Territorial development 35

The Council of European Municipalities and Regions (CEMR) has warned that the upcoming reform of the EU’s economic governance framework, including the Stability and Growth Pact (SGP), could risk undermining the investment capacity of municipalities and regions across Europe.

Local and regional governments are responsible for almost half of all public investments in the EU. These investments are essential to deliver on European priorities such as the green transition, digitalisation, and resilient infrastructure. However, the proposed introduction of net expenditure ceilings risks unintentionally penalising local governments, who generally borrow only for long-term investments in capital assets.

Reform and its implications

The European Commission has announced plans to simplify the SGP by replacing certain rules, including the medium-term objective (MTO), with a new system of net expenditure ceilings. While CEMR welcomes the move away from the MTO, which had previously constrained local investment through deficit limits and reduced transfers from central governments, it raises serious concerns about the impact of the new ceilings.

Applying net expenditure limits to municipalities would create three major risks:

Higher administrative burdens arise because local governments do not use the net expenditure concept in their accounting.
Political mismatches, since local electoral cycles rarely align with national fiscal programming.
Cuts in public investment, as postponing infrastructure projects, are often the only quick adjustment available under tight expenditure ceilings.

This is even though local government debt levels are prudent in every EU Member State, and are already strictly monitored under national rules.

The solution: exclude local expenditure

CEMR is therefore calling for the exclusion of local government expenditure from the definition of net expenditure ceilings in the reformed SGP. Much like cyclical unemployment spending is excluded, removing local investment from these calculations would ensure municipalities can continue to provide essential services, maintain infrastructure, and invest in the future without being penalised by centralised fiscal targets.

At a time when Europe urgently needs stronger local action to address climate, digital, and social challenges, weakening municipalities’ ability to invest would be counterproductive. Protecting local public investment within the EU’s economic governance reform is not just about budgets, it is about safeguarding Europe’s capacity to deliver on its ambitions.

For more information, contact:

Advisor – Territorial Cohesion & Local Finances

GAUDRON Marine In Impact community Cohesion, Impact community Cohesion, Press, Publications, Territorial development

Cohesion policy funds 2021-2027

Cities and municipalities in the driving seat for EU Cohesion Policy funds?

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What is the common feature between the trolleybuses in Otsravian metropolitan area (Czech Republic), the local food businesses in Ljubljana Urban Region (Slovenia) and the traditional dance festival in Saint-Gervais-d’Auvergne (France)? They all benefited from the European Cohesion Policy through integrated territorial investments (ITI) or community-led-local development (CLLD).

Behind the term “EU Cohesion Policy” we can find a variety of programmes and fundings such as the European Regional Development Fund (ERDF), the European Social Fund (ESF) or the European Agricultural Fund for Rural Development (EAFRD) although the latter is now directly attached to the Common Agricultural Policy.

In practice, these funds reach thousands of towns, cities and regions, as well as other beneficiaries through the intermediation of “Managing Authorities” which can be national Ministries or Regions. But there are two lesser-known dimensions of these funds which are directly implemented on the ground: the so-called ‘ITI’ and ‘CLLD’

ITI and CLLD

Integrated Territorial Investments (ITI) and Community Led Local Development (CLLD) are the main mechanisms used to implement European Cohesion Policy funding in an integrated and place-based manner. Using these tools to implement Cohesion Policy funds is a guarantee that local governments and local stakeholders will be closely associated in the design, implementation and monitoring of the EU funds they receive.

They can allow the use of different funds in an integrated way. For instance, a rural municipality interested in a social inclusion project could combine ESF and EAFRD in a single, comprehensive project.

On paper ITI and CLLD are great tools for local and regional governments… But how do they translate in practice?

In 2015, we delved into the analysis of the use of the ITI in different Member States. A few years later, with the start of the new programming period 2021-2027, we reiterated the experiment to understand how these tools were used in practice in the previous period and what the lessons learned and changes in their implementations. Click here to read the full study.

To do so, CEMR reached out to some of its member associations to gather feedback on the implementation and planning of ITI and CLLD tools from the perspective of cities and municipalities.

Highly appreciated tools, but some difficulties in implementation remain

Overall, the many feedbacks we received were quite positive. ITI and CLLD are considered great instruments thanks to their adaptability to local needs and specificities. They empower local authorities, and by doing so help raise their capacities in managing EU funds. But they also strengthen multi-level dialogue between the local authorities and the Managing authorities (either the Ministry or the Region). Hence reinforcing the trust between the different governance levels.

All is not yet rosy either: some challenges remain for fully tapping into the potential of these tools such as the administrative burden still inherent to Cohesion policy funds in general. In CEMR’s new analysis, we also identified some recommendations to improve the uptake of ITI and CLLD in the current and future programming period.

For more information, contact:

Advisor – Territorial Cohesion & Local Finances

GAUDRON Marine In EU budget, EU budget, Impact community Cohesion, Impact community Cohesion, Impact community Society, Local democracy, Press, Publications, Territorial development, Territorial development

Bringing Europe closer to its citizens

How ITI and CLLD strengthen local democracy, multi-level governance, and place-based development in EU cohesion policy

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The European Union’s Cohesion Policy is one of its most important instruments for promoting economic, social, and territorial cohesion across its member states. With nearly €392 billion allocated for 2021–2027, it tackles inequalities between regions while supporting a greener, more competitive, and more inclusive Europe. Central to this effort are Integrated Territorial Investments (ITI) and Community-Led Local Development (CLLD), two tools designed to put territorial needs and local actors at the heart of EU funding.

Why integrated tools matter

The foundations for a place-based approach were laid in the 2009 Barca Report, which argued that EU policy should focus on unlocking the potential of specific territories while addressing persistent exclusion. ITI and CLLD, introduced in 2014, operationalise this vision by giving local and regional governments a stronger role in programming, governance, and project implementation.

These tools provide flexibility, enable cooperation across levels of government, and ensure that EU funds target the real needs of communities. For municipalities, regions, and their associations, they are among the most valued features of cohesion policy.

ITI: Integrating strategies across territories

ITI allows funding from several EU programmes to be combined in support of integrated strategies. It has been especially used for urban development, where at least 8% of ERDF funding is earmarked for sustainable urban projects. While designed to cover any functional area, urban, rural, or mixed, ITI is most common in metropolitan settings, where challenges like mobility, housing, and regeneration demand integrated solutions.

CLLD: Communities leading the way

CLLD builds on the LEADER approach to rural development, empowering local action groups of citizens, NGOs, and businesses to design and implement strategies. While most common in rural areas, it has the potential to strengthen participation and ownership in cities, too. CLLD fosters trust, encourages bottom-up innovation, and helps address the needs of vulnerable groups such as youth, migrants, or elderly people.

What worked well

CEMR’s analysis highlights several clear benefits:

Flexibility and relevance – ITI and CLLD adapt EU funding to local needs.
Capacity-building – local authorities gain expertise in managing EU programmes.
Stronger governance – fostering trust and cooperation between local, regional, and national levels.
Visibility of EU action – projects close to citizens showcase the value of EU funds.
Community cohesion – encouraging cooperation among local actors and building metropolitan or regional identity.

Persistent challenges

Despite their value, integrated tools face obstacles:

Administrative burden remains high, with complex procedures and slow fund absorption.
Limited flexibility – strategies must still align with national operational programmes, sometimes restricting genuine local priorities.
Time pressures – integrated projects require trust and participation, often at odds with the EU’s strict N+3 spending rule.
Uneven use of PO5 (“Europe closer to citizens”) – some member states underfund this priority despite its direct link to ITI and CLLD.
Urban uptake of CLLD – adapting the rural-focused model to cities remains difficult.

CEMR recommendations

Looking ahead, municipalities and regions urge the EU to:

Maintain and strengthen integrated tools in cohesion policy.
Simplify procedures at both EU and national levels, avoiding “gold-plating.”
Clarify guidance on multi-funding, project selection, and the use of PO5.
Exempt ITI/CLLD projects from the N+3 rule to allow more time for participatory approaches.
Reintegrate the EAFRD into the Common Provision Regulation to ease multi-fund projects.
Ensure meaningful local involvement in programming, implementation, and evaluation.

Conclusion

ITI and CLLD have proven their worth as vehicles for place-based development, democratic participation, and closer cooperation between Europe and its citizens. While challenges remain, strengthening these tools is essential for making the EU’s cohesion policy more visible, more inclusive, and more responsive to local realities.

For more information, contact:

Advisor – Territorial Cohesion & Local Finances

GAUDRON Marine In Climate, Climate, EU budget, EU budget, Impact community Climate, Impact community Climate, Impact community Cohesion, Impact community Cohesion, Local democracy, Local democracy, Press, Publications, Territorial development

Investing in Europe’s future

A new EU growth model must empower local services, boost resilience and deliver sustainable investments

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The war in Ukraine and the aftermath of the COVID-19 crisis have placed Europe at a critical crossroads. These overlapping challenges are testing the strength of our democracies, economies and social fabric and call for a bold rethinking of Europe’s economic governance.

In response, the SGIs Network, bringing together key public service stakeholders, has issued a joint declaration ahead of the Tripartite Social Summit on 23 March 2022. The message is clear: to manage the transition and strengthen the EU’s resilience, Europe must urgently shift towards a more forward-looking, inclusive and investment-oriented growth model.

A new economic framework
The current EU fiscal rules are no longer fit for purpose in the face of permacrisis. The declaration calls for a reformed fiscal architecture that reconciles debt sustainability with long-term, growth-enhancing investments. This includes distinguishing productive investments, such as in green infrastructure, digitalisation, healthcare and education, from unproductive spending.

Empowering local action
Local and regional governments are essential to achieving a green, digital and fair transition. The declaration stresses the need for their full involvement in implementing the National Recovery and Resilience Plans (NRRPs) and accessing the Next Generation EU funds. Without this multilevel approach, the EU risks missing the full potential of its recovery strategy.

From temporary response to permanent capacity
As the NGEU package and current EU budget cycle expire in 2026–2027, the declaration urges leaders to prepare for a longer-term fiscal and investment strategy. A permanent common fiscal capacity will be vital to address future shared challenges, from climate change to geopolitical instability, and avoid deepening inequalities between territories.

The call from the SGIs Network is not just for more funding, but for better governance and greater solidarity. It is a reminder that investing in public services, social cohesion and local resilience is not a cost. It is the foundation of a stronger, united Europe.

Read the declaration here

For more information, contact:

Advisor – Territorial Cohesion & Local Finances

Empowering local Europe

CEMR unveils its vision for stronger, inclusive and sustainable territories across Europe

The Council of European Municipalities and Regions (CEMR) has launched its political manifesto calling for a more inclusive, resilient, and citizen-driven European Union. With over 41 national associations of local and regional governments behind it, the manifesto sets out a roadmap to bring Europe closer to its citizens, starting from the ground up.

At its heart are six concrete proposals to reinvigorate European democracy: from establishing permanent citizen panels and annual Europe Day debates in schools, to relaunching town twinning and creating an Erasmus-style programme for civil servants.

CEMR also stresses that a strong Europe must leave no one and no place behind. It calls for renewed efforts to tackle territorial disparities, address depopulation, and ensure that public services, from education to health, are accessible to all citizens, no matter where they live.

The manifesto also focuses on key priorities for the coming decade, including:

Citizen participation through inclusive local democracy;
Empowered local climate action, as cities and regions lead Europe’s green transition;
Fair and coordinated migration policies, with strong local support for integration;
Digital transformation that bridges the urban–rural divide;
New forms of town-to-town partnerships, especially beyond the EU’s borders;
And financial means to invest in sustainable local infrastructure and innovation.

CEMR’s proposals emphasise the urgent need for deeper recognition of local and regional governments in European decision-making. This includes a stronger role for the Committee of the Regions, the creation of a local chamber, and systematic consultation of representative associations like CEMR when shaping EU legislation and strategies.

By calling for a Europe that is democratic, sustainable, and close to its people, the manifesto is a bold invitation to reimagine the Union from the local level up, with municipalities and regions playing a central role in shaping the continent’s future.

For more information, contact:

BORDELOT Federica

Director – Policy & Impact

GAUDRON Marine In EU budget, EU budget, Impact community Cohesion, Impact community Cohesion, Local finances, Local finances, Press, Publications, Territorial development, Territorial development

Boosting public investment for recovery

CEMR calls for investment-friendly EU economic governance reform

Read the position paper here

The COVID-19 crisis exposed vulnerabilities in Europe’s economic governance and the need to rethink how EU rules support long-term, sustainable investment at all levels of government. In its 2022 position, the Council of European Municipalities and Regions (CEMR) argues that the reform of the EU’s economic governance framework is a vital opportunity to unlock local and regional investment capacity.

Local and regional governments, which account for 45% of public investment in the EU, were heavily impacted by the crisis. While they expanded essential services and supported communities, they also faced falling revenues and limited fiscal space. CEMR warns that without urgent reform, municipalities risk being held back from investing in vital green, digital, and social transitions.

CEMR proposes several key changes:

Strengthen multi-level governance: Local and regional voices must be involved in economic coordination, including through a reformed European Semester with mandatory application of the partnership principle.
Recognise investment as a priority: The new framework must distinguish between current spending and long-term, sustainable investment to avoid penalising municipalities for future-oriented projects.
Grant borrowing flexibility: Local and regional borrowing for structural investments should not be constrained by national debt calculations under the Stability and Growth Pact.
Establish a European municipal and regional bank: This new facility within the EIB would support local investment, particularly through pooled resources and tailored green or social bonds.
Support local capacity building: Municipalities need the tools and skills to plan and deliver strategic investments, especially in health, care, and infrastructure.

CEMR also highlights the importance of maintaining local leadership in the implementation of National Recovery and Resilience Plans. Without adequate autonomy, funding, and engagement, the EU’s sustainable recovery goals, particularly those of the Green Deal, risk being delayed or derailed.

Ultimately, CEMR calls for a governance framework that enables, not restricts, local ambition, empowering municipalities and regions to invest in the future of Europe’s communities.

For more information, contact:

Advisor – Territorial Cohesion & Local Finances

BENNIS Hamza In Employment, Employment, EU budget, EU budget, Impact community Cohesion, Impact community Cohesion, Impact community Labour, Impact community Labour, Local finances, Local finances, Press, Publications, Territorial development

Modernising working time rules

Balancing worker protection with flexibility and legal clarity in local public service delivery under the Working Time Directive

The Council of European Municipalities and Regions (CEMR) has responded to the European Commission’s public consultation on the review of the Working Time Directive (WTD), urging the EU to prioritise legal certainty and respect for local autonomy in any future reform.

Unchanged since 2003, the current Directive no longer fully reflects today’s labour realities, especially for local and regional governments as major public employers. While modernisation is welcome, CEMR warns against overreach: the Directive should focus strictly on health and safety, without encroaching on broader employment issues that fall outside the EU’s remit, such as wages, work-life balance, or new working patterns.

In its response, CEMR reaffirms key positions first set out in its 2011 position paper, which remain relevant today. It calls for:

Flexibility for social dialogue: Local social partners are best placed to find tailored solutions through bargaining and agreements that balance worker protection with service continuity.
Clear limits to scope: The Directive must not expand into areas that are either outside EU competence or not directly related to health and safety.
Legal certainty: Any revision should result in simpler, clearer rules that avoid legal ambiguity and reduce the administrative burden on local authorities.

CEMR further stresses that the review must take full account of the impact on local and regional governments’ ability to provide uninterrupted public services, especially in sectors like emergency care and civil protection, where flexible working patterns are essential.

CEMR concludes that no legislative initiative should proceed before the publication of detailed impact assessments and a full analysis of the public consultation. In the meantime, it stands ready to engage in open and constructive dialogue with EU institutions to ensure a balanced approach that works for all levels of governance.

For more information, contact:

BENNIS Hamza

Officer – Employment, Digitalisation and Public Services

THOMAS Carol In EU budget, EU budget, Governance, Governance, Impact community Cohesion, Impact community Cohesion, Local finances, Local finances, Press, Publications, Territorial development

Boosting public investment capacities

Rethinking EU economic governance to empower local investment and drive sustainable recovery

The COVID-19 crisis has reshaped Europe’s economic landscape and highlighted the essential role played by local and regional governments. From enforcing public health measures to supporting vulnerable communities, municipalities and regions have borne the brunt of the pandemic’s immediate and long-term impacts, often while facing steep declines in revenues.

As the EU reflects on the future of its economic governance, the Council of European Municipalities and Regions (CEMR) urges a rethink of the Stability and Growth Pact to better align it with today’s realities and tomorrow’s challenges.

Local governments account for nearly half of public investment in the EU, yet current fiscal rules often restrict their capacity to finance long-term projects. CEMR’s position paper identifies several ways the framework could evolve to support recovery, green and digital transitions, and social inclusion. These include:

Stronger multi-level governance and genuine consultation with local authorities in EU economic coordination;
Greater fiscal flexibility to support sustainable and long-term local investments;
Addressing the investment backlog through accessible financing and capacity building;
Establishing a dedicated European municipal and regional investment facility within the EIB to boost green and digital development;
Ensuring that local-level contributions to the EU Green Deal are not blocked by rigid budget rules.

Reforming EU economic governance is an opportunity to recognise and unleash the potential of Europe’s cities and regions. A more balanced, investment-friendly approach will strengthen resilience, equity and sustainable growth across the Union.

For more information, contact:

THOMAS Carol

Senior Adviser, Governance, Gender Equality, Local Democracy

BENNIS Hamza In EU budget, EU budget, Impact community Cohesion, Impact community Cohesion, Impact community Labour, Impact community Labour, Local finances, Press, Publications, Territorial development

Engaging in the European semester

CEMR–EPSU handbook helps local government social partners strengthen their role in EU economic governance

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The European Semester, launched in 2010 to coordinate EU Member States’ economic, financial, employment and social policies, increasingly shapes national reforms and public investments. For local and regional governments (LRGs) and their social partners, the Semester is not just about fiscal discipline, it now covers areas like health, education, taxation, social care, and the green and digital transitions, with direct implications for workers in the LRG sector.

Recognising this impact, the 2018–2020 CEMR–EPSU joint project produced a Handbook for Social Partners. Its aim: to help LRG social partners navigate the Semester, build their capacity, and influence reforms more effectively.

The handbook highlights the growing territorial dimension of the process: in 2019, 62% of all Country-Specific Recommendations (CSRs) had a direct or indirect local and regional impact. With future EU funds increasingly tied to Semester priorities, active engagement becomes crucial.

Practical guidance is provided on how to engage across the Semester’s different phases:

Awareness-raising and capacity building: Social partners should strengthen internal knowledge, build alliances, and establish direct contact with the national ministry leading the Semester and with the European Commission’s Semester Officer. Early and proactive engagement, including joint employer–worker positions on key issues, helps set the agenda.
Country reports and fact-finding missions: In December–February, the Commission assesses national situations. LRG social partners can influence this by meeting fact-finding missions, submitting analyses, and ensuring that their priorities are reflected in reports.
Implementation phase (April–July): As Member States draft their National Reform Programmes (NRPs) and receive new CSRs, social partners can contribute written submissions, highlight gaps, and propose reforms aligned with local needs. Examples from Sweden, Lithuania, and Spain show structured opportunities for input through consultation fora or tripartite councils.
Follow-up phase (August–October): With reforms under implementation and budgets prepared, dialogue with national authorities and Semester Officers is vital to ensure LRG perspectives are integrated.

The handbook stresses that the aim is not one-off consultations, but structured, regular dialogue between governments, the Commission, and LRG social partners. By organising themselves, building alliances, and proactively shaping priorities, local government employers and trade unions can ensure their voices count in one of the EU’s most influential policy processes.

For more information, contact:

BENNIS Hamza

Officer – Employment, Digitalisation and Public Services

GAUDRON Marine In EU budget, EU budget, Impact community Cohesion, Impact community Cohesion, Press, Publications, Territorial development, Territorial development

Rural Areas and EU Funds

How can local and regional governments in rural areas access EU funds, identify key challenges, and provide recommendations for improvement

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Rural areas are central to Europe’s territorial, social, and economic cohesion, but they often face persistent challenges, from ageing populations and digital divides to restricted access to services. Recognising this, the European Commission is developing a long-term vision for rural areas. In this context, the Council of European Municipalities and Regions (CEMR) has examined how local and regional governments (LRGs) in rural areas access and use EU funds, an essential tool for addressing local needs and unlocking development potential.

In March 2021, CEMR conducted a targeted survey among nine national associations of municipalities across the EU to assess how effectively rural LRGs are utilising EU funds. The results point to a clear mismatch: while EU funding is recognised as highly relevant for rural areas, its actual use by LRGs remains limited in many cases.

The European Agricultural Fund for Rural Development (EAFRD), European Regional Development Fund (ERDF) and European Social Fund (ESF) are considered the most relevant, and most used, by rural LRGs. However, other important programmes like LIFE, Erasmus+, and Connecting Europe Facility are seen as underused, despite their potential relevance. Several barriers contribute to this situation, including overly complex administrative requirements, lack of technical capacity in small municipalities, and limited awareness of support mechanisms.

The analysis also reveals a concerning gap between the perceived importance of rural challenges and the effectiveness of EU funds in addressing them. While EU funding appears helpful in tackling issues like poverty, pollution, or lack of services, it is perceived as inadequate in dealing with demographic decline, public transport gaps, or the rise of populism, issues at the heart of rural fragility.

CEMR’s study further shows that some Member States provide national or regional support to help rural LRGs access EU funds, but awareness and coordination are often lacking. There is also difficulty in combining different EU funding streams, such as CAP and cohesion funds, limiting the efficiency of investment.

CEMR’s findings point to the need for a new narrative on rural areas, one that recognises them as drivers of opportunity, not merely recipients of aid. To make this vision a reality, EU funds must be more accessible, tailored, and coherent with rural priorities. This includes simplifying administrative processes, improving communication, and better aligning funding objectives with on-the-ground realities.

As the EU shapes its long-term vision for rural areas, the voice of local and regional governments must be heard. They are not only implementers of EU policy, but they are also essential partners in building vibrant, resilient rural territories. A stronger focus on their role will be crucial to ensuring no place is left behind.

For more information, contact: