusions

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Some considerations for HungarySome considerations for Hungary

• 4% Capping

• Budapest Phasing out (natural)

• Become competitive on European level and beyond– Lisbon/Gothenburg

• Balanced development between capital and territory

• Meeting the challenge to implement 2004-6– we are still in 2004!

Hungary

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Proposed timetableProposed timetable

10-11 May 2004: European Cohesion Forum, Brussels

July 2004: Commission adopts the legislative package

End 2005: Decision by Council and European Parliament

2006: Preparation of programmes for period 2007-2013

1 Jan 2007: Implementation begins

Next stages

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