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Once the EU's 2014-2020 budget is confirmed by the European Parliament and EU member states, Cohesion Policy will invest € 325 billion in Europe's regions and cities to deliver the EU-wide goals of growth and jobs, as well as tackling climate change and energy dependence. Taking into account the national contribution of member states, and the leverage effect of financial instruments, the overall impact is likely to be more than 500 billion euros. The reform of Cohesion Policy will ensure maxim impact for the investments, adapted to individual needs of regions and cities. Key elements of the reform are:
1. Investing in all EU regions and adapting the level of support and the national contribution (co-financing rate) to their level of development:
- Less Developed regions (GDP < 75% of EU-27 average)
- Transition regions (GDP 75% to 90% of EU-27 average)
- More Developed regions (GDP > 90% of EU-27 average)
2. Targeting resources at key growth sectors: investments under the European Regional Development Fund (ERDF) will be concentrated on 4 key priorities of EU relevance: innovation and research, the digital agenda, support for small and medium sized businesses (SMEs) and the low-carbon economy depending on the category of region (Less Developed: 50%, Transition: 60%, and More Developed: 80%). Around € 100 billion will be dedicated to these sectors, of which at least € 23 billion for will support the low-carbon economy (energy efficiency and renewable energies). On this, there are there are separate obligations to dedicate ERDF resources (Less Developed regions: 12%, Transition regions 15% and More Developed regions: 20%).
Around € 66 billion will be focused on priority Trans-European transport links and key environmental infrastructure projects through the Cohesion Fund.
Through the ESF, Cohesion Policy will provide a significant contribution to EU priorities in the field of employment, for example through training and life-long learning, education and social inclusion. The new Youth Employment Initiative linked to the ESF will provide a specific focus on young people.
3. Fixing clear, transparent, measurable aims and targets for accountability and results: Countries and regions will have to announce upfront what objectives they intend to achieve with the available resources and identify precisely how they will measure progress towards those goals. This will allow regular monitoring and debate on how financial resources are used. It will mean additional funds can be made available to well-performing programmes (through a so called "performance reserve") towards the end of the period.
4. Introducing conditions before funds can be channelled to ensure more effective investments. For example, "smart specialisation" strategies to identify particular strengths, business friendly reforms, transport strategies, measures to improve public procurement systems or compliance with environmental laws are necessary preconditions.
5. Establishing a common strategy for more coordination and less overlap: a Common Strategic Framework provides the basis for better coordination between the European Structural and Investment Funds (ERDF, Cohesion Fund and ESF as the three funds under Cohesion Policy as well as the Rural Development and Fisheries funds). This also links better to other EU instruments like Horizon 2020 and the Connecting Europe Facility.
6. Cutting red tape and simplifying the use of EU investments: through a common set of rules for all ESI Funds as well as simpler accounting rules, more targeted reporting demands and more use of digital technology (“e-cohesion”).
7. Enhancing the urban dimension of the policy by earmarking a minimum amount of resources under the ERDF to be spent for integrated projects in cities - on top of other spending in urban areas.
8. Reinforcing cooperation across borders and making the setting up of more cross-border projects easier. Also to ensure macro-regional strategies like Danube and Baltic Sea are supported by national and regional programmes.
9. Ensuring that Cohesion Policy is fully coherent with the wider EU economic governance. Programmes will have be consistent with National Reform Programmes and contribute to address the relevant reforms identified in the European Semester. If necessary, the Commission can ask Member States – under the so-called "macro-economic conditionality" clause - to modify programmes to support key structural reforms or, as a last resort, it can suspend funds if economic recommendations are repeatedly and seriously breached.
10. Encouraging the increased use of financial instruments to give SMEs more support and access to credit. Loans, guarantees and equity/venture capital will be supported by EU funds through common rules for all funds, a broadening of their scope and providing incentives (higher co-financing rates). The emphasis on loans rather than grants should improve project quality and discourage subsidy dependence.
Author: European Commission
