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Regional policy in 2005: remarkable progress, but stark disparities remain in the modern infrastructure needed to generate growth and jobs

European Commission - IP/06/772   12/06/2006

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IP/06/772

Brussels, 12 June 2006

Regional policy in 2005: remarkable progress, but stark disparities remain in the modern infrastructure needed to generate growth and jobs

Danuta Hübner, Commissioner for Regional Policy, today presented the Fourth progress report on cohesion, which provides a snapshot of economic and social disparities in the EU and reviews progress over the past year in tackling them. Among the highlights of the year: the reform of EU regional policy, excellent progress in preparing the new regional programmes due to start in 2007, and a growing recognition that helping less prosperous regions to catch up on a sustainable basis is key to increasing competitiveness. However, the report also shows that much remains to be done, in particular to narrow severe regional disparities in modern infrastructure and innovative capacity. Regional policy will therefore continue to play a vital role in improving Europe’s economic prospects.

Commissioner Hübner said, "Europe needs growth from below, and all regions must contribute if we are to succeed in boosting competitiveness and employment in the EU as a whole. But today’s report reveals worrying disparities in modern infrastructure, research and education which limit our capacity for excellence and innovation. Regional policy will continue to play a vital role over the next decade in closing these gaps and helping the European economy to fulfil its true potential.”

The Fourth progress report on cohesion shows that economic and social disparities in the EU are narrowing, with rapid and sustained growth in the least prosperous Member States. However, at the regional level, there remains enormous unexploited potential: the 10 per cent of the population living in the poorest regions in the EU account for a mere 1.5 per cent of gross domestic product (GDP). The report also documents extensive gaps in modern infrastructure, which regions will need to close if they are to catch up on a permanent basis. For example:

  • in 47 out of 254 regions, there is hardly any research and development, with expenditure on R&D below 0.5 per cent of GDP, compared to an EU-wide target of 3 per cent;
  • in regions where GDP is below 75 per cent of the EU average, less than 15 per cent of households have broadband internet access, compared to around 30 per cent of households in other regions.

The progress report also shows that 2005 was a record year for cohesion policy in terms of resources invested, with a total of EUR 38.3 billion committed under the European Regional Development Fund, the European Social Fund, the Cohesion Fund, and the pre-accession fund designated for candidate countries (ISPA). It also shows that, in terms of execution, the new Member States’ experience since 2004 has been similar to that of the old Member States in the start-up phase of the 2000-2006 programming period.

Although much remains to be done, Commissioner Hübner said that 2005 had been a remarkable year for cohesion. Among the achievements:

  • essential steps in reforming EU regional policy, and Member States’ agreement on a budget of EUR 308 billion for the policy in the new 2007-2013 programming period;
  • an intensive dialogue with regional authorities during 2005, helping to bring them fully on board;
  • the formal establishment of regional policy as an instrument of the Lisbon agenda for growth and jobs; and
  • the successful preparation by new Member States, as well as Bulgaria and Romania, for substantially increased regional support as of 2007.

In addition, the development of three new initiatives – JASPERS (technical assistance for the preparation of major projects), JEREMIE (access to finance for micro, small and medium-sized enterprises) and JESSICA (innovative finance for urban renewal) – heralds a cultural shift in EU regional policy (see IP/06/693). The unprecedented cooperation with international financial institutions (including the European Investment Bank, the European Bank for Reconstruction and Development, the Council of Europe Development Bank and the European Investment Fund) will bring greater technical and financial expertise to regional programmes while increasing the financial leverage of the Community budget.

Turning to the future, Commissioner Hübner said that the current economic recovery should lead to broadly based growth and to the take-up of spare capacity in regions that are currently under-performing. But in order to maximise the contribution of regional policy to this process, it is essential for regions to be well-prepared for the start of the new programmes in January next year. National and regional authorities must reinforce expectations that the available resources will be wisely and strategically invested.

At EU level, the legal regulations underpinning cohesion policy are expected to be finalised in July following a second reading in the European Parliament. This will pave the way for the adoption of the Community Strategic Guidelines for cohesion policy, and it is expected that regional financial allocations for 2007-2013 will be announced before the summer break.
The full text of the fourth progress report on cohesion is available at:

http://ec.europa.eu/regional_policy/sources/docoffic/official/reports/interim4_en.htm
Further information about regional policy available at:
http://ec.europa.eu/regional_policy/index_en.htm


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