In the face of global challenges like climate change, rapid technological development, pandemic viruses and Russia’s war in Ukraine, Europe’s greatest strength is its unity. But this unity cannot be taken for granted.
To preserve and strengthen it, the European Union must continue to invest in its cohesion. Promoting cohesion has been a core mission of the European Investment Bank (EIB) since its foundation in 1958. Over the course of the last EU long-term budget, between 2014 and 2020, the EIB Group supported investments worth around €630 billion, equivalent to about 16% of the European Union’s gross domestic product, in less developed, so-called cohesion regions.
The European Investment Bank’s new, bigger, bolder and more focused approach to cohesion, adopted in October 2021, aims to do even more, while at the same time ensuring that fully half of all our lending goes towards climate action and environmental sustainability.
About the report
EIB Group Activities in Cohesion Regions In 2021 is the first report in a new series of publications focussing on cohesion. The European Investment Bank adopted a new cohesion approach in October 2021 that aims to increase support for economically weaker EU regions, while focusing on the transition towards a low-carbon economy. The report looks at the long-term economic challenges that cohesion regions face, as well as the ongoing impact of shocks such as the coronavirus pandemic and the war in Ukraine. It also provides an in-depth look at the activities undertaken by the EIB Group in 2021 to raise income levels and tackle other disparities.
Key figures
For 2021 to 2027, EIB support will focus on the European Union’s 145 cohesion regions, of which 67 are transition regions and 78 less developed regions. Less developed regions are defined as regions where the gross domestic product (GDP) per inhabitant is less than 75% of the EU average. Transition regions, are regions where the GDP per inhabitant is between 75% and 100% of the EU average.
The less developed regions are mostly located in Central and Eastern Europe, as well as in Portugal, Greece and the southern parts of Italy and Spain. Many of the transition regions are former wealthy industrial regions that are now struggling to cope with globalisation and technological change. They are found across the European Union, including in wealthy countries such as France, the Netherlands and Finland.
Less developed and transition regions tend to have different investment needs. While less-developed regions need basic infrastructure and investment to catch up technologically, transition regions are generally well-endowed with transport, energy and digital infrastructure and skills but transform structurally to establish new economic sectors.
- In 2021, France, Italy and Spain were the three countries with the highest EIB lending volume overall, each country received more than €7 billion.
- For lending to cohesion regions, however, Poland obtained the most (€4.5 billion), followed by cohesion regions in France (€3.3 billion) and Spain (€2.7 billion).
- Relative to the size of their economies, Greece, Czechia and Romania also benefited from high cohesion lending volumes at €1.6 billion, €0.9 billion and €0.8 billion, respectively.
The following graph breaks down the European Investment Bank’s cohesion lending to each Member State according to its four primary public policy goals: sustainable cities and regions; sustainable energy and natural resources; innovation, digital and human capital; small and medium enterprise (SME) and mid-cap finance.
Climate action
The Bank’s efforts to increase its overall support to cohesion regions are influenced by the Climate Bank Roadmap, the plan adopted in 2020 that commits the Bank to devoting 50% of its total lending to climate action and environmental sustainability by 2025.
Investments for climate action and a sustainable environment complement cohesion objectives. Climate investments can play a vital role in delivering EU cohesion objectives and in paving the way for the green transition.
Contribution to the United Nations’ SDGs
The European Investment Bank has been tracking and reporting how its projects contribute to the United Nations’ Sustainable Development Goals (SDGs) since 2016. The methodology for SDG reporting, in financial terms and in terms of project outputs and outcomes, defines the relationship between the Bank’s detailed policy objectives, sector-specific project outputs and outcomes, and the sustainable development goals.
The following chart gives a visual summary of the EIB’s impact through the lens of its contribution to the SDGs in Europe’s cohesion regions, based on operations financed by the Bank in 2021 in these regions.
Macroeconomic impact
The EIB Group supports a range of operations in cohesion regions. The projects produce direct results such as better roads, better access to finance or other positive outcomes. But the investments the EIB Group supports can have benefits that spread to other parts of European Union. They may create jobs not just in the projects they support, but also down the supply chain, and, they may affect productivity, competitiveness and therefore prosperity overall in the region and the European Union more generally.
Model-based analysis in this report suggests that operations supported by the EIB Group have a sizeable impact on the EU economy. The model suggests that in the long term (by 2040), the investments supported by the Group over the course of the European Union’s last long-term budget (2014-2020) may:
- Raise EU GDP by 4.7% above the baseline scenario;
- Create an additional 3.2 million jobs.