Should the European Semester include territorial cohesion?

March 2025

To ensure the future of the EU and all its places and people, a recent ESPON report on the stocktaking review of the Territorial Agenda (Abre numa nova janela) suggests strengthening the link between the cohesion objective and the European Semester.

Why should EU and national policies strengthen cohesion?

Cohesion is a core value of the European Union, enshrined in Article 3 of the Treaty on European Union (TEU) and Article 174 of the Treaty on the Functioning of the EU (TFEU). It aims to reduce disparities between regions and create opportunities for all territories, ensuring that no place is left behind. However, despite decades of cohesion policy, regional disparities persist and new territorial challenges - such as demographic change, climate adaptation and economic transition - require a more integrated response. If cohesion is to remain a guiding principle, it must be embedded not only in cohesion policy, but in a wide range of EU and national policies that shape economic and social development. Otherwise, widening disparities risk leaving people and places behind, undermining the very foundation of the EU and fuelling fragmentation, potentially threatening European unity. The Territorial Agenda 2030 (Abre numa nova janela) calls for a future for all places and all people in the EU, and provides a framework to operationalise cohesion across policies and levels of governance.

What is the European Semester?

The European Semester, introduced in 2010, is the EU's annual cycle of economic policy coordination. It provides member states with country-specific recommendations based on an assessment of their economic, fiscal and structural policies. While initially focused on macroeconomic stability, the European Semester has evolved to include broader objectives such as the green and digital transitions, social policies and investment priorities. It plays a crucial role in aligning EU and national policies, ensuring that economic governance is coherent and strategic at national and EU level. However, territorial cohesion remains largely absent from this framework, meaning that spatial disparities and the specific needs of different regions receive little attention in economic planning at EU level.

As a side note, the envisaged national plans under the future EU budget could provide an opportunity to align territorial cohesion objectives with broader investment strategies, ensuring that EU funding contributes to reducing disparities between territories (see also previous blog post (Abre numa nova janela)).

Why link the European Semester and cohesion?

Cohesion policy remains the main EU instrument to address territorial disparities, but it operates separately from the economic governance framework of the European Semester. The ESPON report on the stocktaking review of the Territorial Agenda 2030 (Abre numa nova janela) launched the idea of better integrating territorial cohesion into the European Semester in order to improve policy coordination and address regional disparities more effectively. Integrating territorial cohesion into the European Semester could have several benefits:

• Mainstreaming territorial cohesion: Instead of being limited to cohesion policy, territorial cohesion principles would influence broader EU and national policies, ensuring that investments and reforms take into account spatial impacts.

• Better coordination: The European Semester aligns national economic policies with EU objectives. Incorporating territorial cohesion would improve synergies between cohesion policy, EU funding instruments and national reforms.

• Greater political commitment: Country-specific recommendations within the European Semester carry political weight. If they included references to territorial cohesion, member states might be more likely to take action to address regional disparities.

• Performance-based funding: As EU funding moves towards performance-based mechanisms, territorial objectives in the European Semester could provide a clearer framework for measuring progress on cohesion.

How to go about?

Initial proposals suggest several ways to embed territorial cohesion in the European Semester, ensuring that regional disparities are systematically addressed and that territorial considerations are mainstreamed into economic and policy coordination at EU level:

• Strategic Territorial Reference Framework: In order to strengthen the territorial dimension in the European Semester, there is a need for well-defined priorities, a common sense of direction on which to base the work. This could be a common territorial vision for Europe, setting out ideas for the future of the European territory, building on the territorial analysis provided by the Cohesion Reports, the JRC and ESPON.

• Inclusion in country-specific recommendations: Ensure that the European Semester explicitly takes territorial disparities into account when assessing national policies and making recommendations.

• National cohesion plans: In future, a plan for each country is envisaged, linking EU investment with reforms and national and private funding. These national plans should explicitly address the territorial dimension of the planned investments and reforms, how they will help to better exploit the country's diverse territorial potential and reduce territorial disparities and development traps. (see also previous blog post (Abre numa nova janela))

• Set territorial targets: Defining indicators and territorial targets could help to track progress in reducing regional disparities at different geographical levels - from intra-regional to national and European. They can also address a wide range of thematic objectives, such as reducing development traps, increasing competitiveness, strengthening cross-border value chains.

• Strengthening multi-level governance: Embedding the principles of partnership and stakeholder involvement in the European Semester process, could help to ensure that local and regional actors contribute to policy discussions.

What are pros and cons?

Integrating territorial cohesion into the European Semester could help to ensure that cohesion is not confined to specific policies, but is embedded in broader EU and national strategies. It would also significantly increase the visibility of territorial cohesion, leading to greater political commitment and accountability at all levels of governance. The alignment of EU funding with national reform priorities could also be improved, ensuring a more strategic and coordinated use of resources. Moreover, the ability to set and monitor territorial targets under the European Semester would allow for more structured and performance-based policymaking.

However, there are also potential challenges. The European Semester is already a complicated process, and the addition of territorial cohesion considerations would increase its complexity. Member states may also resist such integration, especially those that see economic coordination as separate from cohesion objectives. Moreover, identifying clear indicators and mechanisms to measure effects on territorial cohesion may be more challenging than it sounds, and poor indicators could undermine efforts to achieve tangible results.

Several points deserve further reflection. First, how can territorial cohesion be integrated into the European Semester in a way that is consistent with the broader debate on EU budget reform? Second, what role should national and regional governments play in the design and implementation of territorial recommendations? Finally, how can the integration of territorial cohesion into the European Semester be structured to minimise administrative burden while maximising effectiveness?

Conclusion

Incorporating territorial cohesion into the European Semester would mark a significant shift in EU governance, ensuring that regional disparities are addressed not just through dedicated funding but as a core principle of economic coordination. However, achieving this will require careful design, political commitment and strong multi-level governance. As the EU looks ahead to its next strategic cycle, the question remains: will territorial cohesion remain a “peripheral” policy objective or can it become a guiding principle for all EU action?

by Kai Böhme