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How to read the EU budget deal? II

Structural and Cohesion Funds, if properly used, can represent an important instrument for economic growth. The European Council conclusions of 8 Febr

Publishing date
13 February 2013

How to read the EU budget deal?

How to read the EU budget deal? I

Structural and Cohesion Funds, if properly used, can represent an important instrument for economic growth. The European Council conclusions of 8 February 2013 include the decision to impose a capping to the maximum amount of Structural and Cohesion Funds each member state can receive per year. The capping is set at 2.35 percent of GDP or 2.59 percent if average real growth over 2008-2010 was lower than - 1 percent.

How does the capping affect the allocation of funds compared with the current 2007-2013 MFF?

We calculate the current allocation of Structural and Cohesion Funds as a share in GDP and identify countries for which the annual average amount in 2007-2013 was above 2.35 percent[1]. We account for real GDP growth over 2008-2010 in each of these countries and set the capping at 2.59 percent where the average economic growth rate is found to be lower than - 1 percent. We then calculate how much each country is virtually losing compared with the allocation received under the MFF 2007-2013.

Table 1 shows the results. Unsurprisingly, the capping impacts only on new Member States, as they are those that received the largest amounts of Structural and Cohesion Funds as a share of their GDP. But some of them are losing more than others.

 

Table 1: Loss in Structural and Cohesion Funds compared with 2007-2013

MFF_01

Source: Bruegel based on Benedicta Marzinotto, “A European fund for economic revival in crisis countries”, Bruegel Policy Contribution, February 2011 and Eurostat.

 

 


[1] The data for 2007-2013 stem from http://www.bruegel.org/publications/publication-detail/publication/504-a-european-fund-for-economic-revival-in-crisis-countries/#.URt3pPJy7gE

 

 

About the authors

  • Benedicta Marzinotto

    Benedicta Marzinotto was a Resident Fellow at Bruegel from 2010 to 2013. She is now with the European Commission as a Policy Analyst – Economist, Labour market reforms, at DG ECFIN.

    She is also a Lecturer in Political Economy at the University of Udine and Visiting Professor at the College of Europe (Natolin Campus).

    Her research for Bruegel focused on EU macroeconomic developments, EU Institutions, finance and growth. More precisely, she was working on the macroeconomics of the recent crisis, the competitiveness debate (macro and micro-approach), the role of the EU budget in the crisis and the impact of financial regulation on economic growth.

    From 2004 to 2009, Benedicta was a Research Fellow in the International Economics Programme at Chatham House. She also has experience as a freelance political economic analyst. She has held visiting positions at the Free University of Berlin and at the University of Auckland.

    Benedicta holds a MSc and PhD in European Political Economy from the London School of Economics. Her research interests include: EU macroeconomics, EU economic governance, varieties of capitalism, and labour markets institutions.

    She is fluent in Italian, English and German.

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