It takes two to tango: Competitiveness and Cohesion

October 2024

The EU has long sought to strike a balance between competitiveness and cohesion, ensuring that economic growth benefits all member states and regions, not just the most prosperous. The European Single Market and Cohesion Policy have played a crucial, intertwined role in achieving this delicate balance. However, debates about their shape and evolution, especially in times of budgetary constraints and global competition, suggest that this balance may be shifting. It is therefore worth exploring the interplay between the two and reflecting on the importance of maintaining both to ensure a prosperous, competitive and inclusive EU.

The interplay between competitiveness and cohesion

Since their inception, the European Single Market and Cohesion Policy have been designed to work together to promote economic integration while mitigating the potential inequalities that may result from it. Established in 1993, the European Single Market removed internal borders and harmonised rules to promote the free movement of goods, services, capital and people. It has created a huge integrated market, boosting competitiveness and efficiency across the EU. However, with greater competitiveness comes the risk of regional disparities, as economically stronger regions are more likely to reap the benefits of market liberalisation.

This is where Cohesion Policy comes in. Designed to promote economic, social and territorial cohesion, the policy helps especially less developed regions to catch up by providing targeted financial support to boost their development potential. Cohesion Policy aims to help that the benefits of the Single Market are spread more evenly across all member states, especially those at risk of being left behind.