The EU’s recent crises and complex geopolitical landscape means the EU budget should be rethought in terms of crisis management and increasing spending demands. Despite these pressures, future Multiannual Financial Framework (MFF) discussions are more likely to focus on reallocating existing funds rather than expanding the EU budget.
This situation has put cohesion policy, the EU budget’s largest spending item, under scrutiny. Its potential role in financing new EU priorities could lead to clashing goals and deviation from its primary objectives. Additionally, declining absorption rates and overlap with the Recovery and Resilience Facility (RRF) have raised concerns about its efficiency.
Despite the EU budget’s inherent rigidity, flexibility in cohesion policy has been evoked or used in various contexts. Flexibility is being increasingly advocated in the context of simplifying cohesion rules for managing authorities (executive flexibility). Flexibility in reallocating funds across programmes and regions happened during the Covid-19 pandemic as a crisis response (extraordinary flexibility). Finally, flexibility in reallocating funds towards new strategic priorities has been recently introduced following economic security considerations (extended flexibility). Each of these types of flexibility has its legitimacy but also limitations, also explaining the lack of consensus on the desirable extent and types of flexibility in the next programming period.
To shed light on this issue, this CEPS In-Depth Analysis paper puts forward three sets of options to enhance these three different types of flexibility in cohesion policy.
Increasing extended flexibility can enable the EU to support new priorities and make funds more efficient and effective in addressing emerging needs while retaining its core objectives. Although experience with this form of flexibility is very limited, it may become more in demand as new investment priorities emerge. Options to enhance such flexibility to promote new priorities, like the EU´s competitiveness and growth, include creating ‘place-based’ thematic initiatives within national envelopes, allowing Member States to ‘recycle’ de-committed funds and imposing targeted compulsory transfers to EU-level programmes, along with smart incentives for fund reallocation.
