EC moves to help crisis-hit countries getting the most from EU Funds for growth and jobs

Brussels, 22-5-2013 — /europawire.eu/ —  Measures to help crisis-hit countries to use much needed EU funds have been proposed today by the European Commission. The measures would help these Member States to tackle youth unemployment, to support small and medium sized business and to pay for key infrastructure projects. In the absence of this proposed measure, Cohesion Policy investments for growth could be lost because of a lack of time to spend the money or because of the difficulty of finding national and private co-finance in the current economic climate. The proposal, prompted by requests from EU governments and from the European Council, will now be sent to the European Parliament and the EU’s Council of Ministers for adoption.

The first measure would help to deliver around €500m growth promoting investments more quickly to Greece, Cyprus and Portugal. This would increase the EU contribution of Cohesion Policy investments and allow a lower national share. This would prolong an agreement on co-financing from December 2011 for another two years. It would also ease the strain on national budgets but involves no new money from the EU.

The second measure proposed today would give Romania and Slovakia more time to spend Cohesion Policy money. This would allow for better selection and implementation of strategic projects – for example to boost the competitiveness of SMEs and get young people into jobs.

Commenting on the proposal, Commissioner for Regional Policy, Johannes Hahn said: “We at the European Commission are ready to show solidarity and flexibility to those hit badly by the crisis so they can get back on the path to growth. Cohesion Policy is one of the Union’s main tools to do this. The tailor-made measures we have adopted today will help these countries make use of much needed investments: to create sustainable jobs by supporting small and medium sized business and helping them access finance, to help young people into work and to encourage innovation and research. This will be not just for the good of the countries involved but for Europe as a whole. But I should add that while this proposal does offer breathing space it cannot be a substitute for reform and acceleration in using the funds.”

László Andor, Commissioner for Employment, Social Affairs and Inclusion, added “The exceptional circumstances that prompted us to increase the EU’s share of Cohesion Policy spending in the so called programme countries are unfortunately still with us. The measure has been successful in boosting spending of EU funds on growth promoting investment and we have good reasons to extend it. As for Romania and Slovakia, following on the European Council decisions, this proposal gives them an opportunity to invest EU funds where they are most needed. The two countries should see this as an incentive to strengthen their reform and investment efforts.”

BACKGROUND

The original “top-up” measure, adopted in 2011, saw a temporary increase of EU co-financing, until the end of 2013, of up to 10 percentage points upon request, for those countries hardest hit by the crisis, Ireland, Hungary, Latvia, Greece, Portugal and Romania.

The measure does not represent new funding but it allows an easier implementation of funds already committed under EU cohesion policy. The EU contribution would be increased to a maximum of 95%, thereby reducing the national co-financing requirement to only 5%. In concrete terms, this would correspond in 2014 to around €500m with about €400m for Greece, €100m for Portugal and €20m for Cyprus (these three countries are expected to receive financial assistance under a macro-economic adjustment programme in 2014).

The second measure in this proposal responds to the request of the European Council on the EU’s future budget in February for the Commission to explore ways to make it easier for Romania and Slovakia to spend EU Funds.

Member States Cohesion Policy allocations are divided into annual amounts which must be spent within two or three years, depending on the country. This rule is known as the ‘N+2 or N+3’ rule, with N being the start year when the money is allocated. Any of that annual amount which is not claimed by the Member State within that period, is automatically deducted from their allocation and goes back into the overall EU budget.

Today’s Commission’s proposal extends the N+3 rule for Romania and Slovakia which would have otherwise expired in 2013. It gives them more leeway to spend and claim back EU money reducing the risk of losing funds.

Further information

Increasing co-financing rates for EU funds – boosting European economic recovery IP/11/942

Commission adopts plan to reprogramme €21 million of regional funds for growth and jobs in Cyprus IP/13/374