(Source: European Commission)
“Check against delivery”
Dear members of the press,
As we publish this 8th Cohesion Report, the world begins a third year of the COVID pandemic. We in Europe are striving for a strong and balanced recovery.
Indeed, decisive action taken at European level has averted worse consequences, and our economy is rebounding faster than expected.
However, aggregate figures often hide differences at regional level. In Europe, notably here in the Commission, we are trained to look at the whole, but we should never forget the parts that make up this whole, and the cohesion that keeps it together.
This 8th Cohesion Report gives us a more granular picture of the situation across European regions and enables us to put the limelight in all parts of the European house so that we can identify where are the cracks. If Europe’s house is to stand firm, we must deal with all of these cracks.
The Treaty requires this report every 3 years, and I must say, this is a very appropriate moment, to take stock of the latest data and analysis at both the regional level and the social level for three main reasons.
First, because we know from experience that internal disparities tend to aggravate in the aftermath of crises; second, because we are ushering in a green and digital economy and society and regions are not in the same starting blocks; third, because we now have unprecedented funds available to Member States and it is imperative that these are used in a way that reinforces economic, social and territorial cohesion.
The Report is very rich with analytical material and findings on long term trends.
This is relevant because Cohesion is a long-term transformational policy. While it swiftly provided emergency during the recent crisis, its nature remains structural, with the long term objective of fostering convergence and reducing inequalities between countries and regions.
Let me highlight some of the challenges and opportunities to Europe’s convergence identified in the report.
Early evidence points to a differentiated impact and sharp regional differences in how the Covid pandemic affected health care systems and economic and social structures.
For example, the report notes a striking difference in excess mortality rates by region. But it also shows that the impacts on the economy and society do not always mirror infection rates.
Some regions have suffered more because of their geography, for example border regions, islands, and outermost regions. Others have suffered because of the structure of their economy, for example those dependent on personal interaction, such as tourism or certain industries.
In short, the report gives a snapshot of a Europe in which new territorial and social disparities are emerging raising the risks of an asymmetric recovery, hence the crucial importance of cohesion action and mindset.
When it comes to the long-term trends in economic and social cohesion at the regional level, some are positive, but some are cause for concern.
For example, on the positive side most of the less developed regions, especially in central and Eastern Europe continue to catch up.
We estimate that GDP per capita in less developed regions will be up to 5% higher in 2023, thanks to cohesion policy investment over the last 7 years.
On the other hand many less developed and middle income regions, especially in South and South-western Europe are stagnating or falling behind.
Can we as Europeans live with limited convergence? Can the European model strive with a development trap, where poor regions converge to a certain extent, but no further?
The report also highlights the existence of a digital and an innovation divide. These take many forms, I will cite just 2 key facts.
First, for the digital divide: 2 in 3 city residents have access to very high speed broadband, but only 1 in 6 rural residents.
Second, for the innovation divide, innovation is increasingly concentrated in a few favoured regions, leaving middle income regions behind. These are figures of great concern as we transition to a digital and knowledge-intensive economy.
Similarly, the transition to a green economy offers new jobs and new opportunities, but some regions are better placed than others to exploit these opportunities. And some regions have a longer way to climate neutrality. The report analyses these differences, noting that some regions will have to make particular efforts, for example, regions more dependent on carbon intensive sectors.
The report puts all of this into the context of long term demographic change. By 2040, 51% of Europeans, so just over half, will live in a region where the population is declining. This will require adjustment across the board, including in terms of public service provision for a gradually aging population.
We must pay attention to regions at risk of serious demographic decline. One of the keys is job opportunities for young people, and regional attractiveness, including in terms of infrastructure and public services.
In this situation, what are the lessons for policy? I will highlight 3 key messages from the report.
First, investment is crucial. Cohesion policy has played a key role in protecting public investment, not just in the pandemic, but even before.
Over the period 2014-2020, Cohesion policy was equivalent to just over half of public investment in the 15 Cohesion countries. It became even more relevant, in a context of lower national investment following the 2008 crisis. This investment continues, with the new round of programmes, currently being finalised.
Second, investment alone is not enough: we must have “place based” development strategies, defined at the right scale and territorial level, adapted to the assets of the region and aimed to address old and new drivers of disparities.
The world is changing fast, and different regions respond very differently to the green and digital economy. These bring opportunities: for example, the green economy brings new jobs. Likewise, teleworking is an opportunity to change the pattern of investment, and make smaller cities and rural regions, with their potentially high quality of life, more attractive to high value economic activities.
But these opportunities require policy and investment that is carefully tailored to each region.
So we will need to work closely with regions, with cities and with citizens to develop new approaches. Strengthening the partnership principle, encouraging policy learning and experimentation, and cooperating across regions, countries and levels of government, to exchange best practices are crucial steps in this strategy.
Third, cohesion policy is not enough. Other European policies, and national policies, must consider their regional impacts.
For far too long, many policies have been “spatially blind”. But no policy – no matter how well intentioned, no matter its contribution to the greater good – no policy should ignore the differentiated impacts it will have across the different territories of a nation or of the Union.
In other words, all policies should undergo “regional proofing”, to ensure they obey the principle: “do no harm to cohesion”.
These are the challenges before us, these are the challenges set out in the report. How to take all of Europe’s regions through the recovery, through the green and digital transition, and beyond, leaving no region behind.
To succeed, we need a new sense of place, a new sense of partnership, and a discussion fed by facts.
The cohesion report provides the facts, and we invite discussion. In the coming weeks and months, and especially at the cohesion forum in March.
Our answers will define Europe in the decades to come.