The future of Cohesion Policy

Cohesion Policy is the European Union’s main investment policy and has been one of its biggest drivers of economic and social development. In the last financial framework alone, between 2014 and 2020, this policy supported 4.4 million companies and created more than 370,000 jobs, representing around 13% of the Union’s total public investment.

In Portugal, the impact is clear. Portugal 2020, the cohesion programme for 2014-2020, helped to reduce regional disparities by funding innovation, employment and energy transition projects. More than 26 billion euros were allocated to our country across 400,000 different projects, 86% of which were in less developed regions, boosting investment in these regions and enabling the country to align itself with European targets in terms of employment, poverty reduction, education, innovation and energy efficiency.

But cohesion is not just about economic growth. It is about the stability of the EU itself. These investments aim to reduce inequalities between regions, ensuring that all areas, including rural and outermost regions, can participate fully in the European single market.

In the European Parliament, we have already started the debate on the future of Cohesion Policy after 2027, when the current Multiannual Financial Framework ends. Two of the priorities that we Socialists advocate for the future of this instrument are the response to the housing crisis and support for the automotive industry.

Between 2010 and 2023, EU housing prices rose by 48% and rents by 22%, making life harder not only for low-income families, but also for the middle class and young people. We need a European Housing Strategy with robust Cohesion Policy funding to support the construction of new homes and the renovation of existing housing stock. This support should not be limited to narrow criteria: we need a long-term commitment that allows regions to adapt investments to their local circumstances, without imposing a one-size-fits-all model designed from Brussels.

The European automotive industry could also be rethought in this way. An industry in crisis, marked by global competition and the need to adapt to new environmental standards. In several regions, particularly those that depend heavily on the production of components and vehicles with combustion engines, thousands of jobs are under threat, including in Portugal, which produced more than 300,000 vehicles in 2023. Furthermore, more than 90% of cars produced in the EU have at least one component manufactured in our country, in a value chain on which hundreds of small and medium-sized companies depend. Cohesion Policy can play a central role here, financing the retraining of workers and the adaptation of the industry to compete in the global market, particularly in the electric vehicle segment.

One of the possible threats to this instrument came from news reports that the European Commission was preparing to centralise Cohesion Policy , with more powers for national governments and less involvement of local and regional authorities in defining and managing it. This centralisation would pose a significant risk because, by disregarding the principle of subsidiarity, it would limit the ability to define strategic priorities and adapt investments to regional realities.

Another critical aspect is the systematic use of Cohesion Policy to respond to crises, as was the case when Cohesion Funds were mobilised to combat the pandemic or to support Ukraine. This approach takes funding away from structural projects, which require a predictable instrument focused on the long term. In this sense, I have argued that Cohesion Policy should maintain its primary function of reducing social, economic and territorial inequalities between all regions of the European Union. To respond to crises or unexpected events, a permanent crisis response mechanism with its own funding should be created, which does not draw money from Cohesion Policy.

As we know, in Portugal, Cohesion Policy is a proven instrument and has been fundamental to the development of our country. Above all, however, it is not just a solidarity instrument, as it benefits all those who participate in the internal market, regardless of whether or not they are direct recipients of the funds. It benefits both a Member State that uses Cohesion funds for an investment and the Member State that provides it with goods or services to implement it. Our vision for the future of Cohesion Policy therefore involves a decentralised instrument, capable of responding to structural challenges, combating inequalities between regions and with a long-term perspective.

The author writes according to the new spelling agreement