Does the New EU’s Long-Term Budget Betray the Goal of Territorial Equity?

The far-reaching reform of the Multi​a​nnual Financial Framework (MFF) for 2028–2034 (i.e., the EU’s long-term budget), put forward by the European Commission last week, can be seen as the product of historical circumstances unfolding for more than two decades.   

At the core of the debate lies the concern about the “re-nationalisation” of EU regional policy, the share of the budget dedicated to addressing regional disparities, also known as cohesion policy, and its alignment with a top-down and place-neutral model largely driven by efficiency considerations.   

Indeed, the reform proposes a more centralised governance system, assigning to national governments greater control, both over cohesion and rural development funds, with the aim of more effectively advancing EU-wide goals such as defence and industrial policies.  

This approach departs from the current model, whereby Member States are already responsible for managing the funds under the supervision of the European Commission, in line with the subsidiarity principle, but must comply with more stringent provisions and mechanisms that ensure the involvement of sub-national actors and the application of a territorial approach.  

As a result, especially in the larger countries, the management of the resources and the setting of their priorities, provided that they align with broader strategic objectives, are mostly devolved to regional or local governments, which then liaise directly with the European Commission.   

In the wake of  Draghi’s and Letta’s reports, the new MFF’s ambition to increase support for Europe’s innovation and industrial capacity  — through increased funding for the Framework Programme and the creation of a Competitiveness Fund—is commendable.   

However, weakening the EU policies that, amongst other things, should also help absorb the negative territorial externalities of pursuing these goals risks undermining their very success.  

If adopted, the new course will not merely be administrative—it may fundamentally alter the territorial logic of EU intervention, reflecting a major shift away from the principles of territorial equity and subsidiarity enshrined in the European treaties.   

It may undermine​​ the place-based approach that has informed European regional development policy since the 2009 Barca Report. This approach, which was more recently adopted also in various US federal programmes under the Biden administration, is anchored in the idea that​​ a bottom-up governance, ​​involving local actors in addressing the specific economic, social, and environmental challenges of individual territories, is critical to the effectiveness of public policies. ​​​​​​  ​​​​​  ​​​  ​​​​  ​​  ​​​​  ​​​​  ​​  ​​​​  

However, as we argue in a recent paper, cohesion policy has been drifting away from its original mission of promoting spatial equity and redistribution for many years. Since the early 2000s, it has come under increasing pressure to support the emerging EU competitiveness agenda—particularly the promotion of knowledge-based and innovation-intensive activities—under the successive Lisbon and Europe 2020 strategies.   

The main reason lies in the fact that cohesion and agricultural funds have traditionally represented the largest share of the EU budget (approximately two-thirds), while programmes with a fully-fledged pan-European dimension, such as the Framework Programmes (FP), have remained much more limited in scale.  

Therefore, the modest size of the MFF has resulted in a growing capture by the EU competitiveness agenda of funding programmes originally intended for other objectives, such as cohesion policy. The proposal in the new MFF to consolidate cohesion and agricultural funds into single, nationally managed plans, aligned with a large spectrum of EU-driven objectives, signals the culmination of this logic.  

The problem is that such a shift—termed ​​​“​​​the Lisbonisation of cohesion policy​​​”​​​ by political scientist Carlos Mendez—reflects an economic model that, in order to deliver, must largely leverage​​​ agglomeration economies and technological capabilities concentrated in more developed territories.​ One that, faced with existing trade-offs between aggregate productivity and territorial cohesion, tilts the balance firmly toward the former.  

This model also requires a stronger coordination role for national governments, at the expense of the role of regions, to legitimise and adapt this agenda into domestic contexts.​ This is increasingly at odds with the Union’s territorial reality.​  

The series of shocks experienced by the continent since the pandemic can also explain this shift. The growing demand for the MFF to respond to new and shifting ​​politically pressing ​​priorities—such as energy security, natural disaster response, and the reinforcement of strategic autonomy—has, in the absence of dedicated pan-European instruments, led to redirecting cohesion policy funds toward objectives unrelated to its original structural purpose: social justice and territorial equity.  

In our study, we conceptualise this ongoing evolution as hyper-Lisbonisation: a stage where cohesion policy becomes increasingly tied to the EU’s short-term political agenda, financing a succession of emerging priorities—many of them unpredictable or crisis-driven. This new function necessitates giving national governments a high degree of spending flexibility, thereby enhancing their power vis-à-vis both the European Commission and sub-national actors.  

The Commission’s current MFF proposal reflects the peak of a hyper-Lisbonisation paradigm, including by (wrongly) making flexible spending an end in itself, mixing different objectives. Yet this trajectory raises major concerns.  

First, regional convergence has stalled, with many regions—wealthy or not—falling behind, while growth concentrates in a few “superstar” areas, showing the extolled “trickle-down effects” no longer work and fuelling discontent and populism.  

Second, uneven innovation capacity makes one-size-fits-all national policies risky, likely reinforcing existing disparities and overlooking local, non-tradeable strengths. Third, centralised governance suffers from information asymmetries, reducing the effectiveness of public investment.  

Reaching an interinstitutional agreement over the MFF will be challenging, but vital to uphold the EU’s territorial legitimacy. The future of cohesion policy is more than a budgetary technicality: it is a test of the Union’s commitment to inclusive, balanced and democratic development.