Regional Policy Inforegio - Financial Crisis - the response from European Cohesion Policy

Economic Crisis – the response from European Cohesion Policy

European Economic Recovery Plan

The current global economic crisis is a major challenge for the European Union and requires a rapid response to counter the impacts on the whole economy. The Commission, together with the Member States and its international partners, have taken action to boost investment with a view to generating economic growth and jobs. This was the purpose of the Commission Communication entitled “From financial crisis to recovery: a European framework for action” adopted in October 2008.

With total financial resources of €347 billion for the 2007-2013 period, European cohesion policy provides robust support for budgetary stability and public investment in the Member States and EU regions in times of heavy budgetary constraints.

This is why cohesion policy is so important in restoring confidence in the EU’s economy and why it is a key part of the European Economic Recovery Plan. By supporting investment in infrastructure, business and jobs, it can help Europe’s regions and Member States tackle the challenges brought on by the global economic crisis.

Cohesion Policy in the Recovery Plan

Since October 2008, the Commission has proposed a series of measures to speed up the implementation of European cohesion policy programmes for the 2007-2013 period to ensure that all cohesion policy resources are fully mobilised to support Member State and regional recovery efforts. These measures are based on both recommendations to Member States and specific legislative measures designed to accelerate investment and simplify the implementation of European cohesion policy programmes. The idea is to introduce greater flexibility, give regions a head start and target cohesion policy programmes on smart investment.

1) Flexibility

Modifying cohesion policy programmes

The existing cohesion policy programmes already have a strong strategic focus on jobs, business, infrastructure and energy, and research and innovation. These will continue to be priority areas of investment for cohesion policy programmes. Because of the ongoing economic crisis, the Commission is working with the Member States to see if these programmes require any changes to:

Closing the 2000-2006 programmes

The Commission has extended the final date of eligibility for the 2000-2006 operational programmes to ensure the maximum use of all cohesion policy resources from the 2000- 2006 period. Greater flexibility has also been introduced in the calculation of the final EU contribution. Simplify financial management The Commission has proposed several measures to simplify the financial management of the cohesion policy programmes to reduce the administrative burden. These measures include:

2) Giving regions a head start

Increasing cash flow

The Commission suggested increasing the advance payments to the 2007-2013 programmes. Additional advance payments released in April 2009 provided an immediate cash injection of €4.5 billion for investment, within the financial envelope agreed for each Member State for the 2007-2013 period. These funds have brought the total of advance payments to nearly €23.3 billion since 2007, bringing a much needed boost to public investment.

Help with major projects

To help Member States accelerate the development of major projects, the Commission has proposed the following:

Simplify state aid rules

The Commission is currently negotiating with the Member States to simplify the rules governing state aid schemes which are cofinanced by cohesion policy. In practice, under certain conditions, this would mean that advances to state aid schemes could be reimbursed up to 100%.

In addition, the Commission has put in place a temporary arrangement under the State aid rules for Member States to tackle the effects of the credit squeeze on the real economy until 2010. This temporary arrangement provides the following, under certain conditions:

3) Smart investment

Investing in areas of high growth potential

The Commission will work together with Member States to, if necessary, modify the existing cohesion policy programmes with a greater emphasis on smart investment. For example, investing in energy efficiency, clean technologies, environmental services, infrastructure and interconnections, broadband networks, forecasting and matching skills with future labour market needs or opening up new finance for SMEs (i.e. research-intensive and innovative SMEs).

Maintaining public investment

The Commission is encouraging Member States to maintain high levels of public investment to ensure that cohesion policy resources are fully mobilised to support Member State and regional recovery efforts. More flexibility will be introduced to encourage this type of investment, for example by allowing some measures to be financed at 100% through the EU funds in 2009.

More energy-efficiency investments

The Commission is negotiating with Member States to include more energy efficiency improvements and renewable energy schemes in housing in all Member States. For Member States who joined after 2004, the possibility to invest in the housing sector already exists.

Promote entrepreneurship and enhance cooperation with the European Investment Bank (EIB) and European Investment Funds (EIF)

The Commission encourages and helps Member States and regions get the most out of the JEREMIE (Joint European Resources for Micro to Medium Enterprises) initiative for SMEs, including guarantee, debt and equity instruments, and improving the business environment for micro-credit. The new JASMINE initiative (Joint Action to support Microfinance Institutions in Europe) will channel various forms of technical and financial support to non-bank micro-credit providers to promote the availability of micro- credit for businesses across the EU.


Latest Developments

(29 October 2010) Cohesion Policy helping economic recovery

European Union Cohesion Policy is playing a key role in dealing with the economic crisis, according to a report published by the European Commission on 25 October 2010.

Cohesion Policy: Responding to the economic crisis

(22 July 2009) The European Commission proposes simplifying the management of the European Funds to assist regions in tackling the crisis

Press release

COM(2009) 384 - COM(2009) 382

(12 May 2009) Priorities and Impact of Cohesion Policy in the Member States

These country factsheets provide an overview of some of the key achievements of Cohesion Policy, the main priorities for investment for 2007-2013, and summary information on territorial co-operation programmes. Factsheets

(05May 2009) Road to recovery: Cohesion Policy will help Europe to get out of the crisis, say Commissioners Hübner and Špidla

Press release

(23 March 2009) A short summary of cohesion policy's response to the economic crisis de en es fr it pl

(24 February 2009) More flexibility
Commissioner Danuta Hübner has announced a package of decisions by the European Commission aimed at giving Member States more flexibility in their use of the structural funds. The changes will extend the deadline for EU countries to use up their allocations from the 2000-2006 funding period and ensure that every available euro can be used to maximum effect.

Press release;

Decision of the Commission;

Communication to the Commission;

State of play/ extension eligibility

(19 December 2008) Public Procurement guidance

The Commission recognises that the exceptional nature of the current economic situation can justify the use of the accelerated procedure reducing considerably the overall time limit of the procedure from 87 days to 30 days. Such presumption of urgency should apply throughout 2009 and 2010 for all major public projects.

Public Procurement

(17 December 2008) Temporary framework for State aid measures

Communication from the Commission - Temporary framework for State aid measures to support access to finance in the current financial and economic crisis - adopted on 17 December 2008.

Horizontal rules
Handbook on community state aid rules for smes

(16 December 2008) Investing in the real economy: the contribution of Cohesion policy

The Commission presented recommendations to Member States to help them maximise existing possibilities within Cohesion policy to address the crisis, as well as setting out new opportunities.

Presentation: "EU Cohesion Policy: Investing in the real economy"
Commission Communication
Press Release

(03 December 2008) New measures to promote energy efficiency and renewable energies in the housing sector

The Commission adopted a proposal which would allow all Member States to invest in initiatives supporting energy efficiency and renewable energies in housing. This measure targets low-income households, as defined by legislation in each Member State.

Commission proposal amending the Regulation on the European Regional Development Fund
Press Release

(26 November 2008) The contribution of Cohesion policy to the European Economic Recovery Plan

Additional advance payments agreed to help overcome cash-flow problems in many regions
Press Release
Commissioner Hübner's presentation to the press ppten
Speech of the Commissioner to European Ministers responsible for Regional Policy in Marseille

For the latest developments and up-to-date information from the European Commission on the financial crises