Cities need stronger urban dimension in EU cohesion policy

10 July 2024

As the EU’s main public investment policy, the cohesion policy has historically supported the development of all territories across Europe, including urban areas. However, in recent years, the policy has evolved significantly and developed a fully-fledged urban dimension, making it one of the most important policies supporting investment and innovation in Europe’s cities.

This urban dimension includes key tools and principles such as multi-level governance, the partnership principle, urban earmarking and sustainable urban development, all of which ensure there is a clear role for cities in the policy’s design and implementation.

Looking ahead, the outlook for the current cohesion programme from 2021 – 2027 looks positive for cities, with the EU earmarking €24 billion to support sustainable urban development, including urban transport and social infrastructure.

But, despite these positive developments and the policy’s increased funding and resources, cities do not always have a say in where they spend their resources, and there are several areas where cities believe improvements can still be made. There are also serious concerns about the future of cohesion policy, with suggestions that the policy, and particularly its urban dimension, are under threat in the post-2027 EU budget.

The shifting political focus towards industry and geopolitics has put cohesion policy on the sidelines, while some national governments have started to promote a more centralised approach to EU investments, a step already seen in the NextGenerationEU recovery plan. At the same time, some political representatives are promoting a false division between urban and rural areas, suggesting that sustainable urban development – which in reality can promote urban-rural cooperation – should no longer be one of the focuses of the policy.

In response to these concerns, Eurocities and its members are working to ensure that the next European Commission places cohesion policy high on its agenda. Cities are calling on the EU to make the future policy stronger and inclusive of all territories.

In support of this position, Eurocities has published a new report – Outlook on the urban dimension of cohesion policy – which provides evidence showing why the urban dimension of cohesion policy must be protected, and the crucial support it delivers for cities.

Compiled with input from 29 cities across Europe, the Eurocities report highlights the objectives, achievements and challenges of the policy for cities, while also explaining how cities think it can better support them in the future.

The report reveals that many cities find the cohesion policy tools only partly fit for purpose, with insufficient budgets and fragmented funding structures. There is a strong call among several cities for more direct EU funding to enhance their agility and reduce administrative burdens.

Overall, the report highlights the need for a robust urban dimension in cohesion policy, as emphasised in Eurocities manifesto for the 2024 European elections, A better Europe starts in cities. Cities expect more from the EU to support urban transformations, particularly in areas like climate and energy investments, housing and social inclusion.

Cities make it clear that they do not want to be mere implementers of these investments, but they want to be considered full partners of the EU, with a strategic role in defining where and how the investments should be delivered.

“By putting the spotlight on the urban dimension of cohesion policy, and gathering evidence on how these funds are being implemented locally, this report from Eurocities is a contribution to the debate on the future of cohesion policy and the EU budget,” says Alessandra Barbieri, Manager of Fundraising and European Projects for the Municipality of Florence, and chair of the Eurocities working group on cohesion policy. 

“The goal is to ensure that the cohesion policy provides the effective support, resources and funding that cities require to build a just, sustainable and prosperous future for people across Europe.”

Cities’ mixed experiences in implementation

Multi-level governance, based on the partnership principle, is at the core of cohesion policy. It emphasises involving local and regional authorities in the decision-making process of the cohesion policy, alongside the EU, national governments, economic and social partners and other relevant stakeholders.

This partnership principle is complemented by the policy’s urban dimension, which earmarks specific funding for urban areas, through investment tools such as the European Regional Development Fund.

This allows cities to develop sustainable urban development strategies and deliver investments that address their local needs, including the development of clean urban transport infrastructure, energy efficient buildings, cycle tracks and footpaths.

However, while these principles are key elements of cohesion policy, Eurocities new report shows that cities experiences of their implementation has often been quite varied. This is not surprising as cohesion policy is a redistributive policy, and the allocations for cohesion investments vary greatly between EU regions, with huge differences in terms of what the minimum 8% earmarked for cities means.

It also depends very much on how national governments decide to implement the partnership principle and involve all cities in the delivery of the urban dimension. Overall, 50% of surveyed cities rated the partnership principle as good or very good, while the remaining cities found it sufficient or insufficient.

Brno, one of the more positive examples, received over €200 million during the 2014-2020 period, enabling significant metropolitan-level investments. These funds were crucial in implementing projects related to urban transport, energy efficiency, and social infrastructure. As such, they have represented one of the main sources of public investments for the city.

Similarly, Italian cities are also among significant beneficiaries. Florence and Venice, for example, highlight how this is not just because of the higher amount of EU resources to be received, but also because the government has decided to entrust metropolitan cities by developing a dedicated programme that allows them to deliver investments in a positive multi-level set-up. This has allowed Florence to benefit from significant investments that have enhanced urban mobility and cultural heritage conservation.

With €122.2 million in support, Milan received significant positive impacts, with the funds supporting numerous projects, including the development of sustainable transport systems and energy-efficient buildings.

On the other hand, cities such as Riga and Budapest, despite being significant beneficiaries on paper, have faced challenges in accessing resources due to centralisation and political influences. Despite these obstacles, they have worked towards leveraging cohesion policy funds to support local development initiatives. In Riga, the focus has been on improving public transport and urban infrastructure.

In contrast, the allocation for Gothenburg was only €2 million, not necessarily because of a lack of consideration from the national government, but because the EU resources for this wealthier region are significantly lower. Despite the positive support, Gothenburg officials considered this minimal funding insufficient for integrated investments.

Impact of Covid-19

The Eurocities report finds that the impact of Covid-19 on the implementation of the 2014-2020 cohesion policy period was profound. The European Commission introduced several emergency measures, programmes and schemes designed to offer increased flexibility and additional resources to implementing authorities.

The surveyed cities’ assessment of these measures reveals a mixed response. Many cities see the flexibility as only partly positive (44%), while a significant number view it very positively (34%). Only a small number report a very negative perception (4%).

Cities like Nantes, Malmo and Venice highlight the crucial support they received from emergency programmes such as REACT-EU to respond to critical challenges. However, Budapest noted a trend where national governments used the flexibility offered by emergency measures to centralise some investment decisions, often without sufficient local involvement.

The impact of Covid-19 has led to severe delays in the implementation of cohesion funds for the 2014-2020 period, which resulted in delays in the start of the 2021-2027 programming period. This was also aggravated by the fact that governments, including cities, have largely prioritised the funds from the Next Generation EU recovery plan, provided through the plan’s Recovery and Resilience Facility (RRF), which must be spent by 2026.

However, as outlined in the Urban Recovery Watch report, authored by Eurocities and the Global Cities Programme at CIDOB (Barcelona Centre for International Affairs), and confirmed by the cities surveyed in the new report, there are serious concerns about lack of synergies between the two EU funding instruments all contributing to administrative burdens.

Some of the cities surveyed believe the two funding programmes can complement each other, suggesting that strategic alignment with local needs could enhance their effectiveness. However, the majority of cities express concerns about potential overlaps, with cities like Lyon, Florence, Budapest and Braga emphasising the need for a clear demarcation and strategic resource concentration to prevent duplication.

Fit for the future?

The Eurocities report shows that the experiences of the 29 surveyed cities were complex and varied when it came to implementing cohesion funds, with cities having different levels of resources and very different levels of responsibility.

Despite the difficulties faced, cities are clear that the funds have been a great support for their ambitions. With that said, many cities state that they would like to be entrusted with greater resources and are calling for more direct ways to deliver cohesion funds to local administrations.

When asked whether the cohesion policy’s current tools and instruments are effective enough to deliver urban transformation, most cities highlight that these tools are only partly fit for purpose.

In relation to whether cities would prefer more direct funding through cohesion policy or are satisfied with the current earmarking approach, the responses are nuanced. While the majority of cities would like the earmarking approach replaced with direct funding (56%), a consistent group of cities is satisfied with the current approach.

The reasons for preferring more direct funding vary. Gothenburg and Terrassa highlight that it would be easier for city administrations, saving efforts in competing for funding and advocating support needs with the national government.

While Ghent supports direct funding, it stresses that the management conditions must be tailored to cities’ capacities, and Frankfurt notes potential challenges with a direct funding scheme, such as difficulties in deciding allocation criteria. As Rotterdam highlights, there are already ways of receiving funds in a more direct way which should be strengthened, for example when cities are managing authorities or implementing an Integrated Territorial Investment (ITI) strategy.

Next steps

The new Eurocities report presents a first step towards a better understanding of the urban dimension of cohesion policy and its implications for cities. As highlighted in the Eurocities manifesto ahead of the 2024 elections, cities are asking for increased support from the EU to carry out the many urban transformations that are required.

“Cohesion policy, with its unique support for urban development, is one of the key tools that can support this,” says Pietro Reviglio, Eurocities Policy Advisor and the report’s author.  “Local authorities with the capacity and capabilities to tackle complex challenges will be central to Europe’s societal transformation and resilience going forward.”

He continues: “Cities must be empowered to develop sustainable and reliable investment strategies. We need to be provided with the administrative and financial capacity to drive urban transformation.”

Looking ahead, as discussions on the future of the cohesion policy and its support from the next EU budget gather pace, Eurocities will continue to ensure that the important position of cities is recognised in the debate.

The Eurocities report will support this position, building awareness about the significant benefits of the cohesion policy for cities and support the work of Eurocities and its members to defend the urban dimension of cohesion policy in future negotiations with the next mandate of EU institutions.

Eurocities and its member cities are also involved in a recently awarded ESPON targeted analysis project (ESPON URDICO). Starting in Autumn this year, the project will provide additional evidence and data about the urban dimension of cohesion policy, with the goal to contribute to strengthening the policy in the future EU budget.


Download a copy of Eurocities new report ‘Outlook on the urban dimension of cohesion policy: Mapping the impact of cohesion policy in urban areas through the lenses of EU cities.’