Navigating turbulence: How Cohesion Policy helps tackling crises

December 2023

In the face of the COVID-19 pandemic and the ongoing war in Ukraine, Europe found itself navigating through unprecedented challenges. The impacts of these crises extend beyond immediate health concerns and geopolitical tensions, affecting the socio-economic fabric of regions and societies.

The EU has been important in responding to the crises and cushioning their effects on local and regional development. As there is no allocated EU-level reserve, Cohesion Policy is often perceived as a source of emergency funding. Given its overall financial volume, it is the most important part of the EU budget that can be mobilised to address various aspects of unexpected shocks.

This blog post delves into the distinctive instruments deployed to counter the effects of the COVID-19 pandemic and the crisis caused by the war in Ukraine. The crises instruments under the umbrella of Cohesion Policy include CRII/CRII+, REACT-EU, CARE/CARE+, FAST-CARE, and SAFE. Each instrument has unique characteristics and funding allocations. These mechanisms aimed to provide liquidity, flexibility, and support for sectors most affected by the crisis.

Mitigating the socioeconomic impact of the COVID-19 pandemic

The COVID-19 pandemic has left an indelible mark on the global landscape, impacting economies, societies, and health systems. In Europe, the pandemic's effects were felt unevenly, with significant regional variations in socio-economic development. Looking beyond the devastating implications on people’s health and excess death rates, the debate about the impacts on cohesion concerns the impact on the socio-economic development and prospects of regions in Europe. Gross Value Added (GVA) data for 2020 allows for a comparative regional analysis of changes in the wake of the pandemic. Southern Europe, in particular, faced the most detrimental impacts, while parts of Northern and Eastern Europe were less affected. The pandemic's economic consequences mirrored those of the 2008 financial crisis, potentially reinforcing existing North-South imbalances in the EU. The lowest declines in GVA are to be found around the Baltic Sea as well as in the Netherlands, Ireland, Luxembourg, Romania, and some regions in Bulgaria. See also our earlier blog post on the impacts of the pandemic (Opens in a new window).

Recognising the urgent need for action, the EU swiftly implemented the Coronavirus Response Investment Initiative (CRII) and CRII+ packages in March and April 2020, respectively. These initiatives modified regulations to enhance the flexibility of Cohesion Policy funding, allowing the redirection of resources toward COVID-19-related measures. CRII/CRII+ measures included:

• 100% EU-financing option.

• Reallocation of financial resources among funds, categories of regions, and priorities.

• Increased flexibility in financial instruments and simplified re-programming procedures.