News & Analysis

The EU’s New Policy on Cohesion Funds: How is Emerging Europe Hit?

Central and eastern Europe will lose out on funding while the south of Europe will benefit. That was the headline across much of emerging Europe after the EU last week published its proposed budget for 2021-2027 with regards to Cohesion Policy. But just how much will they lose out?

“Today we propose a Cohesion Policy for all regions, which leaves no one behind,” said Commissioner for Regional Policy Corina Creţu, pictured above. “We have made it more flexible, to adapt to new priorities and better protect our citizens. We also made the rules simpler and this will benefit all, from small businesses and entrepreneurs to schools and hospitals that will get easier access to the funds.”

The European Commission (EC) has shifted funding to support countries that they feel are in need of additional funding. The new proposal will see some countries hit with a 23-24 per cent loss in funding, whilst those that are in need will gain up to an additional eight per cent.

The EC is allocating funding based on several factors which will now include unemployment levels, and the reception of migrants, and not just economic outputs.

Under the new proposal, Poland, Hungary, Lithuania and the Czech Republic will see the biggest cuts to funding (23 to 24 per cent). However, Poland will still be one of the highest net beneficiaries of the next round of funding.  Other countries in emerging Europe that have had cuts to their funding include Slovakia, Estonia, Latvia, Croatia and Slovenia.

The cuts to funding are not all bad news for countries in emerging Europe, as Romania and Bulgaria will see an increase of eight per cent to their funding.

Countries in emerging Europe have generally faired a lot better than other countries in the EU since the last financial crisis, seeing continued growth over the last decade. Ms Crețu said that the reason for such changes is that economies in the region have grown faster in recent years and have overcome the global financial crisis better than others in the EU.

“The natural consequence of getting richer is a gradual decrease in cohesion policy support. This is a fact and in the end is a good sign,” said Ms Crețu.