11.04.2024

Convergence: Differences in the EU are narrowing

The Commission has published its 9th Cohesion Report, which shows that Cohesion Policy is fulfilling its mission to reduce economic, social and territorial disparities in the EU.

Major steps have been taken to reduce the disparities that exist between Member States and regions, strengthen the EU's single market and ensure that the EU continues to invest in human capital and sustainable development. Using the full potential of each region strengthens the competitiveness and sustainability of the Union as a whole.

Stimulating economic growth and employment

Cohesion policy is an important driver of sustainable development and economic growth. In the long term, each euro invested in cohesion policy is expected to triple by 2043, which equates to an annual rate of return of around 4%. Thanks to the policy, it is estimated that 2,027 million additional jobs will be created in the EU by 1.3 years, with a large share in sectors related to the environmental and digital transition. Cohesion policy also ensures that the economic development of the regions has a positive impact on the EU single market thanks to trade and investment links.

By the end of 2022, Cohesion Policy funding between 2014 and 2020 had supported over 4.4 million businesses, created 370,000 jobs in these businesses and represented around 13% of total public investment in the EU , reaching 51% for less developed Member States.

2024 marks 20 years since the EU welcomed new member states in its biggest enlargement process to date. During this period, the average GDP per capita of the Member States that have joined since then increased from 52% to almost 80% of the EU average. The gap with the rest of the EU has halved. The unemployment rate in these Member States fell from an average of 13% to 4%.

Investing to make the ecological transition in place

With a budget of €392 billion, Cohesion Policy funding programs for the period 2021-2027 will continue to invest in Europe's competitiveness, the green and digital transition, human capital and social inclusion, as well as physical and digital connectivity, by at the same time, the participation of citizens is strengthened. In the context of persistent labor shortages, cohesion policy will continue to address issues such as youth unemployment and lifelong learning.

Over €100 billion is programmed to support environmental action through projects targeting renewable energy infrastructure, energy efficiency, sustainable transport networks and nature conservation initiatives. The policy will also prioritize research and innovation, enabling regions to develop environmentally friendly technologies.

Cohesion policy has already had a significant impact on making the green transition, allocating €69 billion between 2014 and 2020. Thanks to these investments, 550,000 households have benefited from the increased energy performance of their buildings, thus reducing their bills for energy; 6,000 megawatts of renewable energy capacity has been created (meaning the annual electricity needs of around 4 million EU households are now met); flood protection measures have been put in place for 17 million people; habitat protection measures have been implemented for 3.4 million hectares; and 6.9 million people gained access to improved water supplies.

Today's report highlights that climate change is exacerbating regional inequalities, with a stronger impact on the EU's coastal, Mediterranean and south-eastern regions. Here, costs related to climate change can amount to more than 1% of GDP per year. The transition to a climate-neutral economy must be implemented in a fair and equitable manner, as regions have different capacities to reap the benefits it brings. This is why Cohesion Policy invests to create jobs and opportunities in all regions, to increase resilience to climate change and to mitigate risks.

Making the digital transition happen everywhere

Digitization will lead to increased productivity, innovation and better access to services. However, EU regions have an uneven capacity to use new technologies. Cohesion Policy is investing €14 billion between 2014 and 2020 to bridge the digital divide, both social and geographical, for example by improving access to eGovernment and eHealth services and by promoting broadband deployment in remote and rural areas. The performance of fixed networks has improved in all Member States, and 7.8 million households have benefited from improved broadband.

The 2021-2027 programming period invests significantly in digitalisation: around €40 billion is earmarked for this purpose, including the development of digital skills, digital technologies and access to faster internet connections in all EU regions.

At the same time, the policy will help people acquire the skills they need to take advantage of the changes brought about by the environmental and digital transition, thanks to €45 billion dedicated to education and training.

A flexible cohesion policy that delivers in times of crisis

Cohesion policy provides a stable source of public investment in times of budgetary constraints. While fulfilling its long-term objectives of investing in structural, growth-enhancing measures to support development, jobs and support regions in the context of demographic change and the environmental and digital transition, Cohesion Policy has also proven to be a flexible tool to support Member States and regions in times of crisis.

This includes the rapid mobilization of resources to meet short-term needs during the health crisis caused by COVID-19. With the two support packages launched in spring 2020, Cohesion Policy has channeled €23 billion to fight the pandemic, in particular to support the purchase of ventilators, vaccines and medicines for hospitals, the recruitment of additional health workers and the provision of home care services for vulnerable groups. As the crisis had a significant impact on SMEs, Cohesion funding also offered urgent financial support for investments in IT equipment to ensure that they could adapt to the 'new normal'. As a result of this support, all categories of regions returned to their 2019 GDP levels just two years after the health crisis caused by COVID-19, in contrast to the financial crisis of 2008, when some regions took more than 10 years.

Cohesion policy has also provided funding and flexibility to help regions host people fleeing Russia's war of aggression against Ukraine. This funding supported emergency measures such as the construction of reception centers and shelters and investment in mobile hospitals and sanitation. Support was also provided in the areas of employment, education and social inclusion, such as language courses, psychological support and access to childcare and health services.

Learning lessons for the future

Although convergence is taking place, the report states that some challenges remain. These include sub-national differences between large metropolitan areas and other regions, as well as regions that fall into the "development trap" and that are lagging behind. Demographic changes are adding to these challenges, as many regions face a declining working-age population, an exiting younger population and difficulties in retaining talent. This shows how important it is to support regional cohesion and invest in jobs and opportunities for Europe's next generation.

Drawing lessons from the implementation of cohesion policy, while taking into account the experience of other instruments such as the Recovery and Resilience Mechanism, the Communication on the 9th Cohesion Report states the need to consider how to improve the policy structure, in order to better achieve the objectives of the Treaty. Some aspects include addressing emerging economic dynamics and new imbalances, tailoring support to regional needs, faster implementation, further simplification, stronger results orientation and linkage to reforms, and introducing flexibilities for responding to unforeseen events.

The first discussion of the findings of the 9th Cohesion Report will take place during the upcoming 9th Cohesion Forum on 11-12 April 2024 in Brussels. Stakeholder representatives in national, regional and local authorities will consider how cohesion policy can continue to ensure that no region is left behind in the ongoing structural changes.

General information

Every three years the Commission publishes its Cohesion Report; a report assessing the current state of economic, social and territorial cohesion in the EU, presenting the progress made and lessons learned and showing the role of the EU as a driver of regional development.

The report is data-driven: it analyzes the development of cohesion according to a wide range of indicators, such as prosperity, employment, education levels and governance.

A clearer picture of what has been achieved and what still needs to be done will guide EU policies and investments to help regions achieve balanced and sustainable long-term growth.