Friday

23rd Feb 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.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

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.

Magazine

Decision day for EU agencies relocation race

EU ministers will decide on the future location of two London-based EU agencies on Monday. In this edition of EUobserver's Regions & Cities magazine, we take a closer look at some of the EU agencies.

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.

News in Brief

  1. Report: EU to increase sanctions on Myanmar
  2. Juncker 'worried' by Italian elections
  3. EU migration to UK at lowest since 2012
  4. MEP Andrieu will chair parliament pesticide committee
  5. Juncker's right-hand man warns of 'institutional blockage'
  6. Greek parliament to open probe on PMs and EU commissioner
  7. May gathers Brexit ministers to hammer out UK position
  8. Tajani asks Juncker for all EMA Brexit relocation documents

Stakeholders' Highlights

  1. EPSUMovie Premiere: 'Up to The Last Drop' - 22 February, Brussels
  2. Aid & Trade LondonJoin Thousands of Stakeholders of the Global Aid Industry at Aid & Trade London
  3. Macedonian Human Rights Movement Int.European Free Alliance Joins MHRMI to End the Anti-Macedonian Name Negotiations
  4. Mission of China to the EUChina-EU Tourism Year to Promote Business and Mutual Ties
  5. European Jewish CongressAt “An End to Antisemitism!” Conference, Dr. Kantor Calls for Ambitious Solutions
  6. UNESDAA Year Ago UNESDA Members Pledged to Reduce Added Sugars in Soft Drinks by 10%
  7. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  8. CESICESI@Noon on ‘Digitalisation & Future of Work: Social Protection For All?’ - March 7
  9. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  10. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  11. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  12. Macedonian Human Rights Movement Int.Suing the Governments of Macedonia and Greece for Changing Macedonia's Name

Latest News

  1. EU leaders to kick off post-Brexit budget debate
  2. Greek government's steady steps to exit bailout programme
  3. Frontex: Europe's new law enforcement agency?
  4. Poland and Greece broke EU environment laws, rules court
  5. Dutch MPs vote on ending 'Ukraine-type' referendums
  6. Corruption report: Hungary gets worse, Italy makes progress
  7. UK seeks flexible transition length after Brexit
  8. Commission defence of Barroso meeting leaves 'discrepancies'