Deal on new rules for EU regional, cohesion and social funds over next 7 years

This article is brought to you in association with the European Commission.

On Tuesday, EU legislators reached a provisional political agreement on how EU countries will be able to spend EU regional, cohesion and social funds for 2021-2027.

Parliament’s and Council’s negotiators agreed that the total resources for economic, social and territorial funds available for 2021-2027 are 330 billion EUR (330 234 776 619 in 2018 prices).

The deal means less developed regions will continue to benefit from substantial EU support with co-financing rates of up to 85% of funds provided by the EU. The co-financing rate for transition regions and more developed ones has been set to 60% and 40% respectively.

Simplifying and strengthening the Partnership Agreement

Partnership agreements, which are prepared by national authorities, for the European Regional Development Fund (ERDF), the Cohesion Fund, the European Social Fund Plus (ESF+) and the European Maritime and Fisheries Fund (EMFF) will be simplified and limited to 35 pages, unless member states wish to go further. Regional, local, urban and other public authorities, economic and social partners, civil society, as well as research bodies, where appropriate, will be key partners to the agreements.

Introducing horizontal principles for EU funds

Parliament succeeded in integrating four main overarching principles to adhere to in order to receive EU funding: (1) compliance with the EU Charter of Fundamental Rights; (2) gender equality and mainstreaming; (3) fighting discrimination; and (4) the respect of the UN Sustainable Development Goals and the Paris Climate Agreement.

Sound economic governance

Measures linked to funds being suspended when countries do not comply with EU economic and employment policies guidelines will be time-limited (suspension procedures may be applied only between 2023 and 2025). Sanctions linked to non-compliance with national economic targets, such as excessive deficit, will not be applicable as long as the general escape clause of the Stability and Growth Pact is activated. ESF+ and Interreg funds may not be suspended.

Other key measures

• Mainstreaming climate action: the funds will contribute to achieving an overall target of 30% of the EU budget expenditure supporting climate objectives and will respect the “do no significant harm” principle of the Green Deal;
• Simplified objectives: There are now five policy objectives (instead of 11 in the previous period): a more competitive and smarter Europe; a greener, low-carbon transitioning towards a net zero carbon economy and resilient Europe; a more connected Europe; a more social and inclusive Europe; a Europe closer to citizens.
• Mid-term review: 50% of the remaining funds can now be allocated elsewhere for the last two years of the programming period;
• Audit requirements: following the EP position, member states which are part of the European Public Prosecutor’s Office will benefit from simplified audit procedures;

Quotes

Co-rapporteur Andrey Novakov (EPP, BG) said: “Agreed after two years of negotiations! This means that member states now have clarity on programming, implementation and closure of their programmes. Finally, we can plan the budget of over 330 billion EUR. I am glad to see an agreement on Parliament’s initial demands: 85% EU co-financing for less developed regions. There will be thus less pressure on central and municipal budgets in times of recovery.”

Co-rapporteur Constanze Krehl (S&D, DE) said: “I am very happy that cohesion policy got sufficient means in the end so all regions can participate and profit from it. It is very important for the regions that we could agree on raising the co-financing rates above what was in the Commission’s proposal. We managed to make cohesion policy fit for the future, especially concerning social and environmental issues. I’m glad that, thanks to the European Parliament, 30% of the budget will be spent on the fight against climate change.”

Next steps

Work at technical level will be finalised shortly to reflect the results of the agreement. Parliament and Council will then be expected to endorse the content of the agreement. Irrespective of the date on which the regulation enters into force, the allocation of financial resources will apply retroactively as of 1 January 2021.

Background

The Common Provisions will apply to the Regional Development Fund, the Social Fund (EFS+), the Cohesion Fund, the European Maritime and Fisheries Fund, the Just Transition Fund, and set out financial rules for the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument 2021–2027. The funds covered make up about a third of the EU’s total budget. The allocated cohesion resources for 2021–2027 are around 48 billion EUR lower than the previous seven-year period.