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OPEN DAYS 2012 Workshop Leverage and multiplier effect of the EU budget

OPEN DAYS 2012 Workshop Leverage and multiplier effect of the EU budget Creating greater synergies between European, national and subnational Budgets Report produced under the Framework Contract with the Committee of the Regions – Tender CdR/CDP/28/2010 “ EU Budget ”. Fabian Zuleeg

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OPEN DAYS 2012 Workshop Leverage and multiplier effect of the EU budget

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  1. OPEN DAYS 2012 Workshop Leverage and multiplier effect of the EU budget Creating greater synergies between European, national and subnational Budgets Report produced under the Framework Contract with the Committee of the Regions – Tender CdR/CDP/28/2010 “EU Budget” Fabian Zuleeg Chief Economist European Policy Centre Contact: f.zuleeg@epc.eu

  2. The European Policy Centre: independent, multi-stakeholder Brussels-based think-tank www.epc.eu Key areas of focus: the economic crisis, long term development of the EU, Europe’s economic and social model, the EU budget, Cohesion Policy and the role of LRAs.

  3. Creating greater synergies between European, national and subnational Budgets Context • A pressing need to deliver more value for money in the context of the crisis; • All eyes on the EU budget as public debt, limited financial resources and the difficulty to access credits for LRAs reduce prospects for public investment; • Improving coordination mechanisms crucial for eliminating duplication of expenditure and achieving better results with available resources; • EU trying to achieve impact on the ground by using implicit mechanisms like ‘hard law’ or ‘soft instruments’. The use of Structural and Cohesion Funds remains the main driver of alignment.

  4. Impact of EU instruments and mechanisms • on subnational budgets • Alignment of regional priorities with EU strategic objectives • Implicit mechanisms also play a role in aligning regional priorities and European objectives. • However, in the future, EU Funds have a much stronger potential for driving alignment due to: • coordination facilitated by three key strategic instruments (CSF, NRPs and PCs); • financial earmarking with overarching objectives; • co-financing requirements that imply that a large part of the national co-financing is geared towards European objectives.

  5. Impact of EU instruments and mechanisms • on subnational budgets • Alignment of regional priorities with EU strategic objectives • New economic governance – both require and (potentially) facilitate the active involvement of LRAs; • Apart from the conditions on LRAs under regional policy, stricter rules put in place as a response to the crisis. LRAs should play an important role in bringing public finances back onto a sustainable path. • Need for an important mobilisation of public (administrative) resources at MS level for streamlining of priorities at all levels of government.

  6. Impact of EU instruments and mechanisms • on subnational budgets • Leverage effect of EU co-financing on subnational public resources • The leverage effect refers to the capacity of EU funds to pool public – national, regional or local – and private resources to induce investment. Often presented as one of the big achievements of Cohesion Policy. • Leverage effect of EU co-financing – data shows significant mobilisation of funds - mostly public resources (table 8). • Additionally, EU funds have a potential to influence policy design and institutional capacity building.

  7. Impact of EU instruments and mechanisms • on subnational budgets Table 8: The share of community and national public funding and co-financing rate at regional level - OPs in Wallonia, the PACA region, Piemonte, Scotland and the North-East region in Romania

  8. Impact of EU instruments and mechanisms • on subnational budgets • Leverage effect of EU co-financing on subnational public resources • However, mechanisms put in place to enhance leverage effect break down.. • ..in crisis countries and • ..in countries with low absorption rates.. • ..due to lack of administrative capacity and public funding.

  9. Improving synergies between the EU, national and subnational budgets Recommendations • ensure that LRAs are involved in policy design and implementation; • introduce clear guidance on the link between policy interventions and money and outcomes and targets; • go beyond aiming to leverage MS co-financing, focusing on achieving sustainable, inclusive and smart growth; • consider the effects of new economic governance on LRAs, as rules and conditions under regional policy are influenced by measures for tackling the crisis.

  10. Thank you for your attention.

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