CEMR report reveals rising costs and falling revenues for local and regional governments during the pandemic, threatening public services and investments
As the COVID-19 pandemic swept through Europe, local and regional governments (LRGs) were on the frontlines, maintaining public services, managing emergency measures, and supporting vulnerable communities. A new analysis by the Council of European Municipalities and Regions (CEMR) sheds light on how this essential work came at a high financial cost, creating long-lasting challenges for municipalities and regions across Europe.
Based on a survey conducted among 40 national associations in 15 countries, the CEMR report highlights what it calls a “scissor effect”: rising local expenditure paired with declining revenue. While towns and regions had to invest in health, social care, education, and digital tools to respond to the crisis, income from taxes, public service fees, and tourism sharply declined.
Some countries, such as Sweden and Estonia, offered significant support to help offset these financial shocks. Others, including Portugal, provided little to no compensation. The situation varied widely, revealing major disparities in how LRGs were supported at the national level.
The report also underscores the challenges LRGs faced in accessing EU support due to limited consultation, legal constraints, or complex procedures. Despite some flexibility under EU fiscal rules, many authorities remain uncertain about their mid- and long-term financial stability. The risk: cuts to investment in essential areas like climate action, digitalisation, housing, and public transport.
CEMR calls for a long-term rethink of how LRGs are financed and included in national and EU recovery plans. Municipalities and regions have proven their capacity to lead in times of crisis. To continue doing so, they need clear legal frameworks, financial autonomy, and a real partnership with national and European institutions.
The report is a clear reminder: Europe’s recovery depends on strong, resilient local and regional governments. Equipping them today is the key to building a more sustainable, inclusive, and future-proof tomorrow.
For more information, contact:
Advisor – Territorial Cohesion & Local Finances
