Press release

Published: 11/09/2019

Each euro spent on cohesion policy generates nearly three euros in GDP impact, according to the Polish Economic Institute (PIE) report “Cohesion policy, or solidarity in action.” The greatest beneficiaries are Portugal, Greece, and Central and Eastern European (CEE) countries. However, the European Commission is already planning budget cuts to a policy that absorbed EUR 787.96 billion between 1989 and 2013.

The core idea behind supporting less-developed regions of the European Union through cohesion policy dates back to the Marshall Plan. Despite this long history, the rules for allocating funds remain a subject of debate. As our report shows, cohesion policy benefits the entire European community, says Piotr Arak, Director of the Polish Economic Institute. It is forecast that the effects of cohesion policy interventions implemented in 2007–2013 will contribute as much as EUR 1 trillion to EU GDP by 2023. Across the entire EU economy, every EUR 1 invested generates an additional EUR 2.74 in GDP.

Between 1989 and 2013, the European Commission allocated EUR 787.96 billion to investment projects under cohesion policy. In the current financial perspective (2014–2020), this amounts to over EUR 350 billion. In total, this represents nearly EUR 1.2 trillion, which translates into an average of approximately EUR 2,400 per capita.

The largest beneficiaries 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 ranked ninth. The smallest amounts were received by Denmark and the Benelux countries: the Netherlands, Luxembourg, and Belgium.

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.”

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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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Andrzej Kubisiak
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