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As negotiations on the design of the next seven-year EU budget gather pace, Eurocities is publishing a series of articles providing evidence to demonstrate why EU funding matters for Europe’s cities and why city governments must have a stronger role in the design and implementation of key EU funding programmes.

In the first article in the series, we share the findings of the EU-funded ESPON URDICO (Urban Dimension of Cohesion Policy and Other EU programmes) project.

This is the first-ever targeted comparative analysis to examine how EU funds support different European cities in delivering both local and European objectives, how city governments use EU investments, and where gaps in EU support for cities remain.

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The ESPON URDICO analysis focuses on eight cities – Budapest, Florence, Ghent, Prague, Rotterdam, Strasbourg, Valencia and Warsaw – and analyses their participation in the EU Cohesion Policy during the 2014-2020 and 2021-2027 EU funding programme periods.

It examines how the urban dimension of Cohesion Policy is implemented on the ground, how cities interact with national and regional authorities, and how EU funding aligns with long-term urban development strategies.

At a moment when proposals are gaining traction for more centralised EU funding models based on single national plans, the URDICO analysis provides clear evidence that Cohesion Policy delivers the greatest impact when cities are directly involved in shaping and implementing investments.

“We are entering key negotiations on the next EU budget just as the EU launches a new Policy Agenda for Cities that raises expectations on cities to deliver,” says André Sobczak, Secretary General of Eurocities. “Yet the current budget proposal risks recentralising decisions that work best when they are locally led. The real question is not simplification, but which governance model will actually deliver EU priorities on the ground.”

“The URDICO research provides clear evidence that when cities can lead integrated investments, results are tangible and aligned with EU priorities. Cities are ready to deliver; what they need is a framework that secures their role as key partners.”

What URDICO analyses

Cohesion Policy remains the EU’s main investment policy for reducing territorial disparities, supporting infrastructure, innovation, employment and social inclusion across all regions and cities. Over time, the EU has increasingly recognised that achieving strategic priorities, from climate neutrality and digital transformation to social cohesion, depends on strong delivery at local level. URDICO examines how this urban dimension functions in practice.

In 2014-2020, at least 5% of the European Regional Development Fund (ERDF) was earmarked for Sustainable Urban Development, alongside the introduction of integrated territorial tools such as Integrated Territorial Investments. In 2021-2027, this earmark increased to 8% of ERDF, reinforcing the role of cities within Cohesion Policy and expanding opportunities for integrated urban action.

The analysis is grounded in extensive fieldwork, combining document analysis, interviews with local, regional and national stakeholders, and data on how EU funds reach cities through different governance and delivery channels. The study was produced within the ESPON 2030 framework by a consortium led by Politecnico di Torino, with the Metropolitan Research Institute and the University of Valencia.

Cities as strategic users of EU funds

The URDICO analysis shows that cities are proactive leaders in using EU funding from Cohesion Policy instruments such as the ERDF and the European Social Fund (ESF), innovative actions under the European Urban Initiative, and other EU programmes including Horizon Europe and LIFE.

Across Europe, more than 1,000 sustainable urban development strategies are currently being implemented through Cohesion Policy, representing over €24 billion in investment that is managed or strongly shaped by cities.

The study’s case studies illustrate how EU funding can reinforce long-term urban strategies when cities are closely involved in governance and implementation. In Ghent, ERDF funding has been embedded in long-term strategies on sustainable mobility, energy efficiency and innovation, allowing EU investments to strengthen existing priorities through strong local coordination.

Rotterdam has strategically focused EU funding on disadvantaged neighbourhoods, using integrated approaches to support employment, skills, energy-efficient housing and social innovation in areas such as Rotterdam South.

In Prague, Integrated Territorial Investments have enabled coordinated EU-funded action across transport, climate adaptation and research infrastructure at metropolitan scale, despite the absence of formal metropolitan governance.

Meanwhile, Strasbourg demonstrates how EU investments can be aligned with climate neutrality and cross-border cooperation objectives through strong multilevel governance. Warsaw shows how large-scale Cohesion funding can underpin major transport, energy efficiency and social investments even in a highly centralised governance context.

EU funding as a strategic response to urban challenges

The analysis also shows that EU funds are helping cities tackle their challenges in a strategic and forward-looking way, particularly when investments are aligned with long-term urban priorities rather than fragmented or isolated projects.

Across the cities studied, Cohesion Policy funding is used to combine infrastructure, social, environmental and innovation objectives, enabling cities to address complex challenges such as climate transition, mobility, social inclusion and economic transformation in an integrated manner.

The Polish capital Warsaw represents large-scale, strategic absorption of Cohesion funding, receiving several billion euros across the ERDF, the Cohesion Fund and the ESF in recent programming periods. EU investment has supported transformative projects such as the expansion of Metro Line II, major upgrades to public transport, energy-efficient renovation of public buildings, and the development of digital and social services.

In Rotterdam, ERDF resources have been strategically concentrated in disadvantaged areas such as Rotterdam South, supporting integrated action on employment, skills, energy-efficient housing and social innovation, closely aligned with long-term urban and neighbourhood strategies.

Florence and Valencia show how medium-sized cities use EU funding to combine urban regeneration, climate adaptation and innovation, linking cultural heritage, green infrastructure and sustainable tourism to broader economic and environmental objectives.

Taken together, these examples show that EU funds are most effective when cities are able to use them strategically: aligning investments with long-term development plans, combining multiple policy objectives and tailoring solutions to local needs.

Where cities have the capacity and mandate to do so, Cohesion Policy becomes a powerful tool for turning European priorities into tangible results on the ground.

When cities lack influence, impact weakens

The URDICO analysis also demonstrates the reverse: when decision-making is overly centralised, fragmented or shaped by political tensions, EU funding becomes harder for city governments to access, less coordinated across policy areas and less visible at neighbourhood level, ultimately weakening its impact on the ground.

The EU Recovery and Resilience Facility, introduced following the Covid-19 crisis, added a major funding layer, but the analysis finds that its highly centralised and performance-driven design often marginalised cities and limited place-based adaptation.

The experience of Budapest illustrates these risks. While the city benefited from EU-funded transport, environmental and energy-efficiency projects in the 2014–2020 period, access to place-based urban funding remained tightly controlled by the national government. Since 2019, political conflict and increasing centralisation, combined with Hungary’s rule-of-law disputes with the EU, have delayed or blocked funding in the 2021–2027 period.

As a result, many well-prepared projects in housing, climate adaptation and social inclusion have stalled, showing how national-level governance arrangements and political tensions can significantly weaken the urban impact of Cohesion Policy, even where local capacity and strategic alignment are strong.

The city’s experience serves as a warning that future EU funding models could again reduce cities to implementers of national priorities, even when cities are best placed to deliver EU objectives on the ground.

What needs to change

Overall, the URDICO analysis provides evidence showing that when cities are given clear roles and adequate instruments, such as Integrated Territorial Investments, delegated management roles or dedicated metropolitan programmes, Cohesion Policy interventions tend to be more integrated, territorially sensitive and aligned with local needs. 

URDICO calls for a renewed commitment to subsidiarity and partnership in the next EU budget, with cities, metropolitan areas and regions acting as co-leaders alongside the EU and national governments in the design, management and implementation of EU funding.

To achieve this goal, the analysis recommends the following actions:

• Cities should take a stronger leadership role in the EU investment framework by improving governance across functional urban areas, managing EU funds for urban priorities more strategically, and strengthening institutional capacity through training and learning.

• National and regional governments should turn the partnership principle into real multilevel cooperation. This includes creating national programmes for cities and metropolitan areas, promoting the use of multiple programmes and funding sources together, helping cities overcome co-financing barriers, and allowing EU funds to be allocated based on the needs of specific places.

• The EU institutions should give cities a stronger role in shaping Cohesion Policy. This means supporting integrated multilevel governance, reaffirming place-based approaches and flexible programme management, strengthening decentralisation and political cooperation, and ensuring that urban funding remains earmarked, stable, and suited to cities’ needs.

Commenting on the URDICO evidence and recommendations, Andre Sobczak added: “Our message to EU policymakers is simple: do not lower ambition on the urban dimension of the EU budget. Learn from the URDICO project’s evidence to strengthen what has worked and fit it into the new budgetary framework through mandatory urban chapters in the National and Regional Partnership Plans, strong urban earmarking for city-led integrated strategies, and a dedicated EU-level programme and budget line for cities.

“This is how to ensure the next EU budget delivers visible results, strengthens cohesion, and supports Europe’s competitiveness where it is built every day: in cities and urban areas.”

The analysis findings were presented by ESPON and Eurocities at a joint event in January, attended by city representatives and EU officials. You can watch all the event discussions in this video:

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Read the full findings of the ESPON URDICO (Urban Dimension of Cohesion Policy and Other EU programmes) project, including the full report, policy brief and eight city case studies.