Just the Facts | The Future of Cohesion Policy in EU Regions

“Europe always begins at ground level in our regions” – Roberta Metsola, address to the European Committee of the Regions, October 2025 

EU cohesion policy aims to reduce regional disparities and promote development across the Union. Through instruments such as the European Regional Development Fund and the Just Transition Fund, it supports areas including infrastructure, agriculture and fisheries, social policy and civil society.  

In July 2025, the European Commission proposed reforms to cohesion funding under the EU’s next long-term budget by merging several instruments, delivered through National and Regional Partnership Plans (NRPPs). This Just the Facts outlines the proposed changes and their implications for different sectors and in particular the local and regional levels.   

What is cohesion policy, and why is it important?

Cohesion policy is the EU’s “prime investment policy”. Enshrined in the Treaty on the Functioning of the EU (Art. 174), the aim of EU cohesion policy is “to promote and support the overall harmonious development of its Member States and regions”. Cohesion funds were introduced to ensure that all regions across the EU could equally benefit from market opportunities, supporting economic integration across the Union. Cohesion policy for the period 2021-2027 seeks to make Europe more competitive, smarter, greener, more connected and citizen-focused.

Cohesion policy is aligned with the EU’s long-term budget – the Multiannual Financial Framework (MFF) – which is designed to fund everything from cohesion, agriculture, and social policy to competitiveness, external action, civil society, culture, defence and more. Approximately a third (around €390 billion) of the current MFF (2021-2027) is allocated to cohesion policy. These funds are managed and delivered in partnership between the European Commission, Member States and stakeholders at the local and regional level. In the previous budgetary period (2014-2020), cohesion funding corresponded to around 13% of the total public investment in the EU, and up to 51% in less developed regions.  

Cohesion funds play a significant role in supporting regions impacted by deindustrialisation as well as those in the process of decarbonisation. Fairly distributed and effective cohesion spending will become even more crucial with further structural changes in the wake of the green and digital transition. The Letta Report emphasises that “an effective cohesion policy – implemented in a balanced way across the EU – has always been, and will continue to be, a key condition for the success of the Single Market”. Cohesion is therefore also linked to the competitiveness of the EU as a whole. The ongoing need for cohesion funding is reflected in the fact that 29% of EU citizens still live in regions with a GDP per capita below 75% of the EU average, while economic growth is increasingly concentrated in a few large urban areas. This is widening socio-economic gaps both between and within Member States, with regional disparities in Ireland amongst the highest in the EU and increasing, according to the European Commission.  

Ireland and cohesion funding 2021-2027

The overall EU cohesion budget for the current funding period 2021–2027 amounts to about €379bn, topped up by €41bn from the NextGeneration EU package (the temporary instrument to support Europe’s economic recovery from the coronavirus pandemic and to improve the EU’s resilience). These funds are channelled through the European Regional Development Fund (ERDF), the Cohesion Fund (CF), the European Social Fund Plus (ESF+), and the Just Transition Fund (JTF). The ERDF makes up the largest part (60%) of the cohesion policy budget for 2021–2027, followed by the ESF+ (25%). Together, the ERDF, CF and JTF account for one quarter of the total MFF.  

Under the current EU budget, Ireland benefits from €1.4 billion in cohesion policy funding through hundreds of projects all over the country supporting sustainable economic development (the details of individual projects can be found here). For example, Ireland is receiving €396 million from the ERDF to improve energy efficiency in housing, revitalise town centres, and strengthen regional innovation ecosystems by improving the capacities of Technical Universities. An additional €508 million from the ESF+ contribute to reducing the risk of poverty and social exclusion, particularly of disadvantaged groups, and helping people to reskill. Around €142 million from the European Maritime Fisheries and Aquaculture Fund (EMFAF) are helping the Irish fishing and aquaculture sectors adapt to the present challenges and support the growth of a sustainable blue economy. 

Structural changes to cohesion funding

Negotiations are currently underway in relation to the next MFF, which will run from 2028 to 2034, meaning it will need to be agreed by the end of 2027. The European Commission published its proposal for the new MFF in July 2025, with a total budget of €1.76 trillion (equivalent to 1.26% of the EU’s GNI, an increase of just 0.02% in real terms from the current MFF). In its proposal, the Commission outlined a major restructuring of the budget, with the merging of over 50 existing programmes into 16 larger funding instruments. The aim of this, according to the Commission, is to make the budget “simpler, more flexible and more strategic”. 

As part of its proposal, the Commission created the European Fund for Economic, Social and Territorial Cohesion, Agriculture and Rural, Fisheries and Maritime, Prosperity and Security (often shortened to “the Fund” – see Figure 1). This merges 14 previously separate funds, such as the ERDF, CF, Common Agricultural Policy (CAP) into a single  pot of €865 billion (or €771bn in 2025 prices). €217 billion of the fund will be earmarked for less developed regions. The new ‘Catalyst Europe’ scheme will provide €150 billion to support the implementation of the NRPPs, while an ‘EU Facility’ will provide flexibility in financing and support transnational projects. 

Of the total funding, around half (€450 billion) will be dedicated to cohesion, rural development and fishing communities, which according to the Commission is roughly equivalent to the funding provided in the current MFF. However, other reports note that adjusted for inflation, these areas will receive around 15% less funding under the next MFF compared to the current period.

New framework: National and Regional Partnership Plans

The bulk of “the Fund” will be distributed via 27 National and Regional Partnership Plans (NRPPs). Under the framework of NRPPs, programmes across policy areas such as cohesion, agriculture, fisheries, rural affairs, migration and security will be merged into country-specific plans, to be negotiated directly between the Commission and national governments. Certain shares of funding through NRPPs will be earmarked for various uses – for example, 38% of funds under a country’s NRPP must go towards direct income support for farmers (€293.7 billion are ringfenced for this), at least 14% (€100 billion) to social objectives, and 43% to climate and environment-related goals. 

The Commission’s NRPP proposal gives national governments greater influence over how EU money is spent, marking a departure from the management of cohesion funding up to now, which has for decades given regions and cities a formal role in planning, allocating and implementing structural funds, in line with the EU partnership principle. This means that national governments could decide to divert more NRPP funds away from regional development projects towards other areas, such as agriculture, migration or security. Some critics warn that this could result in less democratic oversight on the part of the European Parliament, at the risk of national political or sectoral interests being prioritised over regional development. 

Moreover, NRPPs would follow a performance-based governance model, based on the Recovery and Resilience Facility (RRF). Member States would define reform and investment targets in their NRPPs in line with European Semester recommendations and other EU guidance. Funding would be released upon achieving agreed milestones and could be suspended if the rule of law or fundamental rights are violated. The idea behind this is to place a stronger focus on results and to more closely link investments and reforms, according to the Commission; however, experience of the RRF shows that clear milestones and strict evaluation are needed for this approach to succeed.

Concerns of regional bodies about the proposed reforms

In its proposal to restructure cohesion funding, the Commission stated that NRPPs would be “designed in close partnership between the Commission, Member States, regions, local communities and other relevant stakeholders”, allowing for “better coordination” of cohesion policy with other policies, such as CAP.  

Despite this, many regional associations have expressed concern that the reforms could sideline local and regional governments. In September 2025, members of the European Parliament’s Committee on Regional Development (REGI) criticised a lack of clarity over the role of regions and warned against a renationalisation of cohesion policy. They also stressed the need for genuine simplification for beneficiaries and transparency in the allocation of investments.

Similarly, the Commission for Territorial Cohesion Policy and the EU Budget (COTER) of the European Committee of the Regions spoke out against budget cuts and the exclusion of regions and cities from budgetary decision-making. Local Alliance, a coalition of local and regional governments across Europe, emphasised in a position paper that local and regional authorities are the democratic level closest to citizens and best placed to deliver results. Renationalising EU funds would risk weakening onwership and slowing delivery. These concerns draw on evidence from the RRF, where local authorities were often only marginally involved in the design and monitoring of national recovery plans, leading to overlapping projects, poor coordination and missed opportunities for cooperation between local and national governments. 

Questions have also been raised about the absence of ringfencing of funds for specific regional categories beyond less developed regions (defined by regional GDP) – such as regions in transition, more developed or outermost regions, which may face specific challenges linked to the green transition. Under the current proposal, funding allocation for these territories would largely be at the discretion of national governments.

To address these concerns, urban and regional associations and other stakeholders put forward a range of suggested reforms to the Commission’s MFF proposal. These include mandatory regional, territorial and urban chapters in each NRPP, the institutionalisation of structured participation of cities, regions and civil society over the full course of funding programmes, and dedicated budgets for local capacity building, urban innovation and sustainability initiatives, as well as for local CSOs.  

Towards a stronger involvement of local and regional authorities

Following the criticism, particularly from the European Parliament, the European Commission made some amendments to its original proposal in November 2025. These include strengthening the partnership principle and introducing regional checks to ensure that regional authorities are involved in the preparation, implementation and evaluation of the NRPPs. The Commission has reiterated the importance of multilevel governance, emphasising that “the involvement of regions and local authorities undoubtedly add[s] value by increasing the effectiveness of programme implementation”. To alleviate concerns about merging cohesion and agricultural funding, the Commission added a stipulation that at least 10% of NRPP spending be allocated to agriculture.

In February 2026, the Commission for Territorial Cohesion Policy and EU Budget (COTER) of the European Committee of the Regions adopted four draft opinions addressing aspects of the Commission’s MFF proposal and building on its amendments. COTER advocates a multilevel governance assessment requiring Member States to involve subnational authorities in the design of the NRPPs, and a subsidiarity clause, which would allow regions to ask the European Commission to reject plans if they are overly nationalised. COTER members oppose the idea of NRPPs as a “single pot of money” at the disposal of Member States, arguing that individual funds such as the ERDF should be referenced separately, with a corresponding allocation of resources.

A central question in the ongoing MFF negotiations is the role of local and regional authorities. Reducing their involvement would weaken multilevel governance and risk undermining the foundations of cohesion policy – the EU’s main investment tool for cities and regions. Upholding the partnership principle in the design and governance of NRPPs will be key to achieving a just and inclusive transition and continuing to reduce disparities between European regions.

Reflecting this approach, the Irish Government launched a National Dialogue on the Future of EU Cohesion Policy in January 2024, engaging more than 90 stakeholders at national, regional and beneficiary levels over a twelve-month period. On this basis, Ireland called for cohesion policy post 2027 to focus on the most disadvantaged groups, address regional disparities and involve those directly affected in developing solutions. Ireland has the opportunity to use its EU Council Presidency later this year to firmly anchor these priorities in MFF discussions.