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The geography of discontent

25 March 2022

Europe is suffering from a “geography of discontent.” While inequality between EU countries has long been decreasing, albeit more slowly since the financial crisis, inequality between cities and regions across the bloc is ever on the up. Europe’s cities are growing further apart, and these disparities extend to education, job opportunities, and even how long people can expect to live.

So explained Tadashi Matsumoto Head of Sustainable Development and Global Relations at the OECD during this years’ edition of the Eurocities Economic Development Forum, #EDF22, which gathered representatives from cities, the European Commission and European Parliament, and advocacy groups, as well as local entrepreneurs.

On the one hand, said Matsumoto, the destabilising effects of the Covid19 pandemic and the war in Ukraine are likely to accelerate the transitions towards green energy and digitalisation. However, as things stand, these transitions are likely to be enacted disparately across the bloc’s localities, and the dichotomy between rich and poor will only be aggravated by inflation and the enormous numbers of refugees. This disparity, says Matsumoto, is “one of the most worrying challenges” facing Europe.

“place-based solutions”

To face it, we need “place-based solutions,” because the issues are nuanced and local. Without recognising this local element, Matsumoto said, national governments will not be able to correctly identify the priorities for recovery. This goes for short, and long term investment, he said, with local long term recovery strategies and investments being key to success.

For its part, the OECD has developed a regional recovery platform sporting a public policy database that local policymakers can consult for examples, ideas and advice. It has also identified 11 core principles that are essential to recovery, including opportunities for all, coherence, innovation and engagement. Engagement, according to Matsumoto, is the key factor, ensuring everyone from local people to cities and city networks are involved in national policy decisions.

A green transition

Creating a climate neutral future that everyone can share in the environmental and economic benefits of was one of the key concerns for cities at Eurocities Economic Development Forum 2022. Helsinki is convinced of the urgency of this, stressed the city’s Deputy Mayor, Anni Sinnemaki.

There, climate goals have just been adjusted, not to offer more opt-outs, but to bring the deadline for climate neutrality forwards from 2035 to 2030. The war in Ukraine, says Sinnemaki, only puts more pressure on the move towards green energy.

As opposed to the way that national governments talk around the energy issue and avoid firm commitments, claimed Porto Deputy Mayor Felipe Araújo, Europe’s cities are clearer on their ambitious targets, and concrete action to slow climate change. In Porto, a ‘Climate Pact’ engineered by the city brings together private companies and other stakeholders to shoulder their responsibility and take on individual climate targets and measures to reach them.

Investments in the energy cycle, says Araújo, are appealing to the public and private sector because they can have very fast and relatively certain returns. He also pointed to Eurocities as a great platform for sharing tools that could trigger green investment.

In Mannheim, the host city of the Eurocities Economic Development Forum 2022, Mayor Peter Kurz explained that the local focus on sustainability, and especially on localising the UN’s Sustainable Development Goals, which had already begun in 2018, meant that they already had a solid plan for recovery in place before Covid19 even reared its head. The city consulted 2,500 people on its strategy, Mission Mannheim 2030, which will transform the city into a sustainable and green economy, including through decarbonisation of the district heating system.

“what we need is much more money than the EU can provide.”

However, Kurz warned, “what we need is much more money than the EU can provide.” He has seen estimates of between €3-€18 billion needed for a carbon neutral Mannheim, and to achieve this, input and finance from all levels of government, as well as the private sector, will be vital.

Kurz pointed to the 100 Climate Neutral Smart Cities Mission as a good model for sustainable cooperation. In this European initiative, contracts are drawn up between the local, national and EU level.

Cities to rule recovery?

From representatives of the European Commission, European Parliament and cities, one paradox was decidedly evident: Cities are vital to recovery in Europe, and cities have not been sufficiently involved in planning that recovery. Member of the European Parliament Dragos Pislaru positioned the Parliament as a staunch ally of local authorities.

He conceded that despite their best efforts to compel national governments to include mayors’ voices in National Recovery and Resilience Plans, this had, for the most part, not been achieved. However, he sounded a note of hope regarding negotiations with the European Council: “If we failed to get the municipalities involved in design, we need to get them involved in implementation.”

“We did not get the results that we had hoped for”

Sinnemaki testified to Helsinki’s regrettable experience. After preparing and submitting plans and programmes that the city leadership’s on-the-ground understanding of local needs allowed them to design for effective recovery, “We did not get the results that we had hoped for,” the deputy mayor lamented.

This lack of consultation with cities was something that Araujo also attested to, calling this phenomenon “common to most of the governments in Europe.” He pointed to some practical projects in Porto, such as cutting public transport fares and brining in free public transport for children, a move which had led thousands more people to avail of buses and trams.

Araujo echoed MEP Pislaru in pointing out that, whether they like it or not, “for implementation, national government knows that they will have to involve cities.” He also noted that the trend of engagement with cities was already on the up. “Eight years ago, cities were not even participating, now they are participating more. Eurocities has a role in this.”

“Eurocities has a role in this.”

Anni Sinnemaki, Deputy Mayor of Helsinki, criticised a lack of braveness on the national level, citing for example the Finnish government only going so far as a recommendation to bring speed limits down from 50 to 30 kilometres per hour. It was up to the city to actually make this a regulation, despite an initial lack of popularity before the benefits became evident to locals. The city has gone further, regulating for circular construction sites to boost private investment.

Conversely, Sinnemaki commended the bravery of the Parliamentary State Secretary in the German Federal Ministry for Economic Affairs and Climate Action, Franziska Brantner. Addressing cities at the Economic Development Forum Brantner regretted the failure of previous German governments to work closely with cities, especially in the design of National Recovery and Resilience Plans. She announced her own intention to work more closely with cities, or, where practical to facilitate direct work between cities and the European Union.

“Sometimes we should think about helping cities from the European level directly,” she stated, “slashing” the national level out. Not in all cases, she hastened to add, but in many instances it was evident that “strong city networks can achieve much and maybe faster and less bureaucratically.”

“Strong city networks can achieve much and maybe faster and less bureaucratically.”

Brantner stated that she would like to see more bottom-up processes and experimentation across all levels of government, with national level coordination, as well as more transnational coordination, which might help countries get into a ‘how much do I put in and how much do I get out’ approach to EU membership.

Finally, she called for a reform of German federalism, saying that the question of which level or department of government is responsible for dealing with issues needs to be replaced with the question of “how do we deliver best, and one of cooperation.”

Attendees of the Eurocities Economic Development Forum 2022 learned that the European Commission shared much of this sentiment. Franck Conrad, Head of the European Commission’s Resilience Task Force, stressed the importance of the local dimension.

“we are really passing this message to the member states”

“Believe me,” he said, “we are really passing this message to the member states. But we are also limited by legislation.” The Commission cannot make it mandatory to involve local authorities, but it is pushing hard because of the clear fact that “local is a very important dimension for recovery.” The Commission, Conrad said, is always interested in the views of local governments.

To highlight the essential role of cities in recovery and resilience, not just bringing the old Europe back but forging a new and stronger one for people on the ground, Eurocities has launched a campaign, #MoreThanRecovery, which will highlight best practices from cities in this domain.

Watch all of day one of our Economic Development Forum below:

A roof over our heads

A key issue in the geography of discontent of which OECD representative Matsumoto warned is something which is more and more becoming a point of tension across Europe: housing. This is an issue that seems to defy the law of supply and demand, because even as remote working increases and people are squeezed out of city centres, property prices continue to soar.

All of Europe’s crises have been bearing down on this issue. The financial crisis meant that mortgages became less attainable, the Covid19 crisis has led to people spending more time in their homes, and the war in Ukraine has further exacerbated inflation, material costs and energy costs that make building more houses and inhabiting them comfortably an enormous challenge.

Despite member states allocating €47 billion of recovery funds to housing, Housing Europe’s Sorcha Edwards warned of a €13 billion shortfall in the necessary funding for attainable and sustainable housing in Europe, while European Investment Bank Economist Andrea Colantonio also stressed the dire need for more houses. Colantonio said that revenue from housing, which is going up, must be redirected into building more houses before the issue goes further out of control.

Though still too little too late, Edwards was glad to relate that the message from the ground is now being heard. She applauded the fact that the French Presidency of the European Union has brought the topic back into play, and that an increasing number of international and EU institutions are calling for more investments in affordable and sustainable housing.

However, she warned, despite commitments to provide housing rights to those in need, we are still seeing prices rising across Europe. This rise is exacerbated by speculative investments, which is an urgent issue that our governments need to intervene in through heavier regulation.

The connection that housing has with all aspects of the city which makes it a flashpoint of our current crises and ongoing trends also means that it can be a nexus for positive change. For example, as the construction sector is very labour intensive, investment in building new homes will also have a positive effect on the jobs market, the EIB’s Colantonio explained. As the housing sector is responsible for much of cities’ carbon footprints, investment in energy efficient retrofits and new-builds is also key to achieving Europe’s green goals, he said.

For example, in Barcelona, one-stop-shops offering advice and support to people who want to increase the energy efficiency of their homes are combatting climate change and energy poverty, Javier Burón, Manager for Housing at Barcelona City Council, said. This has led to new jobs, renovation of disused spaces, and a higher quality of life for the community.

“Everybody is recognising that we need to close this gap”

Eurocities Policy Director Silvia Ganzerla underscored the essential link between housing and sustainable recovery, advocating the use of innovative solutions like social bonds that incentivise positive behaviour in the private sector. “We’ve now come to a time where everybody is recognising that we need to close this gap,” she said. She highlighted the good practices of cities in this domain, and underlined the work of Eurocities in spreading these good practices.

Creative roots

For a successful recovery, cities have one edge on all other administrative levels: creativity. In Mannheim, the Cultural Innovation Office works on projects at the intersection of  culture and business, but also tries to invest businesses with an ‘artistic approach’ which allows them to deal more readily and creatively with difficult or unanticipated scenarios, explains the office’s Mathias Rauch.

Why invest in culture and creativity for recovery? Rauch makes a strong case. There are 90% more jobs, he says, in creative cities. This is partly because culture attracts talent and investment, and because it functions as a driver of cross-sector innovation. It has further advantages for social cohesion, as it can be a path for intercultural dialogue and understanding. As a UNESCO city of music since 2014, it naturally figures in their projects, for example one that explores the benefits of music in medicine.

“We consider culture to be a central aspect of any innovation ecosystem in a city”

Culture has been central to urban redevelopment, brining Mannheim from an industrial to a modern economy. The enormous Multihalle is an open space that is given to groups for cultural activities such as exhibitions, but also those who want to host political meetings or sports events, from boxing to roller-derby. “We consider culture to be a central aspect of any innovation ecosystem in a city,” Rauch insists.

As a lot of culture happens at night, the Mannheim was the first German city to introduce a ‘Night Mayor,’ a one-stop agency for all bar and club activity that can mediate disputes between all night-time operators and work with them to co-create innovative formats for nightlife.

Hamburg also uses a night mayor, and has found the position instrumental to governing and inspiring night-time culture. Hamburg, explains HafenCity Curator Ellen Blumenstein, has also found a marriage of culture and economic enhancement by leaving “institutional walls” to “bring culture into the city to everyone and create open discussion.” As a city with a strong design and fashion industry, the link between culture and employment is even more evident. The city also works to promote the cross-section of culture and new technologies, for example through ‘The Gate’ a self-guided art-walk and audio library through which people can embark in local exploration.

Entrepreneurship

But you don’t have to be an artist to have a creative spirit – that’s something that already animates many entrepreneurs. Cities are working hard to facilitate a positive startup ecosystem through initiatives like ‘Leuven Mindgate,’ where the city of Leuven uses networking and mentoring to turn the old adage that ‘90% of startups fail’ around into an 80% success rate.

Mannheim’s sectoral startup centres support over 300 startups, training them in marketing, law, human resources and management, as well as providing them with key information about the local business ecosystem. Most useful, thinks Burak Bas of Next Mannheim’s Team International, is the one-on-one contact with key industry players and potential clients. The city even gives entrepreneurs three months of free offices and personal accommodation, going as far as to help them enrol their kids in local schools.

In Vienna, says Gabriele Tatzberger, Start-up Services Director at the Vienna Business Agency, grants of up to €40 million are made available to startups, while collaboration between the city and the real estate sector has resulted in new business spaces and buildings for shared workspaces. The city also gives free services to startups in 17 languages, responding to the huge diversity that exists locally.

A new cycle

“So what did we learn,” asked Eurocities Economic Development Forum Policy Advisor Branislav Machala, from the three-day event? The first message is, “place matters, it matters for economy, recovery and policy-making.”

“place matters, it matters for economy, recovery and policy-making.”

Next, it’s clear that inequalities must be addressed for effective recovery, the EU has an increasing number of countries with a concentration of economic activities towards the national capital, squeezing these cities and leaving other areas behind. A coordinated and complementary approach between all levels of government is the only way overcome this and mount real recovery.

The next key point, said Machala, is that “it is expensive to build and it is expensive to buy.” The trickle-out effect is seeing rising housing prices even as people are moving away from city centres in greater numbers, in part due to a 30-40% price increase on the necessary building materials.

Solving this will have positive economic ripples, not only making cities more attractive to talent, but also stimulating the local economy through the construction sector. When budgets are low, Machala recalled the words of Ganzerla, innovative and sustainable finance is available.

It is fitting that it was in Mannheim that Baron Karl von Drais first pushed off his ‘dandy horse’ in 1817, the two-wheeled pushable frame that later evolved into the bicycle. Over the past three days, that city has been the locus for the cities of Europe to gather around the theme of economic development and push post-pandemic Europe forward into a sustainable and prosperous cycle.

Contact

Anthony Colclough Eurocities Writer

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