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Actions taken with structural funds to promote growth

The European Commission over the last years has taken a range of actions to enhance growth through the use of structural funds, to counter the crisis and ensure a quicker delivery of available funding. Particular attention has been given to Member States which are currently receiving special macro-economic assistance, the so called programme countries (Ireland, Romania, Latvia. Portugal and Greece). For some other Member States a re-programming of funds has taken place, to be able to invest EU funding in sectors where a quick absorption of investments can take place. All these actions have been taken to ensure that, in the light of the existing operational programmes for structural funds, growth enhancing investments are done with a long term economic benefit. An overview:

Increasing the rate of co-financing for programme countries

In August 2011 the Commission has adopted a proposal that allows temporary increase of EU co-financing up to 10 percentage points for countries receiving special macro-economic assistance (Ireland, Latvia, Greece, Portugal and Romania). The proposal was adopted in a record time by both Member States and European Parliament in December 2011. Without raising the overall EU allocation of available funds for the financial planning period from 2007 until 2013, it is possible now that Greece, Portugal, Latvia and Romania can have projects co-financed up to 95 percent, for the period that they are programme countries. With little room for spending in their national budgets this comes as a welcome help to keep growth enhancing investments going. The top-ups for Ireland could go up to 60 percent, as the current maximal co-financing rate for Ireland is 50 percent. Any raise of the co-financing rate will only take place at request of the Member States concerned.

Advances for countries hardest hit by the crisis and more flexibility since 2009

Legislative changes and targeted recommendations in force since April 2009 make means available for cohesion policy accessible through speedy procedures due to important administrative simplification and more flexibility for programme managers, frontloading of actions, cash injections, and increased use of technical assistance.

  • Within these areas a set of 13 individual measures was proposed. For example: An additional advance payment of EUR 6.25 billion for the European Regional Development Fund (ERDF) and European Social Fund (ESF) programmes to boost the cash flow to national, regional and local authorities; bringing up the advances to a total of EUR 11.25 billion;

  • Greater flexibility in programme management allowing reprogramming as a response to the crisis in order to accelerate spending in areas with more growth potential, to simplify the delivery mechanism and content of the programmes;

  • Several regulatory changes to provide simplifications of procedures and more flexibility e.g. for state aid, major investment projects as well as an opening of eligibility for energy efficiency and energy saving in the housing sector;

  • Increased technical support for the preparation of major projects and simplified use of financial instruments, like guarantee schemes, in cooperation with the European Investment Bank (EIB), in particular for setting up new Small- and Medium-Sized Enterprises (SMEs).

Help employment with the European Social Fund

To target to those most hit by the crisis and needy, the Commission has called on Member States to use the available combined EU funding and national co-financing of €22bn of European Social Fund money that is still not committed to projects. These funds can help Member States to create larger scale support schemes for young people in particular. To help Member States use the funds, the Commission is providing €4.3m of technical assistance through the ESF to help Member States develop or expand apprenticeships schemes and programmes supporting young entrepreneurs and social entrepreneurs.

Overall, Member States have shifted resources between instruments or introduced new instruments based on the labour market developments during the recession. These measures have mainly been targeted on groups of people most affected by the crisis with a focus on schemes designed to support their maintenance in job or (re)integration, and with some interventions specifically focused on sectors that had been badly affected by the economic crisis (such as manufacturing, construction and textiles). New measures have been introduced, or there has been a shift of funds in respect of existing measures in the framework of the ESF in Belgium, Czech Republic, France, Ireland, Italy, Lithuania, Latvia, Luxemburg, Netherlands, Portugal, Slovenia, Greece and UK.

For instance in Latvia, within the financial reallocation of €135 million, additional funding was allocated to the promotion of employment (€63,5 million) to provide jobs for the most vulnerable persons in the framework of the emergency employment programme; to support the upgrading of workers’ skills; to offer training opportunities for people working part-time in companies encountering difficulties; and to social inclusion (€20 million) - to develop the mid-term plans by social services in the regions targeting the vulnerable groups (people with disabilities, homeless people and persons at risk of unemployment).

Special technical assistance for Bulgaria and Romania

On 22 and 26 January 2012 the European Commission has signed agreements with Bulgaria and Romania and international financial institutions, like for instance the European Investment Bank, the European Bank for Development and Reconstruction and the World Bank, for technical assistance to national authorities in the two Member States concerned. This enables experts from these institutions to assist national experts in the handling of EU funded projects and to reduce bureaucracy, to be able to invest EU funds more rapidly.

Changing decisions on major projects

As of June 2010 only for projects above a total value of 50 million Euro (EU and national funds combined) the European Commission has to give its prior consent. Beforehand this threshold was set at 25 million Euro. With this change more projects can be started directly, whilst the overall control mechanisms for the use of EU funds remains in place.

Greater and targeted support for small companies and using funds for guarantees and loans for Greece

Small- and Medium-Sized Enterprises (SMEs) are together as a group largest provider of jobs in Europe, creating 80 percent of all new employment on average. To give them more access to credit, for an amount of 500 million Euro EU-funds have been reprogrammed, via using funds as a guarantee scheme. In Greece funds can be used as well to provide investments for existing SMEs, who are enlarging, whereas in up to now this was only possible for newly founded companies. Funds will be able to be used as well for guaranteeing bigger projects in Greece.

Priority projects in Greece

In order to create growth in Greece via quicker investments, at the initiative of the European Commission, an Action Plan with a list of over 180 strategic priority projects has been drafted in full transparency with the responsible authorities. Deadlines have been indicated, to ensure that valid projects for a total value of 11,5 billion Euro (EU and national funding combined) will be implemented by the end of this funding period in 2013, creating between 90.000 and 108.000 new jobs. The Taskforce for Greece, set up in mid-2011, is helping to strengthen the capacity of Greek authorities to accelerate implementation of structural funds investments on the ground.

Reprogramming to improve growth in vital sectors

The European Commission is continuously assisting Member States which want to focus funds on vital economic sectors with a high growth potential. For instance in Italy a recent Action Plan for the Southern or Mezzogiorno regions is underway, focusing funding on education, employment, broadband investments and railway infrastructure for a total value of 3,1 billion Euro, which can be more rapidly invested through a change of programming.