Fact Sheets on the European Union
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Economic, social and territorial cohesion

In order to promote its overall harmonious development, the European Union is strengthening its economic, social and territorial cohesion. In particular, the EU aims to reduce disparities between the levels of development of its various regions. Special attention is paid to rural areas, areas affected by industrial transition and regions that suffer from severe and permanent natural or demographic handicaps, such as the northernmost regions with very low population density, as well as island, cross-border and mountainous regions.

Legal basis

Articles 174 to 178 of the Treaty on the Functioning of the European Union (TFEU).

Context

Cohesion policy is the European Union’s main investment policy. It provides benefits for all regions and cities in the EU and supports economic growth, the creation of jobs, business competitiveness, sustainable development and protection of the environment.

From its very beginning, there have been large territorial and demographic disparities in the European Community (now the European Union) which could constitute obstacles to integration and development in Europe. The Treaty of Rome (1957) established solidarity mechanisms in the form of two funds: the European Social Fund (ESF) and the European Agricultural Guidance and Guarantee Fund (EAGGF, Guidance Section). In 1975, regional aspects were introduced with the creation of the European Regional Development Fund (ERDF). In 1994, the Cohesion Fund was also created.

With the Single European Act of 1986, economic and social cohesion became a competence of the European Community. In 2008, the Treaty of Lisbon introduced a third dimension of EU cohesion: territorial cohesion. These three aspects of cohesion are supported through cohesion policy and the Structural Funds.

Objectives

Strengthening its economic, social and territorial cohesion is one of the EU’s main objectives. It dedicates a significant proportion of its activities and budget to reducing the disparities among regions, with particular reference to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps.

The EU supports the achievement of these objectives through the use of the European Structural and Investment Funds:

  • the ESF;
  • the ERDF;
  • the Cohesion Fund;
  • the European Maritime and Fisheries Fund (EMFF);
  • the Just Transition Fund (JTF).

The European Social Fund, called European Social Fund Plus (EFS+) since 2021, is the Union’s main instrument supporting measures that aim to prevent and combat unemployment, develop human resources and foster social integration in the labour market. It finances initiatives that promote a high level of employment, equal opportunities for men and women, sustainable development and economic and social cohesion. For more detailed information, see fact sheet (2.3.2).

The European Regional Development Fund helps to redress the main regional imbalances in the EU. It supports regions whose development is lagging behind, along with the conversion of declining industrial regions. For more detailed information, see fact sheet (3.1.2).

The Cohesion Fund provides a financial contribution to projects relating to the environment and to trans-European networks in the area of transport infrastructure. This fund may only be accessed by those Member States whose gross national income per inhabitant is lower than 90% of the EU average. For more detailed information, see fact sheet (3.1.3).

The Just Transition Fund (JTF) is a key tool for supporting the territories most affected by the transition towards climate neutrality and for preventing an increase in regional disparities. In order to achieve its objective, the JTF supports investments in areas such as digital connectivity, clean energy technologies, the reduction of emissions, the regeneration of industrial sites, the reskilling of workers and technical assistance. For more detailed information, see fact sheet (3.1.10).

To guarantee efficient use of the Structural Funds, the following principles have to be upheld:

  • Organisation of the funds by objectives and regions;
  • Partnership between the Commission, Member States and regional authorities in planning, implementing and monitoring their use;
  • Programming of assistance;
  • Additionality of EU and national contributions.

The allocation of the Union’s financial resources devoted to cohesion policy is focused on two main goals:

  • Investment for growth and jobs — aiming to strengthen the labour market and regional economies;
  • European Territorial Cooperation — supporting EU cohesion through cooperation at cross-border, transnational and interregional level.

EU cohesion policy in the period 2021-2027

A. General information and budget allocations

In the period 2021-2027, the EU’s financing is derived from two sources: the ‘classic’ multiannual financial framework (MFF), which outlines the EU’s annual expenditure limits, and the NextGenerationEU (NGEU) recovery plan, an extraordinary recovery initiative designed to aid Member States in their recovery from the COVID-19 pandemic. Cohesion policy is funded both through the MFF and, in certain cases, via the NGEU.

Resources for the ‘Investment for jobs and growth’ goal of cohesion policy amount to a total of EUR 322.3 billion (in 2018 prices, meaning in terms of the value of the currency in 2018) and are allocated as follows:

  1. EUR 202.3 billion for less developed regions;
  2. EUR 47.8 billion for transition regions;
  3. EUR 27.2 billion for more developed regions;
  4. EUR 42.6 billion for Member States supported by the Cohesion Fund (of which EUR 10 billion will be spent on the Connecting Europe Facility instrument);
  5. EUR 1 928 million as additional funding for the outermost regions;
  6. EUR 500 million for interregional innovation investments.

Resources from the ERDF for the ‘European territorial cooperation’ goal (Interreg) amount to a total of EUR 8 050 million and are distributed as follows:

  1. EUR 5 812 million for maritime and land cross-border cooperation;
  2. EUR 1 466 million for transnational cooperation;
  3. EUR 490 million for interregional cooperation;
  4. EUR 281 million for outermost regions’ cooperation.

The new JTF, which supports the territories most affected by the transition towards climate neutrality and aims to prevent the growth of regional disparities, has a budget of EUR 17.5 billion (in 2018 prices; EUR 19.7 billion in 2024 prices). EUR 7.5 billion comes from the MFF and an additional EUR 10 billion comes from the NGEU.

Another new instrument, ReactEU, was adopted in December 2020. It acted as a top-up for 2014-2020 cohesion programmes and was additional to the cohesion allocations for 2021-2027. ReactEU supported the most important sectors in making a sound recovery following the COVID-19 crisis. Its allocation (until 2023) was EUR 47.5 billion. For more detailed information, see fact sheet (3.1.11).

In the period 2021-2027, the cohesion policy has five policy objectives for the ERDF, ESF+, the Cohesion Fund and the EMFF:

  • A smarter Europe — innovative and smart economic transformation;
  • A greener, low-carbon Europe;
  • A more connected Europe — mobility and regional ICT connectivity;
  • A more social Europe — implementing the European Pillar of Social Rights;
  • A Europe closer to citizens — sustainable and integrated development of urban, rural and coastal areas through local initiatives.

The Common Provisions Regulation outlines the rules that must be followed in order to use these funds. In October 2022, the regulation was amended to facilitate the use of cohesion policy resources by Member States and regions and to increase their flexibility in order to support measures to address the migratory challenges resulting from Russia’s military aggression, introduced under the 2014-2020 and 2021-2027 programmes.

B. Amendments to the cohesion policy for the 2021-2027 period

To strengthen the EU’s industrial competitiveness by advancing in critical technologies, in 2024, the Strategic Technologies for Europe Platform (STEP) Regulation was adopted. STEP supports project investments in the development and manufacturing phases across three sectors that are key to the green and digital transitions: digital technologies and deep technology innovation, clean and resource-efficient technologies, and biotechnologies. In that regard, national authorities can redirect parts of their cohesion policy funds, including the CF, the ERDF, the ESF+, and the JTF to activities supporting STEP goals.

In December 2024, the Regional Emergency Support to Reconstruction (RESTORE) regulation was adopted to provide additional assistance for Member States affected by natural disasters occurring in 2024 and 2025. It enables Member States to re-programme funds from the ERDF, the CF and the ESF+ to cover ‘measures such as the rehabilitation of damaged infrastructure and equipment, the provision of food and basic material assistance, and healthcare support’. 

In the mid-term review of cohesion policy, in April 2025, the Commission adopted a proposal for amending Regulation (EU) 2021/1058 on the ERDF and the CF and Regulation (EU) 2021/1056 on the JTF. The amendments would allow Member States to re-programme their cohesion spending in 2025 in order to implement new programmes that fall under the EU’s strategic priorities in early 2026. The strategic priorities include improving EU competitiveness, defence, security and support for eastern border regions, affordable housing, water resilience, and energy transition. The proposal has been put forward in light of a changing geopolitical and economic landscape since the adoption of the current cohesion policy programming period in 2021.

More specifically, the proposed amendments include:

  • Providing support to large enterprises from the ERDF in critical areas, such as defence, strategic technologies and decarbonisation;
  • Enabling EU countries to use current cohesion funding to facilitate military mobility by building resilient infrastructure;
  • Doubling the amount of cohesion policy funding dedicated to affordable housing to help EU countries close the housing investment gap;
  • Encouraging EU countries to invest more in water resilience, including in digitisation of water infrastructure and reducing the impact of droughts and desertification;
  • Supporting the energy transition by promoting energy interconnectors and setting up recharging infrastructure;
  • Improving flexibility and simplification of CP for accelerating investments;
  • Strengthening the role of cities: Introducing the possibility of reallocating resources from the ERDF to the European Urban Initiative and the Interregional Innovation Investment Instrument;
  • Allowing countries to move resources from the ERDF and the CF to InvestEU Member State compartments for implementing a new InvestEU financial instrument for the achievement of cohesion policy objectives.

The proposal is now in the preparatory phase in Parliament and Council.

Role of the European Parliament

Parliament plays a very active role in supporting the strengthening of the EU’s economic, social and territorial cohesion. The legislation relating to cohesion policy and the Structural Funds is prepared under the ordinary legislative procedure, in which Parliament has an equal say with the Council.

Parliament has been actively involved in the negotiations for the reform of cohesion policy for the 2021-2027 period. This reform defines the priorities and instruments of future EU action aimed at strengthening economic, social and territorial cohesion. Parliament has strongly supported the proposals for a wide-ranging and efficient cohesion policy, which also necessitate sufficient financial resources.

Parliament has also been vocal about using cohesion policy to fight climate change, for example through its resolution of 25 March 2021 on cohesion policy and regional environment strategies in the fight against climate change. Parliament called for an increase in the use of green and blue investments in the framework of cohesion policy and called for greater synergies between different sources of funding at EU, national and regional levels. Moreover, Parliament adopted a resolution on 9 May 2023 on the role of cohesion policy in addressing multidimensional environmental challenges in the Mediterranean basin. It suggests using cohesion funds to invest in technologies and infrastructure specifically designed to recover materials from residual waste to promote a circular economy and limit and manage increasing plastic pollution and household waste.

Parliament is also working on a resolution on the ‘role of cohesion policy investment in resolving the current housing crisis’. It is currently in its draft stage at Committee level. The resolution intends to establish a list of proposals from the perspective of cohesion policy to tackle the problems that many EU citizens and households are facing in accessing decent, sustainable and affordable housing across the Union.

For more information on this topic, please see the website of the Committee on Regional Development.

 

Kelly Schwarz