EU Policy Areas

Regional policy

Although the EU is one of the most prosperous regions in the world, disparities in income and opportunity between its 250 regions are still evident. The gap between rich and poor widened in May 2004 with the arrival of the 10 new Member States whose national incomes are below the average of the old EU15.

In July 2004, the Commission published its proposals outlining how a new EU budget would finance and guide measures to support economic, social and territorial cohesion post 2006. The proposals work on a financial perspective between 2007 and 2013 of 1.24% EU GNI (Gross National Income) which is close to the maximum allowed of 1.27%. This would see approx 50% of funding applied to the new Member States and 50% to the current Member States. Objective 1, or the ‘convergence’ objective, would remain the main focus for funding, taking approximately 78% of the budget. Objective 2 would be renamed the ‘competitiveness’ objective and would be available to all regions, subject to plans submitted by Member States. The remaining monies will go on ‘cooperation’ – 4%, through projects similar to the INTERREG programme.

A number of net contributors within the current Member States have called for a ceiling on the EU budget, similar to the current level of approx 1%. Therefore, it would seem that the global budget may have to reduce from 1.24% during the negotiations that will follow in 2005. This will particularly affect the amount available to support activities promoting economic and social cohesion, particularly the ‘competitiveness’ objective or new Objective 2. Discussions on the new policy will continue throughout 2005 and 2006.

Under the new proposals, Merseyside would be classed as a Natural Effect Region – this means that our GDP has grown despite the enlargement of the EU.

The European Commission has also published its proposals for new Regional Aid Guidelines for the forthcoming financial period. A decision is likely to be taken on these in December 2005.