Economic Cohesion in the European Union: recent trends and future challenges

The reduction in territorial disparities is a cornerstone of European Integration and dates back to the Treaty of Rome of 1957, which set the goal of “reducing the differences existing between the various regions and the backwardness of the less-favoured regions”. Accordingly, Cohesion policy is not only the most visible expression of EU solidarity but also a central pillar of its growth model. By investing in infrastructure, innovation, education, and other key areas, cohesion policy helps less developed regions directly and all other regions indirectly to reap the benefits of European economic integration. This data story provides a short overview of the state of ‘economic cohesion’ in the EU by assessing long-term economic convergence between regions over the past 20 years. A more detailed analysis is provided in the first chapter of the 9th Cohesion Report (2024).

Strong convergence by regions in Central and Eastern Europe

The 9th Cohesion Report comes 31 years after the introduction of the EU single market, 25 years after the launch of the euro and 20 years after the historic EU eastern enlargement of 2004 (Figure 1.1). It shows the remarkable economic convergence that eastern regions and countries have achieved since then. GDP per head in Central and Eastern Europe has increased from around 52% of the EU’s average in 2004 to nearly 80% in 2021. This is an extraordinary achievement of European integration and cohesion policy, which has invested nearly 1 trillion euro to support balanced economic development in the EU since 2000.

To the right: Figure 1.1. GDP per head in EU regions, PPS, 1995-2021, % of EU average

Subdued growth elsewhere

Some parts of Europe, however, have found it more difficult to converge, especially in a context of overall lower growth in advanced economies. Growth of GDP per head over the past two decades has been robust in eastern regions but subdued in the rest of the EU (Figure 1.2). It averaged about 1% a year in north-western regions and 0,1% in southern regions. In some cases GDP per head actually fell over this period.  For the first time in the post-war period, nearly one in 6 regions in the EU, 37 in total with over 60 million people, experienced two decades in which GDP per head declined. 
At the same time, the impact of the global financial crisis exacerbated the low-growth problem also in parts of north-western Member States. Indeed, one in three people in the EU, 

some 150 million in total, live in one of the 77 regions where GDP per head in 2021 had yet to return to its 2008 level. These regions are equally divided between less developed, transition and more developed regions and are present in 11 Member States: primarily in Italy (19), Spain (15),Greece (13) and France (10), but also in Germany (4), Finland (4), the Netherlands (3), Portugal (3), Romania (3), Austria (2) and Belgium (1). In many cases, this has been accompanied by little or no increase in household disposable income and persistent inequalities. This has contributed to increased political discontent and a decline in support for democratic values and for the EU (for more details see the data story on the geography of discontent).
TIP: Use the menu on the chart (top right) to download the data.
Figure 1.2. Annual growth in real GDP per head in EU regions by level of development, 2001–2021

Strong regional variations within countries

Regional disparities are wide within many Member States and in some cases have tended to widen further since 2000 (see Chapter 1 of the 9th Cohesion Report). Differences in GDP per head within EU countries are often as large as between EU countries, indicating that important regional variations are often hidden behind national averages. The same holds for disparities in employment rates and in a number of social indicators, including between rural and urban areas (see Chapters 2 and 3). The drivers of within-country regional disparities are quite heterogeneous across Member States (Figure 1.3). In Central and Eastern Member States like Bulgaria or Romania the capital region is outperforming the other regions. In other Member States, notably Portugal, the decline in regional disparities is due to low growth in some previously dynamic regions, in this case Lisbon. In France, instead, internal disparities increased because growth of GDP per head in regions with low levels was relatively slow. In such a context, the advantage of place-based approaches is that they can take fully into account of heterogeneity across regions.
Zoom and click on the map to select a region and see how the region performed against the EU and Member State average rate of growth since 2001.
The maps of the Outermost Regions can be seen under the globe icon. 
Figure 1.3. Regional Growth of GDP per head compared to growth in the EU and Member State, annual average, 2001–2021

Regional GDP rebounded after a deep pandemic-induced recession

Moving to the more recent crisis, the COVID-19 outbreak had a severe impact on the EU economy and society, but GDP rebounded strongly in 2021 after a massive downturn in 2020 (Figure 1.4 and Figure 1.5; for more details, see the data story Regional GDP: post-pandemic rebound). The unprecedented, bold and coordinated economic policy actions taken, including through Cohesion policy, mitigated the economic and social impact of the pandemic. EU GDP exceeded the pre-pandemic level by the last quarter of 2021, whereas it took 7 years for GDP to recover the pre-recession level after the 2009 financial crisis. The regional data also indicate a more broad-based recovery in 2021, with less developed, transition and more developed regions all rebounding at once (Figure 1.5).
Figure 1.4. Real GDP in 2008, 2009, 2010, NUTS 2 regions aggregated by level of development, 2008 GDP = 100
Figure 1.5. Real GDP in 2019, 2020 and 2021, NUTS 2 regions aggregated by level of development, 2019 GDP = 100

Looking ahead: cohesion policy as relevant as ever

The historic EU enlargement in 2004 has been emblematic of the positive impact of Cohesion Policy and EU membership. Twenty years later, the average GDP per capita in the Member States that joined the EU in 2004 increased from about 52% of the EU’s average in 2004 to nearly 80%. This remarkable catching up process was enabled, among other factors, by the direct support to investments from cohesion policy, which is necessary for a successful integration into the single market, including the adoption of the EU acquis. Cohesion policy, in synergy with other EU financing instruments, has been instrumental to both.
Building on this success, there is ample room for further upward convergence. Over one in four people in the EU (28%) still live in regions with GDP per head below 75% of the EU average in PPS terms, most of them in eastern Member States, but also in outermost regions and increasingly in southern Europe. In Bulgaria, for instance, GDP per head was below 50% of the EU average in all regions, except in Yugozapaden, the capital city region. Tapping into the growth potential of the 82 regions with GDP per head below 75% of the EU average is key to fostering prosperity in the EU. From a forward looking perspective, regional economic disparities between the EU-27 and current candidate countries are quite large but not too far

 from those between the EU-15 and the countries joining in 2004, suggesting that there is an even larger potential for upward convergence going forward.
The impact of the 2009 recession on EU regions has been a major and persistent one, especially in parts of Southern Europe. Most recently, the outbreak of the COVID-19 pandemic and escalating geopolitical tensions, with war erupting on the EU’s doorstep, have tested cohesion. The disruptions in global supply chains and the surge in energy, raw materials and food prices have exacted a heavy toll on households – especially the most vulnerable ones – throughout Europe. The decisive response to the COVID-19 pandemic has clearly borne fruit and the rebound in terms of GDP, investment, employment and household income has been stronger and more balanced across regions than after the 2009 recession (9th Cohesion Report, 2024).
Despite encouraging signs of recovery, the long-term impact of these recent events on cohesion remains difficult to predict, especially in a context where structural challenges linked to the green and digital transitions are set to reshape much of the EU economy. Within this context, the need to ensure economic cohesion, which has been enshrined in the EU Treaties since The Treaty of Rome of 1957, remains as relevant as ever.

More information and data sources

  • This data story is extracted from the 9th Cohesion Report on Economic, Social and Territorial Cohesion in the European Union, (2024). Find out more about the Cohesion Report on this webpage.
  • DG REGIO Working paper on the geography of discontent paper on this link.
For more information on EU Cohesion policy go to Inforegio and to Kohesio for information on projects supported.
Author: Pasquale D'Apice
Date of publication: March 2024