EU lagging regions: State of play and future challenges

The EU’s lagging regions face significant challenges to transform their economic under-performance. Current ongoing transitions, such as digitalisation and towards a sustainable society, and the COVID-19 pandemic are accentuating these challenges. This is both creating new and exacerbating existing internal divergence within the EU.

This study Marta Pilati and Alison Hunter (EPC) for the REGI Committee of the European Parliament, analyses the challenges faced by the EU’s lagging regions, assesses how lagging regions are identified and proposes a new typology for lagging regions:

• internally lagging regions converge to the EU GDP per head average but diverge from their respective national average;
• divergent regions are relatively poorer regions that do not converge towards the EU average; and
• extremely low-growth regions have growth since 2000 that has been less than half of the EU average growth since 2000.

The study concludes with several recommendations:

• Apply a new typology of lagging regions that is supported by a rationale of better identifying and supporting regions that are falling behind.
• Launch a new initiative that targets low-growth regions which correspond to the (revised) definition of lagging the most, and which currently are not specifically targeted by an EU support programme.
• Improve the availability of and access to data at the regional level, to improve insights into the development needs and bottlenecks of lagging regions.
• Create a central repository of information for the Lagging Regions Initiative, linking together past and current activities as well as achievements.
• Carry out a comprehensive evaluation of the Lagging Regions Initiative to improve its visibility and future policy development.
• Place a stronger focus on quality of governance in the Cohesion Policy and European Semester to improve the targeting of support, especially to lagging regions.
• Ensure that structural reforms entail an improved place-based sensitivity by building on the recent inclusion of Annex D in the European Semester’s Country Reports, thereby strengthening the European Semester’s sensitivity to territorial challenges.
• Direct comprehensive and targeted support to lagging regions that experience multiple and complex challenges throughout their energy, digital and industrial transitions.
• Ensure that COVID-19 recovery measures target the EU’s most vulnerable regions, to overcome the former’s bias towards national-level data and focus, which, in turn, increases the risk of overlooking support for the EU’s most vulnerable regions.