10 myths and realities about EU cohesion policy – Regional policy

EU funding for regional and social development is an important source for key investment projects.

In some EU countries which also have limited resources, European funding finances up to 80% of public investment. However, EU regional spending does not only help the poorest regions. It invests in every region and country in the EU, thus boosting the economy of the EU as a whole.

Cohesion policy is a ‘win-win’ policy for every region and every country in the EU. All regions of the EU, not just the poorest, benefit greatly.
No matter what country you live in, take a close look around and you will definitely notice a school, bridge, hospital, port or any other project that has received EU funding and made a difference in your life. These are just a few examples of what cohesion policy can do. Its effects are innumerable and increasing over time.

An independent expert assessment has shown that the Cohesion Policy investments over the period 2007-2013 have had substantial and tangible results. These range from job creation, to new products launched on the market, to the positive impact on reducing regional disparities and to increasing gross domestic product (GDP).

For example, the evaluation showed that the return on investment by 2023 will be 2.74 euros for every euro invested between 2007 and 2013, or a return of 274%. This indicates that cohesion policy will be responsible for almost € 1 trillion in additional GDP by 2023. The effect is of a similar magnitude to all EU budgets for 2007-2013 ( € 975.8 billion) and 2014-2020 (€ 908.4 billion).
The numbers speak for themselves. More than 1,200,000 jobs have been created thanks to cohesion policy investments until the end of 2015. Almost 120,000 research and innovation projects have been supported. 121,400 start-ups received financial support under the 2007-2013 programs, as well as an estimated number of 400,000 small and medium-sized enterprises.

National and regional authorities in EU countries select the projects which they believe best meet their needs, in accordance with the strategies and priorities agreed with the Commission.

For 2014-2020, the EU has allocated more than 460 billion euros to regional spending. This should translate to:

  • helps more than 800,000 businesses
  • better health care for 44 million Europeans
  • flood and fire prevention for 27 million people
  • nearly 17 million people connected to wastewater treatment plants
  • broadband access for 14 million additional households
  • more than 420,000 new jobs
  • training for 3.7 million Europeans
  • new modern schools and daycares for 6.7 million children.

Each country’s contribution to the EU budget depends on the size of its economy. In 2017, 11 EU countries – the richest – paid more into the EU budget than they received in return from EU funds.
However, in return for their larger contribution, these countries also benefit from the many advantages that this money gives them. all EU countries – peace and stability in and around the EU, security, better infrastructure and the freedom to live, work, study and travel all over the bloc.
In addition, cohesion policy invests in every country of the European Union, which means that the richer Member States also receive funding from EU cohesion policy.

In addition to direct investment, richer countries also benefit from the positive effects (“spillovers”) of EU-funded projects implemented in less developed states.

Contracts for the implementation of projects in a less developed region are often awarded to companies in so-called “net contributor” (or “net payer”) countries (that is, countries that pay more to the budget of the country). ‘EU than what they get). For example, a number of construction companies from Germany and Austria have a significant presence in Hungary, Slovakia and the Czech Republic.

Trade is also positively affected. Exports of goods and services are strengthened in richer Member States thanks to the increase in economic activity in beneficiary countries triggered by cohesion policy. It is estimated that for every euro spent in countries benefiting from the policy during the period 2007-2013, 9 euro cents went to countries which do not receive support from the Cohesion Fund.

EU values ​​are at the heart of projects funded by EU cohesion policy. Principles such as gender equality or non-discrimination are even more important in the new legislative package proposed for the post-2020 period. For example, compliance with these principles is mandatory when selecting projects.

The EU funded projects themselves are a way of disseminating EU values ​​on the ground all over Europe, whether these values ​​are specifically mentioned in the projects or not.

Moreover, by building a more prosperous Europe, cohesion policy contributes to strengthening freedom and democracy in our societies.

Errors in EU spending are usually administrative errors when spending rules have not been followed correctly, for example when documents are missing. This is not a fraud and these errors usually do not compromise the end result of a project.

The Commission and the European Court of Auditors report all suspicions of fraud with EU money to the European Anti-Fraud Office (OLAF). These are very few cases per year, out of several hundred that the European Court of Auditors examines each year.

According to OLAF, irregularities in the management of cohesion funds represented barely 1.8% of payments between 2013 and 2017. Only a tiny fraction of these irregularities turned out to be fraudulent.

The percentage of irregularities has been steadily decreasing in recent years. The regulatory provisions for the period 2014-2020 significantly strengthen measures to prevent and further protect the EU budget against irregular spending.

Since almost 75% of EU spending is managed jointly by the European Commission and EU governments, these governments share the responsibility of minimizing errors. The Commission works closely with them to ensure that the money is spent effectively and efficiently.

For its part, if the Commission finds that EU money has been badly spent, it takes action. In 2017, for example, of funds disbursed to beneficiaries across the EU and beyond, € 2.8 billion in funding was either clawed back by the Commission or redirected to other projects.

Several organizations can benefit from regional funding. These include public bodies, some private sector organizations (especially small businesses), universities, associations, NGOs and voluntary organizations. Foreign companies established in the region covered by the operational program concerned can also apply, provided that they comply with European rules on public procurement.

Contact your Managing Authority for more information on who can apply in your area and how.

Project promoters in candidate or potential candidate countries for EU membership should contact the Instrument for Pre-Accession Assistance (IPA).

In most cases, funding is given to projects, so you need to develop a project to be eligible for funding, which you will then receive at different stages of the process.

According to the Court of Auditors, the EU’s independent external auditor, the “absorption rate” for 2007-2013 was 97.2% in 2018. This is a better rate compared to that of the period 2000-2006 (96%).

This cannot happen under the new regulations for the post-2020 period because:

  • direct financial aid to large companies – which relocate the most – are excluded;
  • any EU contribution to the relocation of economic activities from one Member State to another, when it results in the loss of jobs in the first Member State, is prohibited;
  • in the context of state aid, the authorities responsible for the implementation of the program will be obliged to receive from the beneficiary proof that the EU contribution does not support the relocation.

About the author