1. EU Cohesion Policy: Investing in the real economy European Commission, DG Regional Policy
December 2008
REGIO D2 – Thematic coordination, innovation 1

2. Role of Cohesion Policy in the current financial crises
347 billion euro for the period investing in the real economy
Important role in restoring confidence by supporting priority infrastructure, business capacity and human potential
Powerful instrument for stability
With the overall budget of 347 billion euro for the period, Cohesion policy plays an important role in restoring confidence in the real economy by supporting investments in priority infrastructure, productive capacities of businesses and in human capital potential. These investments can boost short term internal demands while preserving the sustainable focus in the medium term.
Therefore in the current financial crisis and upcoming economic downturn, cohesion policy is powerful instrument of stability as it provides secure source of financing over the seven year programming period and it invests into coherent strategies in the medium to long term upon which the regional and local partners can rely.
Some 70% of the total budget (or 250 billion euro) is allocated to priorities of the Lisbon agenda. These priorities do not disappear due to financial crisis, in contrary, they are even more relevant in the current situation. Investing in innovation and knowledge economy will ensure that the European economies become more competitive in the medium term when Europe returns on a growth path. The Recovery package of the Commission provides for rapid actions to address the immediate needs in economies while keeping the long-term priorities of the Lisbon strategy for Growth and Jobs.
December 2008
REGIO D2 – Thematic coordination, innovation

3. Accelerate implementation by maximising existing tools
Increasing the capacity of JASPERS ("Joint Assistance in Supporting Projects in European Regions“) to accelerate implementation of major projects
Promoting entrepreneurship (JEREMIE “Joint European Resources for Micro to Medium Enterprises", micro-credits)
Enhancing co-operation with the EIB and EIF
Adapting programmes to focus more on areas with growth potential
Simplifying the delivery mechanism
The challenge we are facing is to find synergies and explore the possibilities that are offered under the current cohesion programmes and optimise the allocation of resources to address the immediate needs and speed up the implementation on the ground.
I propose a set of concrete actions which can be done rather quickly without a need to modify the legislative framework:
Increase capacity of Jaspers: in order to address the bottleneck and lack of capacities in preparation of major projects in EU-12, the Commission will, together with EIB and other partners, significantly expand the possibility of use of Jaspers facility. From 2009 this measure will enable to employ totally more than 70 experts to assist Member States in the technical preparation of major projects.
Promoting entrepreneurship and enhancing co-operation with the EIB and EIF : to encourage and assist Member States and regions in using and benefiting from the possibilities offered by the JEREMIE initiative for SMEs, including guarantee, debt and equity instruments, as well as to strengthen the business environment for micro-credits. Early next year two networking platforms for exchange of information, guidance and good practice will be launched in order to facilitate and enhance implementation of both JEREMIE and JESSICA initiative.
Adapt priorities and objectives of the existing programmes: We are in close dialogue with the MS to identify how the existing programmes can be further exploited or adapted to address the immediate needs. The current legal framework already provides important flexibility, for example, European contribution to projects can go up to 100% provided that the average co-financing rate set in the regulation and in the programmes for the whole programming period is respected.
We also recommend MS to use the occasion and simplify the delivery mechanisms of the programmes as an important pre-requisite for timely delivery.
December 2008
REGIO D2 – Thematic coordination, innovation

4. Mobilisation of Cohesion Policy resources: the legislative package
Increase in advances with extra EUR 6.25 billion cash flow to Member States
In parallel to exploring the possibilities under the existing legal framework, the Commission adopted yesterday proposal for limited but important amendments to legislative framework in order to facilitate mobilisation of the European resources and with a view to ensure the maximum efficiency to our common goal for more growth and jobs.
The amendments relate to 4 areas:
Increase in advances to programmes: in order to increase cash flow to the national, regional and local authorities (modification of Article 82 of General Regulation) These steps would provide immediate cash flow of 6,25 billion euro in 2009 for public investments within the financial envelope agreed for each Member State for the period.
For EU 12 Member States increase by 2% in 2009 (=additional EUR 2.29 billion, altogether with already foreseen 2009 advances almost EUR 7 billion in 2009, including the CF advances)
for EU-15 Member States New tranche of 2,5% in 2009 (= additional EUR 3.8 billion, together with CF advances for ES, EL and PT advances will amount billion in 2009
These resources which would be made available as soon as the regulation is adopted by the Council and EP and should be rapidly transferred to the beneficiaries.
December 2008
REGIO D2 – Thematic coordination, innovation

5. Mobilisation of Cohesion Policy resources: the legislative package
Accelerate intermediate payments to major projects and state aid schemes
Simplifying eligibility of expenditure
Facilitating the management of financial engineering instruments
2) Accelerate intermediate payments to major projects: it is proposed to allow also expenditure for major projects not yet adopted by the Commission to be declared and reimbursed Naturally, the programme authorities will still have to ensure that the expenditure is compliant with all the Community and national rules.
Simplification of the treatment of advances paid to the beneficiaries under the state aid schemes. In practice it means that the state aid advances paid to the beneficiaries could reach 100% of the aid, while respecting the other existing conditions (of course the advances have still to be subject to a bank guarantee and they have to be covered by expenditure paid by beneficiaries in project within the eligibility period and supported by accounting document).
3) Simplification of eligibility of expenditure as important simplification of financial management of projects and to decrease unnecessary burden to beneficiaries, the Commission proposes to declare overhead costs on a flat rate basis for all the Funds.
4) Facilitate management of financial engineering instruments. In order to further facilitate the contracting with EIB and EIF direct contract can be awarded to the EIB or EIF. In addition, in- kind contributions, e. g. land for urban regeneration, could be declared as eligible expenditure in all cases, either where creating or contributing to a financial engineering instrument.
December 2008
REGIO D2 – Thematic coordination, innovation

6. New initiatives
Extension of the final eligibility date for implementation under the period
More action in support in energy efficiency and renewable energies in housing
I am also aware that liquidity problems in some MS may be putting at risk the delivery on time of outputs set for the programmes in the period. Thus, I invite MS to request officially an extension in the eligibility period in those cases in which there are significant change in the socio-economic situation and the labour market, as established in the Regulation. The Commission will look favourably into such a request given the exceptional situation created by the current financial and economic crisis. The extension will be of max 6 months.
In addition to the proposal adopted by the Commission yesterday, in the coming days I will propose modification of the legal provision relating to ERDF to enlarge scope of actions in energy efficiency and renewable energies in housing
December 2008
REGIO D2 – Thematic coordination, innovation

7. Maintaining agreed priorities while optimising resources
Conclusions
Maintaining agreed priorities while optimising resources
Legislative changes to be adopted by the Council and the EP before end of June 2009
Communication on “Cohesion Policy investing in the real economy” will provide concrete recommendations
Current financial crisis has hit MS economies hard. MS have our full support in finding the ways to optimise the allocation of resources in the existing programmes while maintaining our long-term priorities for more and better growths and jobs. MS will emerge stronger when sticking to these priorities once the current crisis begins to recede.
I also strongly believe that the legislative changes proposed will largely facilitate the implementation of the programmes and help boost so much needed public investments.
I expect that the modifications will be adopted by the Council following the assent of the European Parliament before end of June 2009.
The Commission will also publish a Communication on 16/12 on “Cohesion policy investing in the real economy” that will provide more concrete recommendations to MS on how to accelerate investments through cohesion policy interventions
December 2008
REGIO D2 – Thematic coordination, innovation

8. Small Business Act A comprehensive policy framework
EU and national level actions
10 principles to guide EU and national policies
Specific EU proposals
State aid general block exemption
European Private Company statute
Amendment of late payment Directive
VAT proposal - lower rates for local services
December 2008
REGIO D2 – Thematic coordination, innovation

9. Small Business Act Create an entrepreneurship environment
In case of bankruptcy => a second chance to honest entrepreneurs
“Think Small First” when designing rules
Responsive public administration
Adapt policy tools to SME needs: procurement, state aid
Access to finance, timely payments
Opportunities of the Single Market
Upgrading skills in SMEs and all forms of innovation
Turn environmental challenges into opportunities for SMEs
Support SMEs to benefit from the growth of markets
December 2008
REGIO D2 – Thematic coordination, innovation