9th Cohesion Report shows that Cohesion Policy continues to narrow the gaps in EU regions and Member States

Today, the Commission published its 9th Cohesion Report, showing that Cohesion Policy is fulfilling its mission to narrow economic, social, and territorial disparities across the EU.

Great strides have been made to reduce the gaps that exist between the Member States and regions, strengthening the EU Single Market and making sure that the EU continues to invest in human capital and sustainable development. Exploiting the full potential of every region strengthens the competitiveness and resilience of the Union as a whole.

Driving economic growth and employment

Cohesion Policy is an important driver of sustainable development and economic growth. In the long run, it is expected that each euro invested through Cohesion Policy will have tripled, by 2043 which is equivalent to an annual rate of return of around 4%. Thanks to the Policy, it is estimated that 1.3 million additional jobs will be created in the EU by 2027, with a large share in sectors related to the green and digital transitions. Cohesion Policy also ensures that economic development in regions has a positive spillover into the EU Single Market, thanks to trade and investment connections.

By the end of 2022, Cohesion Policy funding between 2014 and 2020 had supported over 4.4 million businesses, created 370,000 jobs in these firms, and constituted around 13% of total public investment in the EU, reaching 51% for the less developed Member States.

2024 marks 20 years since the EU welcomed new Member States in its largest enlargement round to date. Over this period, the average GDP per head of the Member States who joined since then has increased from 52% to nearly 80% of the EU average. The gap with the rest of the EU has halved. The unemployment rate in these Member States has decreased from an average of 13% to 4%.

Investing to implement the green transition on the ground

With a budget of €392 billion, Cohesion Policy funding programmes for 2021-2027 will continue to invest in Europe’s competitiveness, the green and digital transitions, human capital and social inclusion, and physical and digital connectivity, while strengthening the involvement of citizens. In the context of persistent labour shortages, Cohesion Policy will continue to tackle issues such as youth unemployment and life-long learning.

Over €100 billion is programmed to support green action through projects focused on renewable energy infrastructure, energy efficiency, sustainable transport networks, and nature conservation initiatives. The Policy will also prioritise research and innovation, enabling regions to develop green technologies.

Cohesion Policy has already had a significant impact on delivering on the green transition, allocating €69 billion between 2014 and 2020. Thanks to these investments, 550,000 households have benefitted from increased energy performance in buildings, thereby decreasing their energy bills; 6,000 megawatts of renewable energy capacity was created (meaning that the annual electricity needs of around 4 million households in the EU are now catered for); flood protection measures were put in place for 17 million people; habitat conservation measures were implemented for 3.4 million hectares; and 6.9 million people got access to an improved water supply.

Today’s Report highlights that climate change exacerbates regional inequalities, by impacting more heavily coastal, Mediterranean, and South-Eastern EU regions. Here, the costs of climate change can amount to over 1% of GDP annually. The transition to a climate-neutral economy needs to be accomplished in a just and fair way, as regions have different capacities to reap the benefits it brings. This is why Cohesion Policy invests to create jobs and opportunities across regions and to increase climate resilience and mitigate risks.

Bringing the digital transition everywhere

Digitalisation will bring increased productivity, innovation, and better access to services. However, EU regions have uneven capacity to use new technologies. Cohesion Policy invested €14 billion between 2014 and 2020 to overcome the digital divide, both social and geographical, for example, by improving access to e-government and e-health services and by fostering the roll-out of broadband in remote and rural regions. Performance for fixed networks improved across all Member States, and 7.8 million households benefitted from improved broadband connection.

The 2021-2027 programming period invests significantly in digitalisation: around €40 billion is devoted to this purpose, including the development of digital skills, digital technologies, and access to faster internet connection in all EU regions.

At the same time, the Policy will also support people in gaining the right skills to embrace the changes brought by the green and digital transitions, thanks to €45 billion devoted to education and training.

A flexible Cohesion Policy that delivers in times of crisis

Cohesion Policy provides a stable source of public investment in times of budget constraints. While delivering on its long-term goals of investing in structural, growth-enhancing measures supporting development, jobs, and helping regions in the context of demographic changes and the green and digital transitions, Cohesion Policy has also proven to be a flexible tool to support Member States and regions in times of crisis.

This includes the quick mobilisation of resources to cater to short-term needs during the COVID-19 health crisis. With the two support packages launched in Spring 2020 (CRII and CRII+), Cohesion Policy channelled €23 billion to fight the pandemic, notably supporting the purchase of ventilators, vaccines and medicines for hospitals, the hiring of additional healthcare workers, and the provision of home care services for vulnerable groups. As the crisis had a major impact on SMEs, Cohesion funding also offered urgent financial support for investments in IT equipment to ensure that they could adapt to the ‘new normal.’ Thanks to this support, all categories of regions returned to their 2019 GDP levels only two years after the COVID-19 health crisis, in contrast with the 2008 financial crisis where it took more than 10 years for some regions to recover.

Cohesion Policy also made funding and flexibilities available to help regions welcome people fleeing Russia’s war of aggression against Ukraine. This funding supported emergency measures such as building reception centres and shelters and investing in mobile hospitals and sanitation. Support was also provided in the areas of employment, education, and social inclusion, such as language courses, psychological assistance, and access to childcare and healthcare services.

Drawing lessons for the future

While convergence is taking place, the Report points out that some challenges remain. These include sub-national disparities between large metropolitan areas and other regions, and those regions caught in a ‘development trap’ and that are lagging behind. Demographic changes further impact these challenges, as many regions face declining working-age population, a departing younger population and difficulties in retaining talent. This shows the importance of supporting regional cohesion and investing in jobs and opportunities for Europe’s next generation.

Drawing lessons from the implementation of Cohesion Policy, while taking into account the experience of other instruments such as the Recovery and Resilience Facility, the Communication on the 9th Cohesion Report points to the need to reflect on how to improve the design of the Policy to better deliver on its Treaty objectives. Some aspects include addressing emerging economic dynamics and new imbalances, tailoring support to regional needs, faster implementation, further simplification, stronger performance orientation and linkage with reforms, and built-in flexibilities to react to unforeseen events.

A first discussion of the findings from the 9th Cohesion Report will take place during the upcoming 9th Cohesion Forum, 11-12 April 2024 in Brussels. Representatives from stakeholders to national, regional, and local authorities, will reflect on how Cohesion Policy can continue to ensure that no region is left behind in the ongoing structural changes.