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THE REGIONS, THE CRISIS, GOVERNANCE
AND THE FUTURE OF EUROPEAN POLICIES
CPMR Policital Bureau, Odessa, June 12th 2009
SUMMARY
1. Overview of global economic situation
2. Impact of the crisis on EU Regions
• Survey
• Policy Workshop and Manifesto
3. Regional policy
• Barca report
• Preparing Göteborg General Assembly
1. OVERVIEW OF GLOBAL ECONOMIC SITUATION
Based on forecasts from EU DG
ECOFIN, International Monetary Fund,
OECD, World Bank
Based on main available indicators:
GDP, employment, wages, investments
THE EU IN THE WORLD: LOSING MOMENTUM
 GDP growth: 2009 as a black year for most advanced economies + Russia and Brazil
 Asian economies to continue growing even though at lower speed
% change on the preceding year
10
8
6
4
2
0
-2
-4
-6
2008
2009
2010
S
ub
sa
C
hi
na
a
di
In
a
si
do
ne
In
ha
ria
n
A
fri
tra
ca
lia
l
si
U
S
B
ra
A
us
k
K
on
g
ey
H
on
Tu
rk
co
ex
i
M
R
us
si
a
ea
E
Z
E
U
K
or
Ja
pa
n
-8
THE EU IN THE WORLD: LOSING MOMENTUM
 GDP/head horizon 2014: EU and Japan losing track of the US, China accelerating
convergence during the crisis
100
US=100
90
Eurozone
80
70
60
China
50
40
Japan
30
20
10
Middle East
RU
India
Brazil
Africa
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
THE EU IN THE WORLD: LOSING MOMENTUM
 Share of world GDP: the US and EU losing momentum, China and India catching up
%
25,0
22,6
21,2
2007
2014
19,5
20,0
18,3
15,5
15,0
15,0
15,5
10,8
10,0
8,6
8,5
6,6
5,5
5,0
5,7
4,6
4,1
3,8
3,8
3,7
3,4
3,2
co
n
le
E
id
d
.I.
A
si
an
M
si
a
R
us
om
ie
s
as
t
E
di
a
In
Ja
pa
n
er
e
m
is
ph
C
hi
na
W
.E
ft
he
w
or
ld
U
S
R
es
to
E
U
0,0
WITHIN THE EU: VERY DIVERSE PICTURES
Only 1 EU country with positive GDP growth in 2009 (CY)
14 countries will remain in recession in 2010 (grey zones)
WITHIN THE EU: VERY DIVERSE PICTURES
Only 4 EU countries with a GDP/head higher in 2010 than in 2008 (CY, PL, SK, EL)
In LU and IE, each citizen will have 4.000 to 5.000 US$ in his pocket
-1000
-2000
-3000
-4000
-5000
US
CA
RU
JP
CN
IS
NO
CH
HR
MK
TR
0
CY
PL
SK
EL
BG
SI
MT
RO
HU
CZ
AT
FR
PT
DK
ES
SE
BE
IT
UK
DE
LT
FI
EE
NL
LV
IE
LU
GDP per capita in ppp change 2008-2010 volume in USD
1000
WITHIN THE EU: VERY DIVERSE PICTURES
Unemployment raising in all EU countries
Unemployment rate above 10% in 12 EU countries in 2010, above 20% in Spain
WITHIN THE EU: VERY DIVERSE PICTURES
The Lisbon strategy 70% employment target missed after having been achieved in 2006
Back to the 2000 situation…
% 73
72
71
Lisbon target for employment
70
69
68
67
66
65
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
WITHIN THE EU: VERY DIVERSE PICTURES
Real wages growth slowing down in most EU countries
Consecutive decrease in real wages in 2009/2010 in 4 countries (LT, EE, IE, LV)
15
2008
2009
2010
5
-5
-10
-15
EU
US
JP
IE
FI
HU
SI
DK
ES
NL
UK
LV
CZ
MT
PT
AT
FR
IT
DE
CY
BE
SE
LU
LT
SK
EE
PL
EL
0
RO
BG
% change on preceding year
10
UNCERTAIN OUTLOOK FOR 2010 AND BEYOND
Worsening forecasts for 2010 (GDP, employment and investments)
EU GDP FORECASTS 2008-2010
(Source: DG ECFIN)
EU INVESTMENT FORECASTS
(Source: DG ECFIN)
1
0
-1
Sp. 08
Aut. 08
Jan.09
Sp.09
GDP 2008
GDP 2009
GDP 2010
-2
-3
-4
-5
Investment in annual percentage
change
2
4
2
0
-2
Sp. 08
Aut. 08
2010
-8
-10
-12
8
2008
6
2009
2010
4
2
0
Jan.09
2008
-6
10
Aut. 08
Sp.09
2009
12
Sp. 08
Jan.09
-4
EU UNEMPLOYMENT RATE FORECASTS
(Source: DG ECFIN)
Unemployment rate (% of active
pop)
GDP Growth (annual percentage
change)
3
Sp.09
VARIOUS PERCEPTIONS OF THE SITUATION
Citizens feeling concerned for mid-term perspectives (Source: Eurobarometer jan/feb 09)
VARIOUS PERCEPTIONS OF THE SITUATION
Markets comforted by G20 decisions and national recovery plans (Eurostoxx 50)
2. IMPACT OF THE CRISIS ON EU REGIONS
 CPMR Regions participating in the survey
2. IMPACT OF THE CRISIS ON EU REGIONS
Diverse regional profiles
GDP/head in %EU27
Population
Unemployment (% labour
force)
Highest level
Aberdeen City and Shire
153.5
PACA
4,74 Million inhabitants
Primorsko-Goranska
14%
Lowest level
Podlaskie
38.4
Shetlands Islands
21.900 inhabitants (2006)
Shetland Islands
1%
Difficulties to get quantitative data > Qualitative answers
2. IMPACT OF THE CRISIS ON EU REGIONS
Most Regions medium or strongly impacted
No impact
-Shetland
Is.
Low impact
-Aberdeen
--Ionia Nisia
-Stockholm
Medium generalized
impact
Medium-strong impact
on few specific sectors
Strong generalized
impact
-Anatoliki Mak.Thraki
-Podlaskie
-Itä-Uusimaa
-Primorsko-goranska
-Region Midtjylland
-Principado de
Asturias
-Friuli V. Giulia
-PACA;
-Basse Normandie
-Österbotten
-Päijät-Häme
-Västra Götaland
-Nordland
-Blekinge County
-Bretagne
-Toscana
-Puglia
-Illes Balears
-Castillia y León
-Cornwall
-Hampshire
-Lisboa-Vale do
Tejo
-Somerset
-Wales
-East of England
•Some Regions expect the crisis to unfold only in the coming months
•Export-oriented and mono-sector Regions as well as declining industrial
districts first and strongly hit
•Differenciated impacts within Regions according to economic specificities
2. IMPACT OF THE CRISIS ON EU REGIONS
EU:2009 sharp fall of all indicators. Data are based on % change
on previous year... export to be the most affected one…..
15
% change on
preceding year
10
5
0
-5
-10
-15
2006
2007
2008
2009
2010
GDP per capita
2,7
2,4
0,5
-4,2
-0,3
Total Investments
6,2
5,4
0,1
-10,5
-2,9
Export
9,2
5
1,6
-12,6
-0,2
Employment
0,6
1,7
0,7
-2,6
-1,4
Consumption
2,3
2,2
0,9
-1,5
-0,4
2. IMPACT OF THE CRISIS ON EU REGIONS
 Few sectors left unaffected but a same economic sector can be very
differently impacted according to the Region in which it is set
1
Services
T ext ile
F inancial sect o r
T ransp o rt s- Lo g ist ics
Iro n & st eel ind ust ry
Elect ro nics- Eng ineering
C hemist ry ind ust ry
F o o d p ro cessing ( includ ing f ish.)
M ining
Oil/ Pet ro l chemical
T o urism
R et ail
M arit ime ind ust ry
W o o d and p ro cessing
C o nst ruct io n–Ho using
A ut o mo t ive ind ust ry and sup p ly chain
2
2
2
2
3
3
3
3
3
3
6
6
6
10
11
0
2
4
6
8
10
12
2. IMPACT OF THE CRISIS ON EU REGIONS
 Unemployment to severely affect the majority of surveyed regions (17),
however the social outwards signs of the crisis are numerous...
Increase in precarious w orks
Increasing insecurity and tensions
Decrease of citizens income
New labour market entrants unable to find w ork
Salary reductions
Raising poverty/difficulties in accessing basic services
House repossession
Increases in homelessness and housing w aiting lists
Reduced domestic demands of goods and services,
Difficulties in accessing credit for households
Sharp decline in job vacancies
Strong increase in claims for benefit payments
Increasing household debt/difficulties in paying
Exceptionally rising unemployment
1
2
2
2
2
3
3
4
5
5
5
5
7
17
2. IMPACT OF THE CRISIS ON EU REGIONS
 A broad range of regional responses raising the key question of governance
Fr i ul i V . G ( I T )
regio nal respo nse
P . d A s t u r i a s ( E S)
C a s t i l l i a y L e o n ( E S)
T os c a na ( I T )
P ugl i a ( I T )
Regi onal i zed States
Decentr al i zed States
I l l e s B a l e a r s ( E S)
U mb r i a ( I T )
Wal es (UK)
Decentr al i zed-Uni tar y States
Uni tar y States
P A C A ( FR )
A qui t a i ne ( FR )
B r e t a gne ( FR )
B a s s e N o r ma n d i e ( F R )
E a s t of E ngl a nd ( U K )
So me r s e t ( U K )
P odl a s k i e ( P L)
St o c k h o l m ( SE )
I t ä - U u s i ma a ( F I )
P ä i j ä t - H ä me ( F I )
Ös t e r bot t e n ( FI )
N or dl a nd ( N O)
H a mp s h i r e ( U K )
R . M i dt j y l l a nd ( D K )
A b e r d e e n ( Sc o t . )
Sh e t l a n d s I s . ( Sc o t . )
V ä s t r a G ö t a l a n d ( SE )
I oni a n I s .
P . Gor ons k a ( H R )
C or nwa l l ( U K )
Li s boa - V . do T e j o ( P T )
K . M a k e doni a - T hr a k i ( E L)
( E L)
impact o f the crisis
2. IMPACT OF THE CRISIS ON EU REGIONS
 According to competences and budgets, +/- formal measures packages (7
adopted a formal recovery plan) including
Budgetary / Fiscal measures
• Support to public investment (short and long term)
• Support to businesses / SMEs (access to credit with guarantee funds or
preferential loan schemes)
• Support to labour market (passive and active employment policies)
• Social interventions
Regulatory measures
• Reduction of administrative burden for businesses
• Improve efficiency in public spending
Advisory measures and services
•For the business community
•For citizens
Governance measures
• Strengthening existing partnerships
• Creating new partnerships / ad hoc mechanisms
2. IMPACT OF THE CRISIS ON EU REGIONS
Different approaches towards the use of Strucutral Funds in sustaining
recovery
Approach
Ops have not
been changed
Ops needs to
be partially
revised
Ops needs a
radical
readjustment
Reasoning
Regions
1. The SF are not counter-cyclical measures;
Österbotten
Västra Götaland
2. The measures contained in the operational programs are still valid
Ionian Is.
3 SF amount for a very small share of regional investments
Päijät-Häme
4. Only delivery on the ground is likely to be re-adapted
East of England (ESF)
5. OPs may be changed in the future should circumstances dictate
Ionia Nisia
East of England (ESF)
Puglia
Asturias
1 A certain re-prioritization of interventions along with speeding-up of
project approvals and implementation is needed
A. Mak-Thraki
Podlaskie
Toscana
B. Normandie (ERDF)
2 Some shift in priorities have been made/will be made to readjust the
Ops to the changed economic conditions
Lisboa-Vale do Tejo
Itä-Uusimaa (ESF)
The Structural Funds system should be made more flexible to make it
easier for the private sector to access to fund.
Cornwall
2. IMPACT OF THE CRISIS ON EU REGIONS
 CPMR initiatives
CPMR Policy Workshop, 16th July, Brussels
Manifesto: 10 signing Regions, 2 asking for amendments
CPMR Seminar « Impact of the crisis on post 2013 EU policies: what the
regions expect », Marseille, 27th November 2009
Going on surveying regional situations?
3. IMPACT ON THE DEBATE ON
REGIONAL POLICY POST 2013
 On the one hand…
Low Structural Funds consumption rates (7% in
average) used as argument by opposants to
Objective 2
The crisis will have unpredictible impacts on GDP
levels 2010/2011: which basis for regional policy
envelopes calculation?
The « Barca » report proposes DG Regio embarrased
with the « Barca » report: a CPMR Contribution?
3. IMPACT ON THE DEBATE ON
REGIONAL POLICY POST 2013
 On the other hand…
DG Regio embarrased with the « Barca » report
supporting a modernized cohesion policy for all EU
Regions
…but still shows no clear vision / ideas for the future
CPMR preparing its proposals for the Gothenburg
AGM