COVID-19

Europe is experiencing its worst economic shock since the Great Depression, with devastating consequences for millions of citizens and businesses, and rising territorial disparities. In this context, CEMR’s Executive Bureau held a discussion with European Commissioner for Cohesion and Reforms Elisa Ferreira on how to best use EU cohesion funds for a sustainable recovery.

The EU responded to the crisis by unblocking over 37 billion euros in unspent cohesion funds to be spent on emergency health and social support measures. “Cohesion policy was one of the EU’s very first budgetary responses to COVID” said CEMR President Stefano Bonaccini. “This shows that cohesion is not only fit for purpose when it comes to correcting territorial disparities, but also a tool to adapt to an emerging crisis.”

Bonaccini stressed that local and regional governments are facing enormous fiscal losses as a result of the crisis (see our brand new study on COVID-19’s impact on local finances). He added that these should not prevent long-term investment in sustainable development: “We have to redesign our territories and there will be a new season of resilience.”

Ferreira: We will recover together or not at all

Commissioner Ferreira outlined the EU’s social and economic response to the coronavirus pandemic, noting it does not have responsibility for health matters. In addition to the use of cohesion funds, this has included a loosening of state aid rules, unblocking billions of euros of emergency funds for medical equipment and support to businesses, and the proposal of Next Generation EU, a 750 billion euro long-term recovery plan.

Noting that COVID’s impact has been highly uneven in different countries and territories, Ferreira stressed the need for solidarity for all of Europe to recover. “Half of Europe risks a double-digit loss of GDP, which means a lot in terms of employment”, she said. “Either we will recover together or we will not recover at all. We need to put cohesion and rebalancing at the centre of our agenda.”

Local leaders react

Mayors and other local leaders took the opportunity to ask questions and raise a number of issues to the commissioner. Karlsruhe County President Christoph Schnaudigel asked how the Commission will ensure coherent action between existing cohesion funds and the new Next Generation EU funds. Mayor of Gdansk Aleksandra Dulkiewicz stressed the need for an environmentally-friendly recovery.

Carola Gunnarsson, the Lord Mayor of Sala (Sweden), mentioned a number of issues, including the need to better coordinate European funds. “Investments are made in different funds and that makes development very hard”, she said “It’s very hard at the local and regional level when we don’t coordinate.”

Carlos Martínez Mínguez, the Mayor of Soria (Spain), warned of rising territorial disparities and cited local government associations’ expertise and information as crucial to tackling the issue. “COVID-19 highlights the inequalities between citizens and territories”, he said. “This inequality is only increasing. To remedy this, the local and regional governments would like to become the main players in the allocation of recovery funds.”

Flo Clucas, Councillor for Cheltenham (UK), emphasised the great opportunities to learn through exchanging best practices and the need to develop people’s skills to make local communities more self-reliant. “There is a huge amount there that all of us can learn from to make the best of a very bad situation”, she said.

Towards a local-friendly recovery

The EU’s long-term recovery measures, notably the new multiannual budget for 2021-2027 and the Next Generation EU programme, now must be approved by all national governments in the EU Council and by the European Parliament. CEMR will work to make sure that local and regional governments are consulted on the implementation of these programmes and that they truly reflect the needs of Europe’s 100,000 municipalities and regions.

For her part, Ferreira said that national associations of local and regional governments had a crucial role to play in the recovery: “There are so many networks of cities and regions which are absolutely essential to exchange experience and have discussion of the issues on which some have made progress and others still have to make the progress.”