New report highlights how EU Cohesion Policy improves the investment environment in Europe

Brussels, 31 March 2017

One of the key elements of the Cohesion Policy reform for 2014-20 was the introduction of preconditions for Member States to receive money from the European Structural and Investment Funds.

A first assessment published today shows that this additional step has a high value, and that the preconditions proved to be a powerful incentive for Member States and regions to carry out reforms which would have otherwise been delayed or not necessarily implemented.

The preconditions for successful investments (or “ex-ante conditionalities“) cover a wide variety of sectors, including compliance with energy efficiency, innovation, digital plans, and education reforms. They were included in the reformed Cohesion Policy to ensure sound and effective spending.

Regional Policy Commissioner Corina Creţu said: “This report shows that the preconditions have improved the framework within which the EU budget operates. By linking the reception of EU funds to the implementation of key structural changes, we have not only contributed to guaranteeing sound public investments. We are also helping to improve quality of life across the EU, while setting the right conditions for growth and job creation, in line with the objectives of President Juncker‘s Investment Plan.”

These preconditions help tackle bottlenecks to investment

Many of them addressed both horizontal and sectorial barriers that hinder investment in the EU. In doing so, they helped deepen the Single Market and deliver the Investment Plan, via its third pillar.

They have for example reinforced institutional set-ups and helped establish transparent procedures in the field of public procurement, or have required Member States to improve and simplify the regulatory and policy environment for small businesses. For example, measures were put in place to reduce the time and cost involved in setting up a business. In Malta, Portugal and Slovenia “SME Tests” were introduced to monitor the impact of national legislation on SMEs.

In the digital sector, the preconditions compelled Member States to set up a pipeline of priority projects, in line with the broadband rollout objectives of the Digital Single Market. This is how the “digital growth” precondition triggered the adoption of a revised digital growth strategy in Greece.

They support structural changes and the implementation of Country Specific Recommendations (CSRs)

These preconditions led to needed legislative changes in many policy areas – education labour market, health or social inclusion to name but a few.

In Croatia, Bulgaria and Romania, maps of healthcare infrastructure developed to fulfil the “health” sector precondition addressed different CSRs on cost effectiveness of spending, accessibility and the overall efficiency of the healthcare sector.

They accelerate the transposition of EU acquis

In the Czech Republic, Italy, Poland, Portugal, Slovenia and Spain, the fulfilment of the “energy efficiency” precondition gave a significant push to the swift transposition of the Energy Efficiency and Buildings Directives. In a number of Member States, like in Hungary, the “water” sector condition prompted the authorities to apply water pricing policies to the agricultural sector, providing an incentive to farmers to use water resources more efficiently.

They help better target support from the European Structural and Investment (ESI) Funds and other public funding.

Many preconditions required that support from EU Funds should form part of strategic investment frameworks. Designed to meet certain quality criteria, based on needs analysis and including measures to attract private investments, these frameworks encompassing EU, national and regional funding resulted in better coordinated and prioritised public spending overall.

In Portugal, the “Research and innovation (R&I)” precondition required the adoption of national and regional smart specialisation strategies. This helped to focus the public funding in R&I on a limited number of key competitive areas and to identify opportunities for partnerships between academia and innovative businesses.

They strengthen administrative capacity and communication between all levels of governance

An efficient public administration is key to the success of EU and public investments. When preconditions specifically required the reinforcement and reform of administrations, the very process of fulfilling them resulted in improved coordination and communication between ministries, agencies, regional and local authorities and other stakeholders.

In the French region of Auvergne, in the framework of the “R&I” precondition, local authorities, civil society and local businesses were together involved, for the first time, in the layout of a regional innovation strategy.

Next steps

The report shows that there are margins for improvement – should the preconditions become more tailored to the needs of Member States and regions? How can we ensure their fulfilment throughout the whole financial period? These are key issues that will fuel the discussion on the post-2020 Cohesion Policy.

Background

Introducing preconditions for successful investments was one of the key novelties of the Reformed Cohesion Policy (see MEMO/13/1011).

Today, 86% of these preconditions is fulfilled by all Member States. Member States have until the summer of 2017 to report on the fulfilment of the outstanding preconditions.

More information

Staff Working Document – the Value added of Ex-ante conditionalities in the European Structural and Investment Funds

Ex-ante conditionality – definition on the Inforegio website

Cohesion Open Data Platform