Reimagining cohesion and EU policies: A sectoral approach

January 2025

The EU has long sought to balance economic, social, and territorial cohesion with its goals of global competitiveness and innovation. However, this balance is increasingly challenged as the EU navigates shifting priorities in a rapidly changing world. In this context the report ‘The future of EU cohesion: Scenarios and their impacts on regional inequalities (Öffnet in neuem Fenster)’ commissioned by the European Parliament explores different scenarios.

In a previous blog post (Öffnet in neuem Fenster), we focused on the integrated approach scenario. In contrast, this blog post focuses on a scenario for a sectoral approach, in which EU policies operate in isolation, prioritising growth and competitiveness over cohesion.

Scenario assumptions

The sectoral approach is based on the conviction that improving the EU's global competitiveness requires prioritising growth-related policies. Key assumptions include:

• Competitiveness-driven financing: The Multiannual Financial Framework (MFF) would focus on sectors with the highest economic returns, such as innovation, research and digitalisation, to the detriment of horizontal and cohesion objectives.

• Policy fragmentation: EU policies would operate independently with limited coordination. Each policy area would pursue its own objectives without reference to broader territorial or social objectives.

• Reduced role for cohesion policy: Cohesion policy would be reduced to a flanking role, supporting only the most needy regions and areas with severe geographical handicaps.

• Coordination at national level: With less integration at EU level, member states would assume greater responsibility for coordinating policies and addressing regional needs.

• Performance orientation: Policies would adopt a results-oriented approach, focusing on short-term economic outcomes rather than long-term cohesion objectives.

Fragmentation in action (the scenario)

In this scenario, EU policies develop into silos, each pursuing its own objectives without coordination. Cohesion policy loses its integrative role and shifts its focus to targeted support for the least developed regions, including those referred to in Article 174 of the Treaty on the Functioning of the European Union (TFEU). This narrow thematic and territorial focus significantly reduces its share in the MFF.

Sectoral policies dominate the policy landscape, emphasising high-growth sectors and areas with an immediate return on investment, such as innovation and infrastructure. These policies often overlook their territorial impact and adopt a spatially blind approach, disregarding geographical disparities in their design and implementation. This leads to potential conflicts and inefficiencies at national and regional level. The lack of integration exacerbates these challenges, with little or no effort to align sectoral objectives with cohesion.

Management approaches in this scenario shift towards centralisation. This reduces the role of local and regional authorities in decision-making, leaving them to cope with increased administrative burdens and less flexibility. For cohesion policy, shared management structures remain, but are limited to a narrower set of priorities and regions.

Territorial cooperation faces new hurdles in this fragmented environment. Although it remains an important tool for promoting cross-border and transnational cooperation, the lack of coordinated funding mechanisms undermines its effectiveness. Regions need to do more to pool resources and tackle common challenges.

The overall policy framework reflects a shift in priorities, with economic growth and global competitiveness taking precedence over cohesion, solidarity and sustainability.

Expected impacts

The 'sectoral approach scenario' offers a glimpse of a future where EU policies prioritise efficiency and performance, but struggle to address wider regional, social and environmental disparities. By separating cohesion and sectoral objectives, this scenario pictures a fragmented policy landscape with far-reaching implications for the Union's territories, citizens and integration.

Economically, the sectoral approach promises to boost the EU's global competitiveness by channelling resources to high performing sectors and regions. However, this comes at the expense of territorial cohesion. Less developed regions struggle to compete for funding and risk falling into development traps. While some regions prosper by capitalising on their existing advantages, others are left behind, widening regional disparities. The resulting imbalances threaten the integrity of the single market and may undermine the long-term economic stability of the EU.

In the environmental field, the pursuit of economic growth risks sidelining environmental objectives. The fragmented policy landscape leaves little room for coordinated climate action, leading to uneven progress across regions. Investment in green innovation may be concentrated in high-performing areas, neglecting less competitive regions, which often face the greatest environmental challenges. This could exacerbate biodiversity loss and climate vulnerability, jeopardising the EU's sustainability goals.

Socially, development suffers from this fragmented approach. As each policy prioritises its own objectives, horizontal initiatives on inclusion, equality and quality of life are neglected. Vulnerable groups in under-resourced regions face increased risks of poverty and exclusion. The lack of coordinated social policies increases disparities and undermines the sense of solidarity and common purpose within the EU.

Territorially, the sectoral approach favours regions with established infrastructure, skilled labour and innovation capacity, especially urban areas and specialised centres. Remote and less competitive regions struggle to attract investment, exacerbating territorial disparities. Regions lacking administrative capacity face additional challenges in navigating the fragmented system, further limiting their development prospects.

Finally, by prioritising competitiveness over cohesion, the sectoral approach risks undermining European integration. Regional disparities fuel discontent and Euroscepticism, challenging the EU's core values of solidarity and inclusiveness. The fragmented policy landscape could lead to an EU of disconnected regions rather than a

Conclusions

The sectoral approach scenario illustrates a departure from the EU's traditional focus on cohesion. By prioritising competitiveness, it offers potential economic gains but at the cost of increased regional, social and environmental disparities. This fragmented policy model challenges the EU's ability to promote inclusive and sustainable development across its territories.

While the sectoral approach may improve short-term economic performance in selected regions, it risks long-term fragmentation and discontent. Policymakers must carefully weigh these trade-offs and consider whether the pursuit of competitiveness is consistent with the EU's broader goals of unity and equity.

As the debate on the future of cohesion policy continues, this scenario highlights the complexity of balancing sectoral priorities with territorial cohesion. More details on this scenario are available in the EU Parliament report: The future of EU cohesion: Scenarios and their impacts on regional inequalities (Öffnet in neuem Fenster).

by Kai Böhme