1. Third Cohesion report February 2004
Convergence, Competitiveness and Co-operation

2. Importance of the Cohesion reports
December 2004 EN
Importance of the Cohesion reports
Every 3 years the Commission analyses the state of cohesion and the contribution EU policies have made (Art of the Treaty)
1st report (1996) the starting point for Agenda 2000
2nd report: (2001) launched debate on cohesion policy after enlargement
3rd report (February 2004): presented proposals for reformed cohesion policy after 2007
context

3. The report comprises 4 sections
December 2004 EN
The report comprises 4 sections
Analysis of socio-economic situation and trends in the regions and factors of competitiveness
The contribution of national policies to cohesion
The contribution of community policies
The impact of Cohesion Policy
structure

4. Financial perspectives 2007-2013
December 2004 EN
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

5. December 2004 EN
Reminder:
EU budget Ceiling as regards commitments per year: € billion for EU25, of which € 37 billion for structural actions,
at 2004 prices
Financial Perspectives Ceiling as regards commitments per year: € billion for EU27, of which € 48 billion for structural actions,
at 2004 prices (excluding rural development)

6. December 2004 EN
% of GNI

7. Proportions of expenditure
December 2004 EN
Cohesion Policy
represents 34% of EU budget (€ 336 billion for the period , at 2004 prices)
represents about 0.41% of Union GDP (with rural development and fisheries: 0.46%)
split between current and new Member States (approx.)
More than ¾ of the budget for regions and Member States lagging behind in development
Context
Proportions of expenditure

8. Categories of expenditure in Structural Funds
December 2004 EN
Categories of expenditure in Structural Funds
Context
For strengthening administrative capacity

9. Part 1 situation and trends: some results
December 2004 EN
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

10. GDP Growth in Cohesion Countries
December 2004 EN
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

11. Unemployment rates in EU15, 1996 and 2002 (% of labour force)
December 2004 EN
Unemployment rates
Unemployment rates in EU15, 1996 and 2002 (% of labour force)
1996
2002
EU15
10,7
7,8
Part I
Situation and
trends
Cohesion countries
17,0
9,6
Greece
9,7
10,0
Spain
22,3
11,4
Ireland
11,9
4,3
Portugal
7,4
5,1
Other Member States
9,5
7,5
Source: Eurostat, LFS

12. European cohesion policy or simple budgetary transfer?
December 2004 EN
European cohesion policy or simple budgetary transfer?
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 % 10 20 30 40 50
Greece
Impact and added value of Structural Policies
Portugal
Ireland
New Länder
Selon les États membres, 15 à +de 40% des ressources structurelles allouées aux régions Objectif 1 retournent - via les importations - vers les régions les plus riches de l’Union (D, F, UK, B, …)
Mezzogiorno
Spain

13. December 2004 EN
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

14. December 2004 EN
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

15. Part I Situation and trends
December 2004 EN
GDP per head PPS 2002
Index, EU25 = 100
Part I Situation and trends
Source: Eurostat, National Accounts

16. Part I Situation and trends
December 2004 EN
Regional GDP 2001
GDP per head (PPS), 2001
Part I Situation and trends
< 50
>= 125
No data
Index EU 25 = 100
Source: Eurostat

17. Employment rate 2002 % of population between 15-64 December 2004 EN
< 56
< 56.0 – 60.2
< 60.2 – 64.4
64.4 – 68.6
>= 68.6
No data
EU-27 = 62.4
Standard
deviation = 8.4
Source: Eurostat and NSI

18. Educational level 2002 % of total population aged 25-64 LOW MEDIUM
December 2004 EN
Educational level 2002
% of total population aged 25-64
LOW
MEDIUM
HIGH
< 19.2
19.2 – 28.0
28.0 – 36.8
36.8 – 45.6
>= 45.6
no data
EU-27 = 32.4
Standard deviation = 17.7
< 35.05
35.05 – 43.35
43.35 – 51.65
51.65 – 59.95
>= 59.95
no data
EU-27 = 47.5
Standard deviation = 16.59
< 13.65
13.65 – 17.95
17.95 – 22.25
22.25 – 26.55
>= 26.55
no data
EU-27 = 20.01
Standard deviation = 8.57
Source: Eurostat (LFS)

19. Regional competitive factors
December 2004 EN
Employment hi-tech 2002
Regional competitive factors
< 7.45
< 7.45 – 9.55
< 9.55 – 11.65
11.65 – 13.75
>= 13.75
No data
Average = 10.6 Standard deviation = 4.30
Sources: Eurostat

20. The contribution of national policies
December 2004 EN
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

21. The contribution of other Community policies
December 2004 EN
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

22. The impact of Cohesion policy
December 2004 EN
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

23. A new partnership for Cohesion
December 2004 EN
A new partnership for Cohesion
In respect of the Union's priorities
In respect of enlargement and the increased responsibilities of cohesion policy
Covers all States, regions and towns – greater subsidiarity
Reform of the policy
Conclusions

24. December 2004 EN
Priorities of the reform (I) First objective: Convergence and competitiveness
Regions with 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

25. December 2004 EN
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-based society
accessibility and services of general interest
environment and risk prevention
would include responsibility for cities being delegated to the regions, no specific community initiative (URBAN+)
(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

26. December 2004 EN
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 current zones of INTERREG III B)
Interregional co-operation (also mainstream programmes)
External cross-border co-operation – linked to the new European neighbourhood instrument, including multi-annual programming and just one financial instrument
Budget: around 4 % of the total
Reform of the policy
Conclusions

27. Implementation system: evolution not revolution
December 2004 EN
Implementation system: evolution not revolution
Confirmation of the principles which made cohesion policy a success –multi-annual programming, partnership, evaluation, co-financing, shared responsibility
Retention of n+2 rule and system of advances
Simplification: reduction in number of financial instruments: 6 to 3 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

28. Proposed timetable Next stages
December 2004 EN
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
1 January 2007: Implementation begins
Next stages