Why is EU funding for regions so important?

EU funding will help regions recover from the Covid crisis, whilst reducing disparities, making them greener and creating jobs.

Revamping EU regional policy

During a plenary session in June 2021, Parliament adopted a cohesion package, including the main regional funds the European Regional Development and Cohesion Fund and the European Territorial Goal of the regional policy (Interreg), as well as a set of goals for the funds – the Common Provisions Regulation.

Supporting smart and sustainable growth in EU regions

The new cohesion policy should simplify procedures, make investments more effective and align with the transition of the regions to a climate-neutral Europe, as part of the Green Deal and the Covid-19 crisis recovery.

A substantial part of the funding will go to projects promoting smart growth and the green economy. In the future, the EU’s cohesion policy should:

Redirect at least 30% of regional funding to climate action
Respect environmental, climate, biodiversity and circular economy objectives
Invest in sustainable growth and job creation
Offer tailored support to outermost regions, islands and depopulated areas
Focus on research and innovation
Allocate at least 8% of the European Regional Development and Cohesion Fund resources to sustainable urban development

Nuclear power and fossil fuels are excluded, aside from projects replacing coal with natural gas, which are eligible for funding before 31 December 2025.

To help regions recover from the Covid crisis, the funds are expected to support culture, sustainable tourism, digitalisation as well as provide for more resilient public health systems.

Financing the regional development and cooperation

Funding for the cohesion policy comes partly from the EU’s long-term budget and from Next Generation EU, a recovery package to support EU countries affected by the Covid-19 pandemic.

The European Regional Development Fund

Created in 1975
Aims to redress regional imbalances, supporting areas whose development is lagging and converting declining industrial regions
Supports regions suffering from severe and permanent natural or demographic handicaps

Interreg

Launched in 1990
Helps cross-border health, green and other projects
Supports cross-border, transnational, interregional cooperation and outermost regions
Will provide funding for climate action and social programmes, including public health, as well as small projects

The Cohesion Fund

Set up in 1994
Backs environmental and trans-European network projects
Finances projects falling under the Investment for growth and jobs cohesion goal
Goes to less developed regions in EU countries with a gross national income below 90% of the EU average

Other financial support for regions

As part of the climate investment plan, the Just Transition Fund aims to support territories relying on fossil fuels and most affected by the transition towards climate neutrality.

Parliament approved the Just Transition Fund in May 2021, which will receive €7.5 billion from the EU budget for 2021-2027 and €10 billion from the EU Recovery Instrument.

In addition, European regions will receive help through ReactEU, the new instrument to help the sectors most affected by the economic impact of the pandemic.