Council agrees positions to better address current and emerging challenges

In the context of the ongoing EU cohesion policy’s mid-term review, member states’ representatives (Coreper) agreed the Council’s negotiating positions aiming to better address current and emerging strategic challenges linked to the economic, social and territorial cohesion.

Today, we took a first step towards the modernisation of EU’s cohesion policy. It needs to be aligned with our current and emerging challenges and new priorities, such as competitiveness, defence and security, affordable housing, and energy transition.

Katarzyna Pełczyńska-Nałęcz, Minister for Funds and Regional Policy of Poland

The negotiating mandates cover the Commission proposals amending:

  • the regulations on the European Regional Development Fund (ERDF) and the Cohesion Fund, as well as on the Just Transition Fund (JTF), and
  • the regulation on the European Social Fund Plus (ESF+)

The Commission proposals contain targeted amendments to the regulatory framework of the cohesion policy funds to align investment priorities with the evolving economic, societal and geopolitical context, as well as with the EU’s climate and environment objectives. Their main objective is to align cohesion policy investments to new priorities, notably competitiveness and decarbonisation, defence and security, affordable housing, access to water, sustainable water management and water resilience, energy transition and challenges facing Eastern border regions. To this end, they introduce greater flexibility and incentives to facilitate the rapid deployment of resources and accelerate the implementation of the programmes.

Council’s negotiating positions

The Council negotiating mandates reflect the efforts of the presidency to balance concerns related to the budgetary impact of the proposals, particularly on the annual budget for 2026, and the capacity of member states to make concrete use of the incentives provided. The compromise texts are based on the following main elements:

  • lowering of pre-financing and co-financing rates at the level of priority for all new specific objectives, while also lowering the threshold for additional financial incentives
  • introducing additional derogations from the Common Provisions Regulation (CPR) - the single rulebook of EU funds jointly delivered with member states and regions - on publicity by beneficiaries
  • introducing additional provisions concerning flexibilities for member states that comply with the concentration requirements at the level of category of regions
  • introducing a new article in each proposal to confirm that commitments suspended by measures adopted in the context of the conditionality regulation cannot be subject to programme amendments or transfers. The same stands for amounts exceeding the flexibility amount corresponding to the specific objectives negatively assessed by the Commission based on the application of horizontal enabling conditions in the CPR.

Moreover, in the case of the ERDF and the Cohesion Fund, as well as the JTF regulations, the text introduces an extension of scope for specific objectives related to energy infrastructure and defence or dual use infrastructure.

Next steps

The presidency will start negotiations with the European Parliament to reach an agreement.

Background information

On 1 April 2025, the Commission published the Communication titled ‘A modernised Cohesion policy: The mid-term review’ alongside two legislative proposals that amend: (i) the regulations on the European Regional Development Fund (ERDF), the Cohesion Fund and the Just Transition Fund (JTF), and (ii) the regulation on the European Social Fund+.

This package takes the opportunity of the ongoing mid-term review of cohesion programmes, which serves to allocate the ‘flexibility reserve’ that corresponds to 50% allocation of all funds for 2026 and 2027, to introduce new priorities that stem from the current geopolitical and economic challenges.

The proposals devote special attention to defence and security with a view to competitiveness, Eastern border regions, affordable housing (including social housing), secure access to water, sustainable water management and water resilience, energy transition (decarbonisation), and cities. They envisage financial incentives for those programmes that allocate the flexibility reserve towards any of these priorities (higher pre-financing and up to 100% EU financing). In case the programmes devote at least 15% of their allocation to these priorities, they get extra pre-financing as bonus, and an extension of eligibility by one year (until 31 December 2031).