Why Regional Policy?
Key Objectives
EU Cohesion Fund

European Union Regional Policy Background

Financial instruments and initiatives to address economics and social imbalances at Community level did exist since the beginning of European integration but only in 1986 legal foundations introduced by the Single European Act paved the way for an integrated cohesion policy.

During the period 1957-1988, the European Social Fund (ESF, since 1958), the European Agricultural Guidance and Guarantee Fund (EAGGF, since 1962), and the European Regional Development Fund (ERDF, since 1975) co-financed projects which had been selected beforehand by Member States.

As regards European Regional Policy, a first Communication was adopted by the European Commission in 1965, followed by the creation of the Directorate-General for Regional Policy in 1968. In 1972, the Heads of State and Government adopted conclusions in Paris which described Regional Policy as "an essential factor in strengthening the Community". The "Thompson Report", published by the European Commission in 1973, concluded that "although the objective of continuous expansion set in the Treaty has been achieved, its balanced and harmonious nature has not been achieved".

The ERDF was set up in 1975 for a three-year period with a budget of €1,300 million with the objectives of correcting regional imbalances due to predominance of agriculture, industrial change and structural unemployment. In that period the ERDF could finance three actions, eligible for up to 50% of public expenditure, preferably to be carried out in national state aid areas:

  • investments in small enterprises creating at least 10 new jobs;
  • investments in infrastructure related to point 1, and
  • infrastructure investments in mountainous areas, which had to be eligible under the agriculture guidance fund.

Finally in 1986, the Single European Act laid the basis for a genuine cohesion policy designed to offset the burden of the single market for the less-favoured regions of the Community.