A quick Guide to Regional PolicyA quick Guide to Regional PolicySolihull - 2007Solihull - 2007

Its origins and purposeIts origins and purpose

What is regional policyWhat is regional policy??

Article 158 of the Treaty states that:Article 158 of the Treaty states that:

""in order to strengthen its economic and social in order to strengthen its economic and social cohesion, the Community shall aim at reducing cohesion, the Community shall aim at reducing disparities between the levels of development of the disparities between the levels of development of the various regions and the backwardness of the least various regions and the backwardness of the least favoured regions or islands, including rural areasfavoured regions or islands, including rural areas""

also called:also called:

– cohesion policycohesion policy

– structural policystructural policy

– refers to the Structural Fundsrefers to the Structural Funds

– or "EU money"!or "EU money"!

OriginsOrigins

Treaty of Rome set up:Treaty of Rome set up: CAPCAP European Social FundEuropean Social Fund No specific provision for regional policy No specific provision for regional policy

or regional fundor regional fund

Why?Why? Common market thought to be enoughCommon market thought to be enough Strong economic growth in 1950s and Strong economic growth in 1950s and

1960s1960s

Why change?Why change?

Recession of 1970s highlighted Recession of 1970s highlighted development gapsdevelopment gaps

Regional disparities increased with Regional disparities increased with accession of:accession of:

– 1973: UK, Ireland and Denmark1973: UK, Ireland and Denmark

– 1981: Greece1981: Greece

– 1986: Spain and Portugal1986: Spain and Portugal

Why is regional policy Why is regional policy important?important?

Socio-economic cohesion considered to be a priority for the European UnionSecond most heavily funded sector in the Union after the Common Agricultural Policy.From less than 5% of 1975 budget to 35% of 1999 budget€ 233 billion. (approximately £ 160 billion)Visible sign of the EUPromotes convergence (helping poorer regions develop)

Economic RationaleEconomic Rationale

Effects of single market on Effects of single market on regional disparitiesregional disparities

Migration to rich areas not poorMigration to rich areas not poor Less mobility in EuropeLess mobility in Europe Social costsSocial costs

Slow economic growth:

since the mid-1990s, EU growth has averaged just over 2% per year

Greater differences between regions and Member States:

regional disparity levels are higher than national disparities but are also falling Over ¼ of EU-25 population lives in regions below 75% of EU average GDP13 Member States of EU-25 have GDP below 90% of average – 21% of population

50 - 75

75 - 90

90 - 100

100 - 125

125

Index, EUR-27 = 100

<50

Regional Disparities in EU27GDP per head in % in PPP (2002)

40% to 49,9% of EU population(155→224 Mio.) in eligible areas (Obj. 1 & 2)

233 bn. Euro(one third of the EU budget)

400 to 480 Structural Funds programmes

211 to 264Regions

EU Regional Policy 2000-06

How does it work?How does it work?

Objective 1:Objective 1: funding for regions with average per capital GDP less funding for regions with average per capital GDP less

than 75% of EU average remote regions, e.g. French than 75% of EU average remote regions, e.g. French overseas départements, the Azores, Madeira and the overseas départements, the Azores, Madeira and the Canary IslandsCanary Islands

in the UK: Cornwall, Merseyside, South Yorkshirein the UK: Cornwall, Merseyside, South Yorkshire approximately 2/3 (69.7% )of total fund or € 135.9 billion; approximately 2/3 (69.7% )of total fund or € 135.9 billion; 20% of total EU population benefit20% of total EU population benefit

How does it work?How does it work?

Objective 2:Objective 2:

for regions with structural difficulties or in need of for regions with structural difficulties or in need of economic diversificationeconomic diversification

e.g. declining rural areas, regeneration of urban arease.g. declining rural areas, regeneration of urban areas in the UK: North Yorkshire, NW and NE England, West in the UK: North Yorkshire, NW and NE England, West

Midlands, Tower Hamlets in London, etc.Midlands, Tower Hamlets in London, etc. 11.5% of total fund or € 22.5 billion11.5% of total fund or € 22.5 billion 18% of total EU population18% of total EU population

6.6

32.1

47.4

0.9

6.5 5.6

35.7

9.9

40.4

6.4

1.5

6.1

0

5

10

15

20

25

30

35

40

45

50

1A Competitiveness 1B Cohesion 2 Natural resources 3 Justice 4 Global role 5 Administration

2006

2013

2007-2013 - New Budget Structure: Regional Policy gains

2006 vs. 2013 in %

Convergence-Objective:Regions below 75% of EU25 GDPAverage 2000-2002

86 Regions 124 million inhabitants27.3%of EU population

Allocation: EUR 177.8 bn

ConclusionsConclusions Does it work?Does it work?

– across Member States yesacross Member States yes– within Member States lesswithin Member States less

What will enlargement do (Poland 40 What will enlargement do (Poland 40 million, Spain 40 million)million, Spain 40 million)– from 15 to 25 Member Statesfrom 15 to 25 Member States– new Member States are much poorernew Member States are much poorer– pressure on budgetpressure on budget

Causes friction between member-statesCauses friction between member-states– Poor vs. richPoor vs. rich– South vs. NorthSouth vs. North– East vs. WestEast vs. West