A quick Guide to Regional Policy Its origins and purpose

What is regional policy ? Article 158 of the Treaty states that: "in order to strengthen its economic and social cohesion, the Community shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions or islands, including rural areas" also called: –cohesion policy –structural policy –refers to the Structural Funds –or "EU money"!

Origins Origins Treaty of Rome set up: CAP European Social Fund No specific provision for regional policy or regional fund Why? Common market thought to be enough Strong economic growth in 1950s and 1960s

Why change? Recession of 1970s highlighted development gaps Regional disparities increased with accession of: –1973: UK, Ireland and Denmark –1981: Greece –1986: Spain and Portugal

Why is regional policy important?  Socio-economic cohesion considered to be a priority for the European Union  Second most heavily funded sector in the Union after the Common Agricultural Policy.  From less than 5% of 1975 budget to 35% of 1999 budget Now moving towards 40%, especially if you add research  € 233 billion. (approximately £ 160 billion)  Visible sign of the EU  Promotes convergence (helping poorer regions develop)

Economic Rationale Effects of single market on regional disparities Migration to rich areas not poor Less mobility in Europe Social costs

Political rationale need to legitimise the new economic and political order fiscal and monetary policy seen as not being enough "sweetener" for Member State accession

Greater differences between regions and Member States:  regional disparity levels are higher than national disparities but are also falling  Over ¼ of EU-27 population lives in regions below 75% of EU average GDP  13 Member States of EU-27 have GDP below 90% of average – 21% of population

EU spending

Regional and Cohesion Policy Three new objectives Convergence (like old Objective 1: greater scope) 81.9% Competitiveness (old Objective 2&3, tie to Lisbon) 15.7% Territorial co-operation (former Interreg programme and RFEC networks to test ideas) 2.4%

EU Structural Funds The Structural and Cohesion Funds The European Council of December 2005 agreed a total Structural Funds budget of €308 billion for As a result of the agreement, the UK will continue to receive substantial Structural Funds receipts, amounting to €9.4 billion (2004 prices), for

The Neighbourhood Policy of the EU Partners: -Russia, Ukraine, Belarus and Moldova -Mediterranean partners: Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, as well as the Palestinian Authority -inclusion of Armenia, Azerbaijan and Georgia National Action Plans (3-5 years): -Alignement with EU standards -Co-operation on EU polices -Dialogue on counter-terrorism -Participation in EU Programmes -Co-operation on JHA

Regional Policy – Objective 'Regional Competitiveness and Employment Red – Convergence Criteria Blue = Competitive – bring in regions already over 75% Pink = Statistically affected regions

Where are the new industries?

Priorities of Regional and Cohesion Policies –

R and D –

 125 Index, EUR-27 = 100 <50 Regional Disparities in EU27 GDP per head in % in PPP (2002)

40% to 49,9% of EU population (155→224 Mio.) in eligible areas (Obj. 1 & 2) 233 bn. Euro (one third of the EU budget) EU Regional Policy

New Budget Structure: Regional Policy gains 2006 vs in %

Convergence- Objective: Regions below 75% of EU25 GDP Average Regions 124 million inhabitants 27.3%of EU population Allocation: EUR bn

Conclusions Does it work? –across Member States yes –within Member States less What will enlargement do (Poland 40 million, Spain 40 million) –from 15 to 25 Member States –new Member States are much poorer –pressure on budget Causes friction between member- states –Poor vs. rich –South vs. North –East vs. West