Doubts rise over future EU funding for Central Europe

Subject

The outlook for continued EU structural fund inflows.

Significance

Germany and France have called for the disbursement of structural and investment funds in the 2021-27 EU multiannual financial framework (MFF) to be linked to the behaviour of individual member states, specifically, their respect for EU standards. Such tensions are likely to prompt political debate across Central Europe (CE) about the most effective ways to maintain the high rates of EU fund absorption attained since 2015. On July 11, the Polish government announced an assessment of whether EU funds were put to effective use in the first half of 2017, when the number of applications rose for projects co-financed with EU funds.

Impacts

• In 2017-19, most EU funds will go to infrastructure, particularly railways and roads, the environment and SMEs.
• Spending on research and development is expected to remain small.
• Some CE countries will be less eligible for structural funding after 2020, thanks to fiscal and economic convergence with Western Europe.
• Reduced inflows of EU funds after 2021 will require robust structural reforms to underpin labour market competitiveness.