European Regional Development Fund (ERDF)

The European Regional Development Fund (ERDF) is one of the main financial instruments of the EUʼs cohesion policy. Its purpose is to contribute to reducing disparities between the levels of development of European regions and to improve living standards in the least-favoured regions. Particular attention is paid to regions which suffer from severe and permanent natural or demographic disadvantages, such as the northernmost regions, which have very low population densities, and island, cross-border and mountain regions.

Legal basis

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


Article 176 TFEU provides that the ERDF is intended to help to redress the main regional imbalances in the European Union. It can do that through support for:

  • The development and structural adjustment of regions whose development is lagging behind;
  • The conversion of declining industrial regions.

The ERDF has two main goals, namely:

  • Investment for growth and jobs – aiming to strengthen the labour market and regional economies;
  • European Territorial Cooperation – aiming to strengthen cross-border, transnational and interregional cooperation within the EU.

Resources assigned to the first goal have been allocated to three different categories of regions:

  • More-developed regions whose GDP per capita is above 90% of the EU average;
  • Transition regions whose GDP per capita is between 75% and 90% of the EU average;
  • Less-developed regions whose GDP per capita is below 75% of the EU average.

The ERDF also supports sustainable urban development. In the 2014-2020 period, at least 5% of the ERDF allocation for each Member State had to be earmarked for integrated actions for sustainable urban development to tackle the economic, environmental, climate, demographic and social challenges affecting urban areas.

Details of the allocation and future use of ERDF funds are determined in the Partnership Agreements. These are strategy documents drawn up by each Member State with the assistance of regional and social partners.

Thematic concentration

ERDF spending focuses on the priorities specified in this strategy. In the 2014-2020 period, the main priorities were:

  1. Research and innovation;
  2. Information and communication technologies;
  3. Small and medium-sized enterprises (SMEs);
  4. The promotion of a low-carbon economy.

The level of concentration required varies according to the category of regions being supported. More-developed regions have to allocate at least 80% of their ERDF resources to at least two of these priorities and at least 20% to the promotion of a low-carbon economy. Transition regions have to allocate at least 60% of their ERDF resources to at least two of these priorities and at least 15% to the promotion of a low-carbon economy. Less-developed regions have to allocate at least 50% of their ERDF resources to at least two of these priorities and at least 12% to the promotion of a low-carbon economy.

Budget and financial rules

During the 2014-2020 programming period, the EU allocated over EUR 350 billion to cohesion policy. That was equal to 32.5% of the overall EU budget for the period. Around EUR 199 billion was allocated to the ERDF. This included EUR 9.4 billion for European Territorial Cooperation and EUR 1.5 billion of special allocations for outermost and sparsely populated regions.

The level of co-financing required for projects financed by the ERDF is geared to the development of the regions concerned. In the less-developed regions (and outermost regions), the ERDF can finance up to 85% of the cost of the project. In the transition regions, this can be up to 60% of the cost of the project, and in the more-developed regions up to 50%.

European Regional Development Fund in the 2021-2027 period

In 2021, the EU entered a new multiannual programming period. Rules for the ERDF in the 2021-2027 period are established in:

  • A regulation on the ERDF and the Cohesion Fund;
  • A regulation on specific provisions for the European Territorial Cooperation goal (Interreg).

These regulations maintain the two current goals of the ERDF: ‘Investment for jobs and growth’ and ‘European Territorial Cooperation’.

They also maintain thematic concentration for the top two priorities: support for innovation, the digital economy and SMEs delivered through a smart specialisation strategy (PO1); and a greener, low-carbon and circular economy (PO2). The new cohesion policy also introduced a list of activities that are not to be supported by the ERDF. It includes the decommissioning or construction of nuclear power stations, airport infrastructure (except in the outermost regions) and some waste management operations (e.g. landfill).

For the 2021-2027 programming period, around EUR 200.36 billion has been allocated to the ERDF (including EUR 8 billion for European Territorial Cooperation and EUR 1.93 billion of special allocations for the outermost regions). Less-developed regions will benefit from co-financing rates of up to 85% of the cost of the projects. Co-financing rates for transition regions and for more-developed regions will be up to 60% and 40% respectively.

After 2020, support for cities will be reinforced. At least 8% of the ERDF resources (at national level) will be earmarked for sustainable urban development and the creation of the European Urban Initiative.

Role of the European Parliament

The European Parliament is on an equal footing with the Council of the European Union when it comes to preparing new legislation concerning the European Structural and Investment Funds. The regulation on the ERDF and the Cohesion Fund for the 2021-2027 period was subject to the ordinary legislative procedure, under which the European Parliament has full rights to propose modifications. During the negotiations on EU cohesion policy for the 2021-2027 period, the European Parliament managed to increase the level of co-financing for projects and improve the flexibility in applying the rules. In addition, it has strengthened ERDF support for cities and integrated urban policies.


Marek Kołodziejski