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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 2 Importance of the Cohesion reports Every 3 years Commission analyses state of cohesion and contribution of its policies (Art. 159 of the Treaty) 1 st report (1996) the premises of Agenda nd report: (2001) launched debate on cohesion policy after enlargement 3 rd report (February 2004): presents proposals for reformed cohesion policy after 2007 context

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 3 The 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 structure

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 4 Financial perspectives Promoting Europe's wealth - Policy challenges and budgetary means of the enlarged Union 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 5 Reminder: EU budget Ceiling as regards committments per year: billion for EU25, of which 37 billion for structural actions, at 2004 prices Financial Perspectives Ceiling as regards committments per year: billion for EU27, of which 48 billion for structural actions, at 2004 prices (excluding rural development)

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 6 % of GNI

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 7 Cohesion Policy Is 34% of EU budget ( 336 billion for the period , at 2004 prices) Is about 0.41% of Union GDP (with rural development and fisheries: 0.46%) About 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 8 Categories of expenditure in Structural Funds Context For strengthening administrative capacity

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 9 Observations Observations 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 10 GDP Growth in Cohesion Countries GDP per head growth in Spain, Portugal and Greece between 1998 and 2002 compared to average GDP growth in EU15 GDP Growth in Cohesion Countries GDP per head growth in Spain, Portugal and Greece between 1998 and 2002 compared to average GDP growth in EU15

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 11 Unemployment rates Unemployment rates in EU15, 1996 and 2002 (% of labour force) EU15 10,77,8 Source: Eurostat, LFS 7,4 Cohesion countries 17,09,6 Other Member States9,57,5 Greece9,710,0 Spain22,311,4 Ireland11,94,3 Portugal5,1 Part I Situation and trends Part I Situation and trends

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 12 European cohesion policy or simple budgetary transfer? Impact and added value of Structural Policies Proportion of EU transfers to main beneficiaries spent on imports purchased from other Member States 17,4 % 18,9 % 26,7 % 35,2 % 42,6 % 14,7 % Spain Mezzogiorno New Länder Ireland Portugal Greece

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 13 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 14 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 15 GDP per head PPS 2002 Source: Eurostat, National Accounts Index, EU25 = 100 Part I Situation and trends

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 16 Regional GDP 2001 Part I Situation and trends GDP per head (PPS), 2001 < >= 125 No data Index EU 25 = 100 Source: Eurostat

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 17 Employment rate 2002 < 56 < 56.0 – 60.2 < 60.2 – – 68.6 >= 68.6 No data % of population between Standard deviation = 8.4 Source: Eurostat and NSI EU-27 = 62.4

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 18 Educational level 2002 LOWMEDIUMHIGH % of total population aged < – – – 45.6 >= 45.6 no data EU-27 = 32.4 Standard deviation = 17.7 < – – – >= no data EU-27 = 47.5 Standard deviation = < – – – >= no data EU-27 = Standard deviation = 8.57 Source: Eurostat (LFS)

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 19 Employment hi-tech 2002 Regional competitive factors < 7.45 < 7.45 – 9.55 < 9.55 – – >= No data Sources: Eurostat Average = 10.6 Standard deviation = 4.30

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 20 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 21 The contribution of other Community policies 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 22 The 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 23 A new partnership for Cohesion A 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

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 24 Priorities of the reform (I) First objective: Convergence and competitiveness Priorities of the reform (I) First objective: Convergence and competitiveness 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 Reform of the policy Conclusions

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 25 Priorities of the reform (II) Second objective: regional competitiveness and employment Priorities of the reform (II) Second objective: regional competitiveness and employment Cohesion policy at the service of all other regions in the Union – no community zoning Contains 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 Reform of the policy Conclusions

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 26 Priorities of the reform (III) Third objective: European Territorial co- operation Priorities of the reform (III) Third objective: European Territorial co- operation 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 Reform of the policy Conclusions

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 27 Implementation system: evolution not revolution Implementation system: 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 Reform of the policy Conclusions

Regional Policy EUROPEAN COMMISSION EN Third Cohesion report Third Cohesion report 18/02/2004 EN 28 Proposed timetable Proposed 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 Jan 2007: Implementation begins Next stages