Download What do the recent regional GDP statistics tell us about Cohesion?

Analysis from the CPMR Secretariat – July 2015
What do the recent regional GDP statistics tell us about Cohesion?
Headline messages
- Recent regional GDP statistics reveal that regional disparities are on the increase. Gaps are widening
between Member States but also between regions in the same country
- 32 regions would change eligibility within Cohesion Policy if the 2011, 2012 and 2013 regional GDP
average was used. 31 of these 32 regions would go down a category
- The debate on the future of Cohesion Policy is a political debate above all else. However, recent
trends alone would (should!) fully justify the existence of Cohesion Policy in the post-2020 EU policy
framework and Multiannual Financial Framework.
1. Introduction and background
In May 2015, the EU statistical office published the latest Regional Gross Domestic Product (regional
GDP) for the years 2012 and 2013 at NUTS II level. The publication of these statistics is important for
CPMR regions for two reasons:



Firstly, they provide an indication of where regions are likely to fit within the post-2020
Cohesion Policy framework, assuming that there are no changes in the Cohesion Policy
architecture and the three categories of regions1 (section 2 of this note). These statistics have
no bearing on the eligibility of regions within Cohesion Policy for the 2014 – 2020 period
Secondly, the new statistics provide a reliable indication as to which Member States (and
therefore regions) are likely to benefit from the 2016 review of Structural Funds allocations
(section 3)
Finally, the statistics are also revealing for the future of Cohesion Policy more generally
(section 4)
As a reminder:
- Eligibility for Cohesion Policy is calculated using regional GDP (at NUTS II level) data in purchasing
power standard (PPS) as a percentage of the EU average
- An average of three years is taken to determine in which category (more developed, transition, less
developed) a region fits within the Cohesion Policy architecture
- The political agreement on the Cohesion Policy package for 2014 / 2020 reached in November 2013
confirmed that the reference period for Cohesion Policy eligibility would be the 2007/2008/2009
regional GDP average
1
In addition, the French ‘réforme territoriale’ will have some impact in terms of the eligibility of French regions
within Cohesion Policy. Reform of NUTS II boundaries is also to be expected before 2020.
1
- In Spring 2016, the Commission will review structural funds allocations at Member State level to take
into account the latest economic data. Member States which have most suffered the impact of the
crisis will get additional funding from within the Cohesion Policy budget
2. Analysis for EU regions and Cohesion Policy
The CPMR General Secretariat carried out a simulation exercise to evaluate the eligibility of CPMR
regions if the latest regional GDP statistics were used. The exercise took into account the average of
regional GDP for 2011, 2012 and 2013. The trends for each region and the list of regions changing
eligibility are provided in an Annex PDF file (2014 - 2020 Structural Funds eligibility - Comparison of
reference periods).
The following map shows what the eligibility of regions within Cohesion Policy would look like using
the latest GDP statistics.
Map 1 - Comparison of structural funds eligibility (2007, 2008, 2009 average vs 2011, 2012, 2013 average)
2
Quick analysis of trends
- 32 regions would change eligibility in the Cohesion Policy architecture
- Out of these 32 regions, 31 would move down a category, i.e. from “more developed” to “transition”
regions or from “transition” to “less developed”, whilst only one would move up
- One of these regions (Madeira, Portugal) would move down from the more developed regions
category to the less developed regions category
- The UK (9 regions), Spain (8 regions) and Greece (7 regions) are the Member States with the most
changes in terms of regional eligibility
- At Member State level, regional disparities are rising. They can be grouped into broad categories:
- Member States with positive growth in all regions: PL, AT, RO, SK, HU, LV, LT, BG, EST, MT.
This means that with the exception of Austria, Member States which experienced growth across all of
their regions are all countries which have joined the EU in 2004 or after that date.
- Member States with positive growth across most regions: DE, BE, CZ
- Member States with a mix of positive and negative growth regions: DK, FR, IT, NL, SE, UK
- Member States with negative growth across all regions: ES, EL, PT (with one exception), CY,
LU, SI, IE, FI, HR
- With the exception of Malta, all Mediterranean Member States2 are worse off and are below the
EU average.
- Disparities of development have increased between regions of the same country. This is particularly
true in the UK, IT, NL, PT, EL.
- Many more regions are on the verge of changing eligibility. Based on current trends, a number of
regions in the Czech Republic and in Poland, and French regions of Guadeloupe and Martinique are
likely to move up from less developed to transition regions status. A number of additional Spanish
regions and English regions are likely to drop down to the less developed regions category.
- Figures also reveal anomalies, some of which could be linked to the limits of GDP as an indicator. This
is true for the North Eastern Scotland NUTS II region which experienced a rise of 10 points, compared
to the neighbouring region of Eastern Scotland which sees a fall of 12 points
2
The following countries have been considered: Portugal, Spain, Malta, France, Italy, Greece, Cyprus, Croatia
and Slovenia
3
The following table reveals what the latest statistics would mean for the Cohesion Policy architecture.
Table 1 – Number of regions in each category
3. What consequences for the review of structural funds allocations?
The European Commission will carry out a mathematical review of structural funds allocations, as per
article 92 of the Common Provisions Regulations. In short, the review will involve recalculating
structural funds allocations for each Member State using the latest available statistics (including
regional GDP and other indicators such as population, employment, etc.) and will result in adjustments
for each Member State, the idea being that Member States and regions which have suffered most
from the effects of the crisis receive some financial compensation from the Cohesion Policy envelope.
More detailed information about the mid-term review can be found in the Annex.
In a nutshell:
- The Commission will carry out the review of Structural Funds allocations by Spring 2016
- Adjustments will be based on the latest available statistics at the time of calculation. Bearing in mind
the usual publication of regional GDP figures around March every year, the 2012, 2013 and 2014
regional GDP statistics baseline is likely to be used
- It must be remembered that the adjustments are made within the Cohesion Policy envelope (e.g.
some Member States will lose out) and that the total level of adjustments cannot exceed 4 billion
euros.
4
The highly complex nature of the process for reviewing structural funds allocations (see steps in
Annex) makes it impossible for the CPMR to work out precisely the adjustments for each Member
State.
Although it is too early to forecast which will be the likely beneficiaries of the review clause for
structural funds, one can foresee that Greece, Spain and to a lesser extent Italy, Cyprus and the UK
could receive a financial top up as a result of the review clause for structural funds. On the other hand,
Poland in particular, but also Hungary and Romania would lose out.
4. What consequences for the future of Cohesion Policy for the post-2020 period?
The fate of Cohesion Policy after 2020 lies in the hands of the stakeholders who will decide on the
shape and form of the post – 2020 Multiannual Financial Framework, and more specifically, in the
hands of the net contributors to the EU Budget.
In other words, no matter what the social, economic and territorial trends may reveal for European
regions, the question about the future of Cohesion Policy remains a political issue above all else.
Having said that, the recent regional GDP statistics are enlightening for a number of reasons:

There is less ‘Cohesion’ in Europe: regional disparities are on the increase
Regional GDP is very far from being an indicator able to capture economic, social, and territorial issues
within a European region. However, it is interesting to note that regional disparities generally have
increased at two levels:
- at the level of Member States, where one can clearly identify which countries have clearly emerged
relatively unscathed from the effects of the financial crisis, and those which were already lagging
behind before the crisis and which are continuing to plummet down the rankings
- within Member States, with wide ranging discrepancies in terms of growth between regions in the
same country, for several Member States.
5
Comparison of 2007, 2008, 2009 regional GDP average with 2011, 2012, 2013 regional
GDP average (in % of GDP EU28 average)
30
20
10
0
-10
-20
-30
min
max
Poland
Lithuania
Germany
Romania
Malta
Latvia
Austria
Slovakia
Belgium
Estonia
Hungary
Denmark
Sweden
Bulgaria
France
Czech Republic
Croatia
Portugal
Cyprus
Finland
Italy
Slovenia
Netherlands
Ireland
Spain
United Kingdom
Luxembourg
Greece
-40
National level
Table 2 – Comparison of regional GDP averages (2007, 2008, 2009 vs 2011, 2012, 2013)
The above graph compares the regional GDP average of EU regions for 2007, 2008 and 2009 with the
average of 2011, 2012 and 2013. Member States which have seen a positive evolution between both
baselines are shown in green whereas those experiencing a negative evolution are shown in red. The
vertical lines shows the difference between the region that has experienced the most growth with the
one that has experienced the least growth between both baselines, for each country.
There is no uniform pattern but it is clear from the above graph that growth has been uneven in a
number of Member States (Greece, the UK, Portugal, Belgium, Romania and Germany in particular).

Statistics show that Cohesion Policy support would be shifting to the Mediterranean
The regional eligibility map and the evolution of regional GDP statistics more generally show that
Cohesion Policy support would be shifting towards the Mediterranean in the future. Regions in
countries such as Greece and Spain (with the most eligibility changes) but also in Italy, Slovenia,
Portugal and Cyprus are concerned in particular. The UK would also be a major beneficiary.
As mentioned above, the above analysis is only valid if the current Cohesion Policy architecture was
to remain unchanged for the post-2020 period, with three categories of regions and the existing
thresholds (75% of the EU average or less for less developed regions, 90% of the EU average or less
for transition regions).

The Transition Regions category gains in importance
The newly released statistics and their impact on eligibility for Cohesion Policy shows that a rising
number of regions would be eligible for transition regions status, should the 2011, 2012 and 2013
6
average be used. The number of transition regions would rise from 49 to 58 regions, and it is likely
that that number will rise once 2014 statistics are used. This is despite all 6 Greek transition regions
moving down to the less developed regions category.
It is worth mentioning that many of these regions are highly populated regions (Outer London, West
Midlands (UK); Comunidad Valenciana (Spain) to give a few examples) with the majority of these in
the UK, Spain and France. France and the UK are also net contributors into the EU Budget.
7
Annex – The mid-term review of Structural Funds allocations
It is understood that the mid-term review of Structural Funds allocations will proceed as follows:
- a recalculation of the national allocations on the basis of the most recent historical data for regions
and Member States available at that time and compare them with the original allocation.
- for ‘capped’ Member States (e.g. Member States for which the structural funds allocations is fixed
as a percentage of their national GDP), a comparison will be made of the most recent Eurostat data
for their respective national GDP in 2014 and 2015 and the estimates used for capping purposes for
the same two year period in 2012.
- when the comparison under either component results in a difference exceeding + or – 5%, the
national allocations for the period 2017-2020 will be adjusted accordingly. The actual categorisation
of regions and Member States for programming purposes in the Cohesion Policy architecture will be
left untouched.
- there will also be an eligibility review of the Cohesion Fund. In case a Member State either becomes
newly eligible to the Cohesion Fund or loses its existing eligibility, the resulting amounts to or from
the funds allocated to the Member State for the years 2017 to 2020 will be added or substracted
- if the sum of the adjustments exceeds + or – 4 billion euros, the allocations for all Member States
concerned will be adjusted accordingly. This means that the adjustments cannot exceed more than 4
billion euros.
8