Cohesion policy brings 2.7-fold return – the JRC data in the 8th Cohesion Report

A new analysis carried out with the JRC’s spatial computable general equilibrium model, RHOMOLO, showed that each euro invested in cohesion policy on average generated 2.7 euros of return in GDP fifteen years after the respective policy programme finished.

According to the model, the 2014-2020 cohesion policy programmes raised the GDP of the EU by 0.4 % in 2021.

This emerges from the JRC research that went into the Commission’s 8th Cohesion Report, published today.

The JRC research in the report also shows that:

• house prices have recovered after the Great Recession slump. Only in Croatia, Spain and Italy they were lower in 2018 than in 2012. On average, disposable household income accumulated in just below ten years is required to purchase a house of 100 square meters, with prices generally being lower in rural regions. This trend may be further exacerbated in the future, since the JRC’s LUISA Territorial modelling projects that 3.5 % of the EU’s agricultural land (5.8 million ha) will be abandoned by 2030, with Spain and Poland expected to account for one-third of the abandonment.                
• Tourism is a sector that has suffered a lot in the past couple of years, negatively affecting cohesion.  The COVID-19 pandemic thus halved Europe’s tourism in 2020, as international overnight stays dropped by 70 % and domestic ones fell by 39 % compared to the previous year. Spain, Greece, Malta, and Cyprus were hit the hardest among EU countries, losing 70 % of their overnight stays.
• Using the RHOMOLO model, JRC researchers also identified 140 000 jobs indirectly related to the coal, peat, and oil shale industries, on top of the 200 000 jobs that these sectors provide directly. This highlights the significance of the Just Transition Fund, which aims to smoothen the green transition and make sure that the regions dependent on these industries keep pace with the rest of Europe.
• in terms of broadband, JRC data reveals that 70 % of the EU’s city-dwellers now have of access to internet speed higher than 30 Mbps. The average fixed broadband speed in the EU is 59 Mbps, with Denmark topping the list with 131 Mbps, and Greece lagging behind with 15 Mbps.

This year’s Cohesion Report

Every three years, the Commission publishes a report on the economic, social, and territorial cohesion in the EU, presenting the progress and the EU’s role as a driver for regional development. It analyses the evolution of cohesion in the EU for up to the past years according to a wide range of indicators, regarding, such as prosperity, employment, education levels, and accessibility and governance. On the basis of facts and figures, it offers a snapshot of EU regions’ state of development and the challenges they are facing.

The Report assesses whether disparities between regions have decreased, who is leading and who needs to catch up in innovation, employment or institutional capacity, where regions stand in the green and digital transition and who needs further support. A clearer picture of what has been achieved and what still needs to be done in the 2021-2027 programming period will guide EU policies and investments to help regions with their green and digital transition.

The 8th Cohesion Report shows that in the past three years, Cohesion policy has helped narrow territorial and social disparities between regions in the EU. Thanks to Cohesion funding, the GDP per capita of less developed regions will increase by up to 5% by 2023 and the differences between more and less developed or transition regions will fall by 3.5%.

The report also shows that Cohesion policy provided much needed and very swift support to Member States, regional and local authorities in the midst of economic slowdowns and the worst health crisis of recent times. This has been possible thanks to the flexibility of Cohesion policy and the level of funding that has reached 52% of public investments in less and moderately developed Member States.

Commissioner for Cohesion and Reforms, Elisa Ferreira, said: “The 8th Cohesion Report clearly shows Cohesion policy’s role in fostering convergence and reducing inequalities between countries and regions in the EU. By mapping the areas where Member States and regions need to do more and better, the report allows us to learn from the lessons of the past to be better prepared for the challenges of the future. We need to accelerate the adoption and implementation of Cohesion policy programmes for 2021-2027 so that we can continue supporting regions in recovering from the pandemic and reap the full benefits of the transition to a green and digital Europe”.

Commissioner for Jobs and Social Rights, Nicolas Schmit, added: “The pandemic has increased the risk of inequalities in the EU, and Cohesion policy is one of our main tools to combat this trend and invest in people. It helps us to meet the objective of building a strong social Europe that is inclusive and fair. I am proud that thanks to EU funds, disadvantaged children receive books and computers; young people are offered apprenticeships to get them into the labour market; and vulnerable people have access to a warm meal and care.”

Cohesion policy addresses EU regions’ main challenges

Cohesion policy has made a difference for many EU regions and people. It has helped them invest in a more sustainable and balanced growth, with long term benefits. It has supported physical and digital infrastructure, education and training, SMEs, and the green transition.

More recently, Cohesion policy has helped EU regions face the challenge of the coronavirus pandemic and its consequences.

The two support packages launched in spring 2020 (CRII and CRII+) offered immediate liquidity, made spending more flexible, increased the co-financing rate to 100% and extended the scope of the EU Solidarity Fund.

As part of Next Generation EU, REACT-EU provided an extra €50.6 billion to support the recovery from the pandemic allowing regions and cities to continue investing in their growth while preparing the 2021-2027 programming period.

It has also provided a much-needed safety net to vulnerable persons whose situations have become even more precarious as a result of the pandemic.

Over the next years, Cohesion policy will continue to enhance a fair and sustainable development in all EU regions, while supporting the green and digital transition through:

• A comprehensive and targeted approach to development: funding, governance, consistency and synergies with national policies;
• Place-based, multilevel and partnership-led policies, tailoring its support to most vulnerable territories;
• Continued adaptability to emerging and unexpected challenges.

Next steps

The 8th Cohesion Report will feed the discussions at the upcoming Cohesion Forum (on 17-18 March), which brings together representatives of EU institutions, national, regional and local authorities from all Member States, social and economic partners, non-governmental organisations and academia.

The Forum will debate how Cohesion policy can ensure that no region is left behind in the ongoing structural changes, and that all regions can reap the benefits of the green and digital transitions.