EN Regional Policy EUROPEAN COMMISSION Third Cohesion report February 2004 Convergence, Competitiveness and Co-operation

ENENRegional Policy

EUROPEAN COMMISSION

Third Cohesion report Third Cohesion report February 2004February 2004

Third Cohesion report Third Cohesion report February 2004February 2004

Convergence, Competitiveness and Co-operation

Regional Policy

EUROPEAN COMMISSION 18/02/2004EN

ENEN

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Importance of the Cohesion reportsImportance of the Cohesion reports

• Every 3 years Commission analyses state of cohesion and contribution of its policies (Art. 159 of the Treaty)

•1st report (1996) the premises of 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 factors of competitiveness

2. The contribution of national policies to cohesion

3. The contribution of community policies

4. The impact of Cohesion Policy

structurestructure

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Financial perspectives 2007-2013Financial perspectives 2007-2013

Promoting Europe's wealth - Policy challenges and budgetary means of the enlarged Union 2007-2013 Keeping the current expenditure ceiling (1.24% of the Union's GNI)

Commission proposal: commitments 1.22% and 1.14% for payments

A distinct change in the financial perspectives

Four political priorities for the Union:

• Sustainable development – competitiveness, cohesion (for growth and employment)

• conservation and management of natural resources

• Citizenship, freedom, security and justice

• The EU – a global partner

Financial aspects

Financial aspects

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Reminder:

EU budget 2000-2006 Ceiling as regards committments per year: € 108.5 billion for EU25, of which € 37 billion for structural actions, at 2004 prices

Financial Perspectives 2007-2013Ceiling as regards committments per year: € 146.4 billion for EU27, of which € 48 billion for structural actions,at 2004 prices (excluding rural development)

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0

10000

20000

30000

40000

50000

60000

70000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0,00

0,05

0,10

0,15

0,20

0,25

0,30

0,35

0,40

Rural development deductions

Expenditure in EU15 (left axis)

Expenditure in N12 (left axis)EUR million (at 1999 prices)

BRU4711

Expenditure on cohesion policy, 2000-2013

Source: DG REGIO

Expenditure in EU15 as % of GNI in EU27 (right axis)

Expenditure in N12 as % of GNI in EU27 (right axis)

% of GNI% of GNI

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Cohesion PolicyCohesion Policy

• Is 34% of EU budget (€ 336 billion for the period 2007-2013, at 2004 prices)

• Is about 0.41% of Union GDP (with rural development and fisheries: 0.46%)

• About 50-50 between current and new Member States

• More than ¾ of the budget for regions and Member States lagging behind in development

Context Proportions of

expenditure

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Categories of expenditure in Structural Categories of expenditure in Structural FundsFunds

Categories of expenditure in Structural Categories of expenditure in Structural FundsFunds

Context

Other2%

Human resources23%

Productive environment

34%Infrastructure

41%

4,3 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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ObservationsObservations

• Significant convergence of cohesion countries

• Positive trend in Obj. 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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-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

GDP Growth in Cohesion CountriesGDP Growth in Cohesion CountriesGDP per head growth in Spain, Portugal and Greece between 1998 and 2002 GDP per head growth in Spain, Portugal and Greece between 1998 and 2002

compared to average GDP growth in EU15 compared to average GDP growth in EU15

GDP Growth in Cohesion CountriesGDP Growth in Cohesion CountriesGDP per head growth in Spain, Portugal and Greece between 1998 and 2002 GDP per head growth in Spain, Portugal and Greece between 1998 and 2002

compared to average GDP growth in EU15 compared to average GDP growth in EU15

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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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European cohesion policy or simple European cohesion policy or simple budgetary transfer?budgetary transfer?

Impact and added value of Structural

Policies

Proportion of EU transfers to main beneficiaries spenton imports purchased from other Member States

17,4 %

18,9 %

26,7 %

35,2 %

42,6 %

14,7 %

0 10 20 30 40 50

Spain

Mezzogiorno

New Länder

Ireland

Portugal

Greece

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Impact of enlargement Impact of enlargement

• 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 in euros

Part I

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Impact of enlargement Impact of enlargement

• Population in the convergence objective goes from 84 million to 123 million

• Development gap between regions doubles: average GDP in Obj. 1 is 69%: new MS 46%

• Employment rate in EU 15 grew from 60% to 64% (1996 – 2002). In NMS 10 it was 56%: (59% in 1999)

Part I

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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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Educational level 2002Educational level 2002

LOW MEDIUM HIGH

% of total population aged 25-64

< 19.219.2 – 28.028.0 – 36.836.8 – 45.6>= 45.6 no data

EU-27 = 32.4Standard deviation

= 17.7

< 35.0535.05 – 43.3543.35 – 51.6551.65 – 59.95>= 59.95 no data


= 16.59

< 13.6513.65 – 17.9517.95 – 22.2522.25 – 26.55>= 26.55no data


= 8.57

Source:Eurostat (LFS)

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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

• National budgets are 47% of GDP on average

• The Cohesion budget is 0.43% 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 – about 80% of the total

Part II

Different approaches to

promote growth

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The contribution of other Community The contribution of other Community policiespolicies

• Aim at specific objectives set out in the treaty

• Do not always have cohesion as an objective

• But there have been improvements

• A need to strengthen coherence between these policies and the objective of cohesion, especially for the new MS.

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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A new partnership for CohesionA new partnership for Cohesion

1. In respect of the Union's priorities

2. In respect of enlargement and the increased responsibilities of cohesion policy

3. Covers all States, regions and towns – greater subsidiarity

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

• 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)

• Special accessibility programme for OMR

• Budget: about 78% of the total


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 zoningContains two elements:• first element: regional competitiveness

- innovation and the knowledge society- accessibility and services of general interest- environment and risk prevention

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

• second element: employment - based on European Employment Strategy- adaptability of the workforce, - job creation, - accessibility to the labour market for vulnerable persons

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

Makes possible harmonious and balanced integration of the whole Union

• 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, including multi-annual programming and just one financial instrument

Budget: around 4 % of the total


Conclusions

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

• Confirmation of the principles which made this policy a success –multi-annual programming, partnership, evaluation, co-finance, shared responsibility Retention of n+2 rule and system of advances

• Simplification: reduction in number of financial instruments: 3 not 6 and single fund programmes only Clearer division of responsibilities with the sustainable development policy Reducing the stages of programming (policy document from each MS, operational programmes) Simplification of financial management (priority axes) Controls: introduction of proportionality, contracts

• More strategic approach: Political discussion in Council, EP opinion, Commission mandate, annual report presented to spring Council


Conclusions

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Proposed timetableProposed timetable

10 and 11 May 2004: European cohesion forum, Brussels

July 2004: Commission adopts the legislative packet

End 2005: Decision by Council and European Parliament

2006: Preparation of programmes for period 2007-2013

1 Jan 2007: Implementation begins

Next stages

Documents

EN Regional Policy EUROPEAN COMMISSION Third Cohesion report February 2004 Convergence, Competitiveness and Co-operation