EU officials: European inequality can only be tackled with investment
Our London-centric nation is devastatingly unequal . Inner London is the richest region in northern Europe, yet nine out of 10 poorest regions are also in the UK. In fact, the UK is the only country in the G7 group of leading economies where inequality has increased this century.
West Wales tops the list of the poorest northern European regions. And making up the poorest five regions are Cornwall, Durham and Tees Valley, Lincolnshire and South Yorkshire.
However, the UK isn’t alone in its inequality. The gap between the richest and poorest regions in Europe, which has grown since the 2008 economic crisis, has concerned European policy-makers for many years.
Recent OECD reports on inequality show the income gap between citizens in the poorest and richest regions has widened in half of the 34 OECD countries since 2008.
And it’s not just income disparity that separates Europe’s rich and poor: there is inequality in employment opportunities, education and health. Regional differences in life expectancy have grown in 18 of 30 countries since 2000.
Meanwhile, the increase in the number of people at risk of poverty or exclusion - now 9 million in the EU - is more pronounced in the UK than anywhere else in Europe, except Greece, Spain and Italy. And while south-east England is in the top 20% of OECD regions for employment prospects, the north-east is in the bottom 30%.
Before 2008 these regional disparities were shrinking but austerity measures after the crash are widely considered to be the cause of today’s inequality.
EU calls for targeted funding
The EU has responded by using its economic power to invest in combating inequality, but the funds it has set up have a chequered history. They are dogged by scepticism over their effectiveness; their purpose is often misunderstood (particularly in the UK, with its often negative attitude towards Europe); and concerns remain over the bureaucratic processes that often hold them up. Now, though, EU policy-makers are determined to get results.
Between 2014 and 2020 the EU plans to invest more than €350bn (£280bn) in Europe’s cities and regions. UK local authorities will receive £11.8bn.
At a recent conference in Brussels, top officials from the EU and OECD were united in calling for more targeted funding to create growth and jobs. OECD secretary general Jose Ángel Gurría acknowledged that investment is the first thing that governments cut when they need to reduce a deficit.
That’s not the right response but it may be the only politically feasible response, he said, adding that Europe’s regions would need to show strong leadership to communicate to the public that reforms and investment need time before they will work.
Michel Lebrun, president of the Committee of the Regions, the EU’s assembly of regional and local representatives from all 28 member states, said a combination of fiscal controls, structural reforms and investment in employment and infrastructure was essential to halting the trend of growing inequalities across Europe. The committee has to be consulted by the European Parliament, the European Commission and the Council on any policy decisions affecting regions and cities.
Lebrun said local authorities were often held back from boosting investment. In Wallonia, for example, the predominantly French-speaking region in southern Belgium, local authorities can invest only up to a certain amount per inhabitant because of a cap on investment implemented to prevent them getting into more debt. He called for this policy to be redefined to give local regions the capacity to invest more in growth and jobs.
Meanwhile, in Yorkshire the council is fighting the UK government in the Supreme Court over plans to divert millions of pounds of EU funding away from the county into Scotland and Wales.
The EU commissioner for regional policy, Johannes Hahn, announced reforms to the way EU funding under cohesion policy is to be delivered in cities and regions across Europe.
“As a result of the reform, the mindset of people has been changed. Cohesion policy is no longer considered as a pot of money to be handed out, he said.
“The difference this time around is that we make a more focused and strategic selection of projects that do continue to [encourage] smart and sustainable growth. The aim is to create sustainable business opportunities and jobs for people in their regions. This will help deal with the brain drain problem. People will stop migrating if they have opportunities where they live.