Without the right policies, transformations risk creating new territorial, social divides in EU

We are now entering the year 3 A.C. – the third year “After Coronavirus”. Because it is no exaggeration to describe this as a new era: from teleworking to profound societal changes, our lives have been upended and there has been serious economic damage. The decisive joint action we have taken at European level has helped to limit the social and economic damage – and has spurred the recovery process.

However, the impact of the crisis has been very uneven, across regions, across social groups: will we see an “asymmetric recovery”?

And after the recovery, comes a momentous transformation: the move towards the green economy and the knowledge society. This is a tremendous opportunity – new industries, new jobs – but not every region is ready to reap the benefits. In this new economy, will some be left behind?

The 8th Cohesion Report is a unique resource to answer these questions, bringing together a wealth of facts, figures and analysis. It tells a complex story, of significant improvements in the state of Europe’s regions and cities over the past decades, but also of current difficulties and future challenges.

Regions in the eastern part of the EU have generally caught up dramatically with the rest of the Union, but important gaps remain. These regions have grown on the back of low-cost advantage and infrastructure investments – drivers of growth which can only slow down over time. To see this, consider the many middle-income and less developed regions, especially in southern and southwestern Europe, which have experienced long periods of stagnation or relative economic decline.

Escaping this development trap requires targeted policies: governance, education, innovation and business environment.

These investments become particularly crucial as we look to the future, and the green and digital transitions. The new economy represents opportunities: new jobs, more competitive businesses, and better access to services. But we see the opening of an innovation divide: advanced areas forge ahead, while less developed and middle-income regions have actually become less innovative relative to the EU average. A similar divide exists for the green transition: due to their economic specialisation, some areas have a much longer road to climate neutrality than others.

All this happens in the context of a silent, yet unrelenting change: an aging (and often shrinking) population. In almost all regions, the number of children, teenagers and working age adults is decreasing, while the number of people aged 65 and over is growing rapidly. This trend continues and has important implications for the school system, the labour market, the pension system and healthcare.

Without the right policies, all these transformations – digital, ecological, demographic – risk creating new territorial and social divides.

Europe cannot afford to leave some places behind. To ensure fair transitions, I would argue for 3 key actions.

First, investment is crucial. This is a challenge, because public investment is not yet back to pre-2008 levels. In the difficult times of the last decade, cohesion investments have become increasingly relevant, often crucial. The report estimates that our 2014-20 programmes boosted GDP per head by up to 5% in less developed regions. For the coming years, as an answer to the COVID crisis, we have unprecedented financial means - the NextGenerationEU and Cohesion policy. We must work together for Europe’s regions.

Second, all policies must rediscover a sense of place. All policies – horizontal policies, recovery instruments – have spatial impacts, and we cannot turn a blind eye to this. Cohesion policy alone cannot ensure cohesive economies and societies. Other European and national policies must consider their regional impacts. In other words, a regional proofing and a “do no harm to cohesion” principle must be embedded in all relevant policy areas. Key policy decisions have been spatially blind for too long – and the price has been paid by our economies, our social fabric and our democratic systems. It is time to turn the tide.

Third, we must have more multi-level governance. Local policies need local partners: we must have cooperation among different levels of government to strengthen governance, introduce best practices, diffuse innovation, and implement tailor-made policies. Cohesion policy offers the framework to combine all these elements at the right territorial scale.

The 8th cohesion report is an excellent basis for a collective reflection among policymakers, stakeholders and citizens. In the green, digital and demographic transitions, how can we ensure that no place is left behind, that no place feels forgotten? The answers to this question will define Europe for a generation, and we must find them together. Let us make 2022 the year 1 A.C. – the start of the Affirmation of Cohesion era.

This article reflects the views of the author, which do not necessarily reflect those of the Portfolio editorial team.

Cover photo: European Union, European Commission media library