Every euro spent on cohesion policy generates almost three times as much GDP, according to a report by the Polish Economic Institute entitled “Cohesion policy, or solidarity in action”.
Portugal, Greece and the CEE countries benefit the most from it. Yet the European Commission plans to cut the budget, which amounted to EUR 787.96 billion in 1989-2013.
The idea of providing assistance to less developed regions in the EU, which is behind cohesion policy, dates back to the Marshall Plan. Nevertheless, the rules for allocating funds are still being discussed. “As our report shows, cohesion policy pays off for the whole European community,” says Piotr Arak, director of the Polish Economic Institute. “It is forecast that its actions in 2007-2013 will contribute EUR 1 bn to EU GDP by 2023. At the EU level, each euro generates an additional EUR 2.74 in GDP.”
In 1989-2013, the European Commission spent EUR 787.96 bn on investment projects as part of cohesion policy. In the current financial framework (2014-2020), the figure is over EUR 350 bn. This gives a total of almost EUR 1.2 bn – or around EUR 2400 per capita.
The biggest beneficiaries of the funds in per capita terms are Portugal, Greece and Central and Eastern European countries, such as Estonia, Lithuania, Latvia, Slovakia, Hungary and the Czech Republic. Poland is in ninth place. Denmark and the Benelux countries (the Netherlands, Luxembourg and Belgium) have received the least.
Cuts in the cohesion policy budget
According to the Commission, the repercussions of Brexit, along with new security and environmental challenges, require an immediate reaction. For this reason, it has announced plans to cut the budget for cohesion policy by 10%. In its current form, the Commission’s draft allocates slightly less than EUR 330 bn to cohesion policy.
Decisions on how much countries would contribute to the EU budget for 2021-2027 have not yet been made. “Cohesion policy should be viewed in terms of long-term benefits,” says Krzysztof Kutwa, an analyst on the Polish Economic Institute’s Strategy Team. “On the one hand, there is a lack of reliable information for assessing its effectiveness, which is why a European Institute for Evaluating Cohesion Policy needs to be established. On the other hand, the challenges currently faced by the EU, such as Brexit, must be considered when adapting the funds to individual countries’ needs. The EU should forestall their negative consequences.”
The Polish Economic Institute is a public economic think-tank dating back to 1928. Its research spans trade, energy and the digital economy, with strategic analysis on key areas of social and public life in Poland. The Institute provides analysis and expertise for the implementation of the Strategy for Responsible Development and helps popularise Polish economic and social research in the country and abroad.
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