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In the Eurocities policy statement – Empowering Cities through the Next EU Budget – the leaders of Europe’s cities call for a stronger role in EU funding programmes to drive sustainable growth, improve social inclusion and tackle climate change. As the EU enters crucial negotiations on its budget after 2027, city leaders state that they must have a direct role in deciding where EU funds are allocated.

With 75% of Europe’s living in urban areas, cities are at the forefront of implementing innovative projects that align with EU policies and priorities. Over 70% of climate policies and 90% of climate adaptation efforts are carried out locally, and for every €10 spent on environmental policies, €8 is spent by cities.

However, despite this important role, city leaders are seriously concerned by the general trend to centralise EU funds. In the current EU budget, covering 2021-2027, this centralised management means cities have found it difficult to access funding and their specific needs have often been overlooked, undermining the implementation of EU policies.

Strengthening cities’ roles in EU policy implementation, says the policy statement, is not only beneficial for urban areas but will also support their surrounding rural areas, ensuring a more inclusive and cohesive Europe.

To achieve this goal, the policy statement says multilevel governance must be strengthened to better tailor EU policies to cities’ specific needs. It also calls for city administrations to have more direct access to EU funds, minimising their dependence on national governments, and addressing the issue of political misalignment between national and local governments.

Read the policy statement here.

Challenges of centralised EU policies and funding

The previous EU budget, also known as the Multiannual Financial Framework (MFF), covered the period 2021-2027. It supported urban development primarily through the European Regional Development Fund (ERDF) and innovation-oriented programmes like Horizon Europe. However, a significant portion of these funds are still being managed at the national level, limiting cities’ access and flexibility.

Centralised management, particularly of Covid-19 recovery funds, via the NextGenerationEU recovery plan and its Recovery and Resilience Facility (RRF), has led to the insufficient involvement of local authorities, reduced fund absorption rates, and hindered cities’ efforts in achieving timely and effective results. This national centralisation has often delayed funding, with cities facing significant obstacles in addressing local needs without adequate support from national governments.

Improved funding and autonomy for cities

To tackle these challenges, the policy statement calls on the EU to establish direct financial agreements with cities, independent of national governments. Such a model would bypass political bottlenecks at national level, ensuring cities have the resources to implement projects tailored to their specific needs.

Funds left unspent due to inefficiencies at national level should also be reallocated to city governments, allowing them to deploy resources in support of local development projects that align with EU priorities.

By improving multilevel governance, EU funds can be better aligned with local priorities. Cities should have greater input in planning and implementation, which is critical for adapting EU policies to local contexts.

Earmarking and fiscal decentralisation

The report suggests increasing earmarking for cities across EU cohesion and funding programmes. Given that cities are responsible for nearly 45% of all government investment in the EU, they are well-positioned to manage and optimise the use of EU resources.

To improve cities’ capacity to implement transformative projects, fiscal decentralisation is recommended. By granting cities more control over financial decisions, the EU can strengthen local capacities and encourage investment in infrastructure, climate resilience, and social services.

Private investment and partnerships

The report highlights the need to attract private investment, alongside EU funding, to meet cities’ ambitious goals. This could be supported by empowering cities to create ‘bankable’ projects and improving the pipeline for private sector investments.

The European Investment Bank (EIB) could play a significant role in this work, by offering tailored financial products for cities, especially in climate and social infrastructure. Collaborating on investment strategies would enhance cities’ ability to attract private capital, complementing public resources.

Simplified, transparent funding

Simplifying administrative requirements is essential to help cities manage EU funds effectively. The report suggests standardising application criteria across EU programmes, reducing the regulatory burden on city administrations.

To ensure that funds are used effectively, the report calls for transparent and proportional audit rules. A robust system of monitoring and accountability, would prevent misallocation of funds and allow for regular assessments to track progress against EU goals.

Cities are ‘indispensable’ partners of the EU

The report makes it clear that the EU must work alongside cities, utilising their innovation, ambition and expertise to secure a sustainable, just and prosperous future for everyone in Europe. As negotiations on the next EU budget continue to unfold, Eurocities and its members call on the new EU institutions to recognise cities as indispensable partners in shaping Europe’s next chapter.