The next generation of European ESI funds

The formula for calculating the allocation of European ESI funds will be refined with data on youth unemployment, low educational level, reception of migrants and CO2 emissions

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The cohesion policy was born with the European project of the founders. Its first instrument, the Social Fund, was created in 1957, at the same time as the European Economic Community and Euratom. The Treaty of Lisbon added territorial cohesion to economic and social cohesion policy instituted in the 1986 Single Act. Today, cohesion policy represents one third of the European Union budget. It absorbs 325,000 million euros during the seven-year period 2014-2020; and if the Commission’s proposal to reform it prospers, it will have 373,000 million euros to invest in the regions during the next long budget cycle, from 2021 to 2027.

Total allocation of the Cohesion Policy (at 2018 prices) 330.624 mill. €
European Regional Development Fund (ERDF) 200.629 mill. €
  • Job and growth investment
190.752 mill. €
  • European inter-regional cooperation
8.430 mill. €
  • Outermost Regions and Sparsely Populated Areas
1.447 mill. €
Cohesion Fund 41.349 mill. €
  • of which they contribute to the MCE Transport
10.000 mill. €
European Social Fund Plus 88.646 mill €

Brussels presented in May 2018 its proposal for the cohesion policy for 2021-2027, which includes a new method of funds allocation. The reform has been at the center of the conversation during the European Week of Regions and Cities, held in October in Brussels. The Regional Policy Commissioner, Corina Cretu, spoke of a «next generation» of European funds that should boost the competitive specialization of the regions and their transition to a low carbon economy. They will be –Mrs. Cretu promised– resources better adapted to the needs and powers of each region. Local authorities will have more initiative in managing them. Its regulation will be simplified and the administrative burden for those interested will be reduced. They will attend to new needs, such as the integration of migrants. 

The ball is now on the roof of Parliament and the Council. The reform must be integrated into the new multiannual financial framework. The Commission thinks that the agreement must be adopted before the European Elections of 2019. Otherwise, it will happen as in previous transitions between September, when the financing of the projects was interrupted because the budgetary framework was not approved in time.

Specific assignment for Rup

The Commission proposal on the cohesion policy reform for the period 2021-2027 maintains a specific heading in the Regional Development Fund for the nine outermost regions. It is an additional allocation to which these territories will receive by the calculation method common to all regions. The Feder-Outermost for 2021-2027 will amount to 1,447 million euros, if the Commission proposal prospers. They are about 140 million more than those allocated in the multi-year framework from 2014 to 2020.

The distribution formula among the nine outermost regions has an allocation of 30 euros per inhabitant per year. According to this proposal, we offer the reader the following approximation to the scheme of assignments to the nine Rup territories, with a charge of 1,447 million euros (at current prices) of the Feder-Rup:

On the other hand, the outermost regions will participate in the method of territorial location of funds common to all regions of the Union.

The reformed cohesion policy will maintain the per capita income criterion as the cornerstone of the calculation system. The Commission proposal reaffirms the classification into three categories of regions: less developed, with per capita income less than 75% of the EU-27 average; regions in transition, whose per capita income is between 75% and 90% of the European average; and more developed regions, converging by more than 90% with the European average income per capita.

The new distribution formula

Each EU region will receive a minimum and maximum allocation, depending on the category to which it belongs by its level of income.

The allocation will be intensified with the weighting of circumstances such as unemployment, youth unemployment, low educational level, tons of CO2 emitted into the atmosphere or the number of migrants received.

The outermost regions will be especially eligible for the youth unemployment allowance. Some –like the Canary Islands– are around 50% unemployed in this segment of the population.

By refining the territorial allocation formula with new distribution criteria, the European Commission aims to «reduce disparities between regions» and «better reflect reality on the ground,» according to the College of Commissioners in May.

As a result of applying the new allocation method, the Commission has presented a distribution scheme by Member States for the period 2021-2027. Each State receives a quantity of funds from the cohesion policy that is the sum of the allocations for each of its regions.

The allocations proposed by the Commission for the 2021-2027 multi-year cycle are the following:

The investment of the European Union in the outermost regions amounts to 13,300 million euros for the period 2014-2020. This calculation includes the structural funds (Feder and European Social Fund Plus) and the Posei (Program of Specific Options for Distance and Insularity), which is the specific instrument of the agrarian policy in the outermost regions. Approximately half –some 6,100 million euros– were channeled to the agro-industrial and fishing sector, through the Posei.

Reference documents

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