Tuesday

21st Aug 2018

EU to link regional funds to strict deficit rules

  • The cut-off measure would also apply to fisheries and rural development funding (Photo: ec.europa.eu)

The EU commission on Thursday (6 October) proposed that from 2014 onwards, the bloc's structural funds for poorer regions be linked to strict budget deficit rules under the new economic governance legislation.

In line with the austerity-driven 'fiscal discipline' promoted by the EU's net contributors, the commission wants to be given the power to suspend the funding if a country pursues "unsound macro-economic policies" or has weak administrative capacity.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

At the same time, the proposed €336 billion in the structural funds for 2014-2020 will be made more "flexible", allowing the commission to intervene and change priorities if the country is seen as getting them wrong.

"Cohesion policy has already contributed a lot to building prosperity in the EU. But given the economic crisis, it must now become a motor for growth and competitiveness. Our proposals will make EU funds work even harder," said EU regional policy commissioner Johannes Hahn.

He said the cut-off measure would be applied only as a "last resort" after a "long series of steps". At the same time, unused structural funds can be used as loan guarantees with the EU commission working with Greece to this end.

"There is no contradiction between these measures," Hahn claimed, when pressed by journalists to explain how cutting funding from financially troubled countries would help them "get back on track".

"The recently passed six pack [of EU economic governance legislation] raises the possibility to fine eurozone countries if they don't stick to deficit rules. So we discussed the theoretical possibility to use money as a final way to bring them back to the right way," the Austrian politician explained, adding that the cut-off measure would also apply to fisheries and rural development funding.

MEPs and regional representatives fiercely opposed the proposal, however.

"In these times of crisis, solidarity is the key (...) Our group will oppose any attempt to breach that solidarity. EU citizens should not be punished for the difficulties of their governments in reducing public deficits as proposed by the European Commission," said Italian Social Democrat MEP Patrizia Toia.

Her Green counterpart from Germany Elisabeth Schroedter also criticised the funds-cutting measure, which she said would "undermine the very essence of structural and cohesion funds."

And Mercedes Bresso, the chairwoman of the Committee of the Regions, an advisory EU body comprising of regional and local officials said that she is "firmly" opposed.

"It is irritating that the Commission ignored the strong opposition of the Committee of the Regions, the European Parliament and of the other concerned stakeholders on this point," she said.

"Withdrawing EU funding from an already ailing economy will only make matters worse. And this measure will punish regional and local authorities for the failures of their national governments", Bresso explained.

The centre-right group in the European Parliament approves the move, however.

"We are now at the starting point of a big debate on the future regional policy and of course there are elements of utmost importance for us to be defined and regulated," it said, citing "macro-economic conditionality" as one of them.

Member states and the European Parliament still have to agree on the new rules as well as the final figures for the seven-year budget.

Eurobonds could steer the EU out of crisis, regions chief says

One way to revive the European economy without burdening national budgets would be to set up eurobonds and use them to finance pan-European transport networks and broadband connections, the head of EU's regional assembly said in an interview.

Magazine

Regions feel the pinch

Looking to save a buck in every corner of the budget, EU countries are now pointing their arrows at subnational governments, a new study has found. Subsidies are down, as is the number of municipalities.

Magazine

Regions join army of EU lobbyists

The number of lobbyists in Brussels working for regions, cities and municipalities has grown to about 1,500 people.

Visual Data

Mediterranean towns ready for EU-sponsored free wifi

The European Union's fund for free wireless internet connection hotspots is most popular in Belgium, Bulgaria, Croatia, Italy, Malta, Slovenia and Romania. Check if your municipality pre-registered.

News in Brief

  1. EU Commission: efforts 'ongoing' over Italian migrant ship
  2. Italy allows boat with migrants to dock
  3. France's Total pulls out of Iran due to US sanctions
  4. Trump accuses EU and China of currency manipulation
  5. Swedish conservatives regret unsuccessful integration policies
  6. Record high measles cases hit Europe
  7. Swedish politician declares war on media
  8. Italy threatens to return migrants to Libya

Magazine

The EU Agencies Race

In this edition of EUobserver's Regions & Cities magazine, we take a closer look at some of the EU agencies, exploring how their location matters and the benefits for cities and regions to host them.

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. UK sanctions appeal risks highlighting EU divisions
  2. Wind delays launch of European wind-mapping satellite
  3. Greece 'normal' again after end of crisis, EU says
  4. Putin strikes blow against Russia's isolation by Europe
  5. EU-China cooperation on CO2 storage lost in limbo
  6. Greece exits bailouts, but difficult path ahead
  7. EU gets record response on 'summertime' consultation
  8. 'Nativism' and the upcoming Swedish and Bavarian elections

Join EUobserver

Support quality EU news

Join us