On Monday, 1 April, the European Commission announced a revision of the EU’s cohesion policy to better align regional development funding with the bloc’s strategic priorities. These include defence and security, housing, innovation, and sustainability. The updated policy aims to enhance European competitiveness while reducing economic, social, and territorial disparities among Member States. The revised policy seeks to enhance European competitiveness while reducing economic, social, and territorial disparities across Member States.
Supporting the defence industry
A key aspect of the modernised cohesion policy is its enhanced support for the European defence sector. The European Regional Development Fund (ERDF) will now fund small and large enterprises involved in defence and strategic technologies.
Moreover, investments in defence will contribute to the broader goal of technological sovereignty. With funding directed towards research, innovation, and the transfer of strategic knowledge, European companies will be better positioned to develop advanced military capabilities and technologies that align with the EU’s security objectives.
Boosting affordable housing
In addition to defence, the modernised cohesion policy places a strong emphasis on addressing housing challenges across the EU. In response to growing concerns about affordability, the Commission has proposed doubling the cohesion policy funding allocated to affordable housing. This measure aligns with the political priorities set by the Commission and aims to improve living conditions for citizens in urban and rural areas.
To enhance financing options, Member States could leverage private and public investments through a new financial instrument developed in collaboration with the European Investment Bank (EIB). This mechanism will combine cohesion funding with contributions from international financial institutions, national promotional banks, and commercial lenders, ensuring a more sustainable and impactful housing strategy across Europe.
Conclusions
The EU’s decision to integrate defence into cohesion policy marks a strategic shift in its approach to regional development. By aligning economic investment with security imperatives, the bloc is strengthening its commitment to safeguarding stability and sovereignty. Simultaneously, increased investments in housing, infrastructure, and energy transition will contribute to a more resilient and competitive European economy.
The European Parliament and the Council will discuss the revision, with a possible deal to be finalised by 2025. This will ensure that new strategic initiatives, including defence and social infrastructure projects, can begin implementation in early 2026.
