Cohesion policy at a crossroads: rethinking EU funding for a competitive future

Hungary's Minister for Regional Development and Public Administration, Tibor Navracsics, argued that competitiveness must be understood not only in economic or technological terms, but as a broad societal ambition. EU funding, he stressed, is not just a financial tool but also a badge of prestige for companies and an enabler of social mobility. According to Navracsics,

we don't just need competitive machines - we need competitive societies.

Navracsics outlined Hungary’s performance in using EU funds, highlighting the GINOP programme, which has supported over 7,600 enterprises, with more than 5,000 projects already completed by March 2025. He noted significant advances in research, vocational training, and labour market adaptation, citing that nearly 40,000 workers have benefited from support to better adapt to economic changes.

Yet the challenges are real. Navracsics acknowledged the impact of the EU’s rule-of-law procedure, which has led to the suspension of several operational programmes. He warned that by the withholding of funds not only harms Hungary but undermines the EU’s overall competitiveness:

The EU weakens itself if it fails to support its member states’ development.

Sofia Alves, Director at the European Commission’s Directorate-General for Regional and Urban Policy, echoed the need for transformation. “The status quo is not an option,” she declared. Europe stands at a historic turning point, where

the cohesion policy must become more flexible, responsive, and technologically driven.

The Commission’s mid-term review aims to better integrate local realities into broader EU strategies.

Alves emphasized that future cohesion spending must align with the EU’s industrial and technological goals. She underscored the importance of regional leadership in emerging sectors like hydrogen energy, microelectronics, and AI. As she said, the “Strategic Technologies for Europe Platform” (STEP) is a major tool already for this shift, reallocating over €7 billion so far to support innovation in high-value sectors.

In Hungary, the STEP initiative is being actively utilized. Balázs Greinstetter, Director General of the National Development Centre, announced

a proposed reallocation of €300 million toward green economy, biotechnology, and AI projects.

These investments, he said, are essential to bridge the gap between lagging and leading regions. Over 65% of funding remains targeted at less-developed areas.

However Greinstetter raised concerns about implementation capacity. Many managing authorities are overstretched, balancing the closure of the 2014–2020 funding cycle with preparations for the next. Too complex administrative procedures remains a persistent obstacle despite political promises of simplification.

In practice, the process is becoming more and more complicated.

Both Alves and Greinstetter highlighted the importance of local and regional collaboration. Alves stressed that cohesion cannot be top-down; successful outcomes depend on active local participation, strategic coordination, and integration with programs like Horizon Europe. “Only you, on the ground, know what works,” she told the audience.

Another shared concern was the slow start of the current 2021–2027 funding cycle. Delays in legal frameworks and programme approvals have constrained flexibility. Greinstetter welcomed the CPR regulation’s new allowance for up to 8% internal reallocations without formal approval, calling it a much-needed step toward adaptive management.

All agreed in their speeches that, cohesion policy must be about more than money. As Navracsics put it, “We are investing EU funds not for today, but for the future.” Cultural programmes, such as Veszprém and Lake Balaton’s role as European Capitals of Culture in 2023, show how strategic cultural investments can bolster both economic vitality and community resilience.

The key message from all speakers was clear:

the cohesion policy of tomorrow must prioritise not just economic indicators but human potential.

A competitive Europe requires educated, socially integrated, and innovative citizens as much as advanced technologies and efficient administration. Reforming EU funding with these goals in mind is not just a national interest—but a European imperative.

Cover photo: Portfolio