EUROPEAN COMMISSION Regional Policy 01012003 EN EN Third

EUROPEAN COMMISSION Regional Policy 01/01/2003 EN EN Third Cohesion report February 2004 Convergence, Competitiveness and Co-operation

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report context 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. 159 of the Treaty) • 1 st report (1996) the starting point for Agenda 2000 • 2 nd report: (2001) launched debate on cohesion policy after enlargement • 3 report (February 2004): presented proposals for reformed cohesion policy after 2007 rd 2

EUROPEAN COMMISSION Regional Policy December 2004 EN EN The report comprises 4 sections Third Cohesion report 1. Analysis of socio-economic situation and trends in the regions and factors of competitiveness 2. The contribution of national policies to cohesion structure 3. The contribution of community policies 4. The impact of Cohesion Policy 3

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Financial aspects 4 December 2004 EN Financial perspectives 2007 -2013 Promoting Europe's wealth - Policy challenges and budgetary means of the enlarged Union 2007 -2013 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

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report December 2004 EN Reminder: EU budget 2000 -2006 Ceiling as regards commitments per year: € 108. 5 billion for EU 25, of which € 37 billion for structural actions, at 2004 prices Financial Perspectives 2007 -2013 Ceiling as regards commitments per year: € 146. 4 billion for EU 27, of which € 48 billion for structural actions, at 2004 prices (excluding rural development) 5

EUROPEAN COMMISSION Regional Policy December 2004 EN EN Third Cohesion report 6 % of GNI

EUROPEAN COMMISSION Regional Policy EN December 2004 EN Cohesion Policy Third Cohesion report • represents 34% of EU budget (€ 336 billion for the period 2007 -2013, at 2004 prices) Context • represents about 0. 41% of Union GDP (with rural development and fisheries: 0. 46%) Proportions of expenditure • split 50 -50 between current and new Member States (approx. ) • More than ¾ of the budget for regions and Member States lagging behind in development 7

EUROPEAN COMMISSION Regional Policy EN December 2004 EN Categories of expenditure in Structural Funds Third Cohesion report Context For 2007 -2013 + strengthening administrative capacity 8

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Part 1 situation and trends: some results 9 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

EUROPEAN COMMISSION Regional Policy December 2004 EN 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 EU 15 Third Cohesion report 10

December 2004 EN EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Part I Situation and trends Unemployment rates 1996 -2001 Unemployment rates in EU 15, 1996 and 2002 (% of labour force) 1996 2002 EU 15 Cohesion countries Greece Spain Ireland Portugal Other Member States Source: Eurostat, LFS 11 10, 7 7, 8 17, 0 9, 6 9, 7 10, 0 22, 3 11, 4 11, 9 4, 3 7, 4 5, 1 9, 5 7, 5

December 2004 EN EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Impact and added value of Structural Policies European cohesion policy or simple budgetary transfer? Proportion of EU transfers to main beneficiaries spent on imports purchased from other Member States 42, 6 % Greece 35, 2 % Portugal 26, 7 % Ireland 18, 9 % New Länder 17, 4 % Mezzogiorno 14, 7 % Spain 0 12 10 20 30 40 50

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Part I 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 13

EUROPEAN COMMISSION Regional Policy EN December 2004 EN Impact of enlargement Third Cohesion report • Population in the convergence objective goes from 84 million to 123 million Part I • 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) 14

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report GDP per head PPS 2002 Index, EU 25 = 100 Part I Situation and trends 15 Source: Eurostat, National Accounts December 2004 EN

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Part I Situation and trends < 50 50 - 75 75 - 90 90 - 100 - 125 >= 125 No data Index EU 25 = 100 Source: Eurostat 16 Regional GDP 2001 GDP per head (PPS), 2001 December 2004 EN

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Employment rate 2002 % of population between 15 -64 < 56. 0 – 60. 2 < 60. 2 – 64. 4 – 68. 6 >= 68. 6 No data EU-27 = 62. 4 Standard deviation = 8. 4 17 Source: Eurostat and NSI December 2004 EN

December 2004 EN EUROPEAN COMMISSION Regional Policy EN Educational level 2002 % of total population aged 25 -64 Third LOW Cohesion report < 19. 2 – 28. 0 – 36. 8 – 45. 6 >= 45. 6 no 18 data EU-27 = 32. 4 Standard deviation = 17. 7 MEDIUM < 35. 05 – 43. 35 – 51. 65 – 59. 95 >= 59. 95 no data EU-27 = 47. 5 Standard deviation = 16. 59 HIGH < 13. 65 – 17. 95 – 22. 25 – 26. 55 >= 26. 55 no data EU-27 = 20. 01 Standard deviation = 8. 57 Source: Eurostat (LFS)

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Employment hi-tech 2002 Regional competitive factors < 7. 45 – 9. 55 < 9. 55 – 11. 65 – 13. 75 >= 13. 75 No data Average = 10. 6 Standard deviation = 4. 30 Sources: Eurostat 19 December 2004 EN

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report December 2004 EN The contribution of national policies • National budgets are 47% of GDP on average • The Cohesion budget is 0. 43% of GDP Part II Different approaches to promote growth 20 • 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

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report 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 Part III Need to promote coherence of policies 21 • But there have been improvements • A need to strengthen coherence between these policies and the objective of cohesion, especially for the new MS.

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report December 2004 EN The impact of Cohesion policy • Increase public and private investment in beneficiary regions (growth) • Contribute to increasing GDP (convergence) Part IV Mobilising resources to promote growth • Create jobs and maximise potential of human resources • Increase physical and human capital • Better regional and local governance • Financial stability over 7 years 22

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report Reform of the policy Conclusions 23 December 2004 EN 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

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report 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

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report 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: • Reform of the policy • Conclusions - 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 25 December 2004 EN

EUROPEAN COMMISSION Regional Policy EN Third Cohesion report 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 Reform of the • policy • Cross border co-operation (MS to propose changes to the 13 current zones of INTERREG III B) • Interregional co-operation (also mainstream Conclusions programmes) • External cross-border co-operation – linked to the new European neighbourhood instrument, including multiannual programming and just one financial instrument Budget: around 4 % of the total 26

EUROPEAN COMMISSION Regional Policy December 2004 EN EN Implementation system: evolution not revolution Third Cohesion report • Reform of the policy • 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: • More strategic approach: Conclusions 27 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 Political discussion in Council, EP opinion, Commission mandate, annual report presented to spring Council

EUROPEAN COMMISSION Regional Policy December 2004 EN EN Proposed timetable Third Cohesion report 10 and 11 May 2004: European cohesion forum, Brussels July 2004: Commission adopts the legislative packet Next stages End 2005: Decision by Council and European Parliament 2006: Preparation of programmes for period 2007 -2013 1 January 2007: Implementation begins 28