Finland faces potential decrease in EU cohesion funds under new negotiations
The European Union is currently negotiating financial decisions that will determine the fate of cohesion funds allocated to Finland. The new regional leader of Lapland, Hannu Takkula, assesses that the EU’s financial contributions for regional development may tighten in the future.
Funding is likely to decrease due to the more significant challenges facing countries that joined the EU during its latest expansion. In addition to previous expansions and potential future enlargements, the EU’s budgetary off-balance financing, including support systems for recovering from the COVID-19 crisis, will also influence this funding.
The EU’s cohesion policy relies on support from structural funds, which must be combined with national public financing and private investment. This policy is financed through three main funds: the European Regional Development Fund, the European Social Fund, and the Cohesion Fund. Due to a high gross domestic product, Finland will not receive funding from the Cohesion Fund.
The fate of regional development funding is expected to become clearer by the end of June next year when the Commission is required to present a proposal for the EU’s multiannual financial framework. Takkula emphasizes the importance of advocating for Finland’s share in this negotiation.
The upcoming funding period will begin in 2028 and last until the end of 2034. Discussions within the EU are also addressing the potential for common debt, as suggested by European Commission President Ursula von der Leyen and economist Mario Draghi, who are considering changes to the EU’s financing model.
In Finland, there is ongoing debate about the allocation of regional development funds. Currently, approximately half of these funds are designated for Eastern and Northern Finland, while the rest is distributed to other parts of the country. Finland receives these funds partly due to its sparsely populated areas and long distances. Takkula recently assumed his position after Mika Riipi moved to a parliamentary role following elections in June.