European Funds

The European Union has 27 member states, which form an interior community and market of 493 million people. Nevertheless, the economic and social disparities between these states and their 271 regions remain very important.

One of every four regions has a GDP (Gross Domestic Product) per head lower than 75% of the average across the 27 member states.

European regional policy aims to shore up the solidarity of the Union via social and economic cohesion, reducing the divergence between the levels of development across the different regions. 

The disparities between European regions have grown following the recent expansions. Thus, the richest of the member states, Luxembourg, is now seven times richer than the poorest, Romania. At the regional level the differences are even greater.

European Union regional policy promotes the reduction of the structural differences between the regions of the Union, balanced development of community regions and true equality of opportunity amongst the population, via the transfer of resources from the richest regions to the poorest. It is an instrument of financial solidarity and a powerful tool of economic integration.

The European Union’s regional policy is based on two fundamental values:

• Solidarity because the purpose of the policy is to benefit the population and the most socially and economically disadvantaged regions in terms of the EU average. 
• Cohesion because reducing the differences in income and wealth between the poorest and richest countries and regions will benefit everyone. 

The European Union’s new regional policy for the 2007-2013 period will help achieve the objectives set out at the Council of Lisbon: “Making the European Union knowledge-based economy the most competitive and dynamic in the world, capable of sustained and sustainable economic growth, environmentally compatible, with more and better jobs and with greater social cohesion”, via the creation of growth and employment.

Between 2007 and 2013, regional programmes will be funded by three Funds based on the type of help required and the nature of the beneficiary.

  • Making the countries and regions more attractive for investment by improving accessibility, offering quality services and protecting the environment. 
  • Stimulating innovation, business innovation and the knowledge economy via the development of information and communication technology. 
  • Creating more and better jobs, making work more attractive to people, by promoting the adaptability of workers and investing more in human capital. 

The European Regional Development Fund (ERDF) funds programmes dealing with general infrastructure, innovation and investment. The poorest of all member state regions can seek funding from the ERDF.

The ERDF’s aim is to strengthen social and economic cohesion in the European Union by correcting imbalances between its regions. The fund is governed by the European parliament and the Council’s laws (EC) no 1080/2006 of the 5th of July 2006 concerning the European Regional Development Fund by which the laws (EC) no 1783/1999 are repealed.

The European Social Fund (ESF)
The European Social Fund, created in 1957, is the principal financing instrument of the European Union, dedicated to investment in people. It contributes to employment and helps to improve training and qualification. This, in turn, improves the population’s job prospects.
The member states and the regions develop their own programmes operating under the ESF, with the aim of responding to real needs “on the ground”.

The Cohesion Fund
The Cohesion Fund helps member states whose gross national income (GNI) per head is lower than 90% of the EU average to reduce economic and social backwardness as well as to stabilise their economies. It supports action under the “Convergence” framework and in the future wil depend on the same programming, management and control regulations as the ESF and ERDF.
For the 2007-2013 period the Cohesion fund is concerned with Bulgaria, Romania, the Czech Republic, Cyprus, Estonia, Slovakia, Slovenia, Greece, Hungary, Latvia, Lithuania, Malta, Poland and Portugal. Spain is eligible in a transitory phase as its GNI per head is lower than the EU-15 average.

The Cohesion Fund finances activities which fall within the following areas:

  • Trans-European transport networks, in particular priority projects of European interest as defined by the Union.
  • The environment. Here, the Cohesion fund may also intervene in projects linked to energy or transport, provided they offer clear environmental advantages: energy efficiency, renewable energy resources, the development of rail transport, support for inter-modality, strengthening public transport, etc. 

The financial assistance of the Cohesion Fund can be suspended by a Council decision (by qualified majority) where a State posts an excessive public deficit and cannot remedy the situation, or where activities undertaken are inadequate.