CoR's president Tzitzikostas: "Rising costs and
shrinking revenues threaten regions' and cities'
ability to protect people and help businesses"
Since the beginning of the COVID-19 pandemic, the
mobilisation of regions and cities has prevented
the collapse of many local businesses. However, the
fall in fiscal income and the economic efforts
taken by mayors and governors to protect citizens
and SMEs could put local public finances at risk.
During a debate with the President of the European
Investment Bank (EIB), Werner Hoyer, and the
Vice-President
Lilyana Pavlova, members of the
European Committee of the Regions (CoR) urged
support for local public investment and SMEs.
Local and regional authorities
are responsible
for a third of public expenditure (33.6%) and for 53%
of public investment in the EU. According to a CoR-OECD
survey on the impact of COVID-19 on regions and cities,
included into the
first Annual Regional and Local Barometer
, 65% of local and regional authorities put in place or
contributed to direct support to businesses and the
self-employed.
The unprecedented financial effort taken by regions and
cities during the crisis could lead to a dangerous
‘scissors effect’: decreasing revenues and increasing
expenditure, put public finances of municipalities,
cities and regions in the EU at risk. The decrease of
revenues in 2020 of subnational authorities in France,
Germany and Italy alone is estimated to be in the order
of EUR 30 billion for the three countries representing
up to 10% of the respective totals.
These concerns were highlighted by the CoR Plenary
during a debate with the president of the European
Investment Bank, Werner Hoyer, and the
Vice-President, Lilyana Pavlova.
The president of the CoR,
Apostolos Tzitzikostas
, underlined that
"The rising costs for services and the shrinking
fiscal revenues are threatening regions' and
cities' ability to protect people and help local
businesses. With the action plan 2021, the
Committee and the EIB join forces to help them save
jobs, become resilient and make their community
greener and more digitalised. The many stories
shared today by CoR members show that the EIB is
closer than ever to regional and local authorities
. This cooperation is a strategic asset for our
Union as Europe's recovery can only be built in
partnership, from the bottom up".
President Hoyer said: “
In response to the coronavirus pandemic, the EIB
has quickly mobilised to deploy a support plan to
help meet the most urgent financing needs,
including those of regions and municipalities. To
date, we have approved financing of nearly EUR 25
billion for COVID-19-related investment to improve
public health, strengthen public services and
support affected companies. At the same time, our
recovery from the crisis must also be the
opportunity to accelerate the transition to a
greener and more sustainable future that leaves no
one behind. Our long-term financing of urban and
regional development projects thus continues with
an overarching focus on climate action and cohesion
”.
Vice-President Pavlova stated
: “
The EIB values the excellent and well-established
relation with the Committee of the Regions that has
been a key player in connecting us to regional and
local decision makers. We are looking forward to
reinforcing our successful cooperation even further
in our renewed CoR-EIB Group joint action plan for
2021. Cities and regions have been a partner of
choice for the EU Bank for more than 60 years. As
they face unprecedented challenges, the EIB is
fully committed to support investments that make
our cities and regions recover and prosper. Through
its wide range of financing instruments and
advisory services, the EIB also stands ready to
continue to complement EU funds during the next
Multiannual Financial Framework
”.
Despite the devastating effect of the Covid-19 on
enterprise liquidity and revenues, SMEs remain the
backbone of the European economy and their performance
is key for a swift economic recovery
. The EU SME Strategy needs to promote a strong
partnership between
local, national and EU authorities for the development
of resilient local and regional entrepreneurial
ecosystems. This request is included into the opinion
entitled
SME Strategy
, drafted by Eddy Van Hijum (NL/EPP),
Member of the Council of the Province of Overijssel,
adopted by the CoR Plenary.
"SMEs in sectors such as tourism, retail and
manufacturing industries are heavily hit by the corona
crisis. There is no recovery of the economy without
recovery for SMEs. Regions can play a crucial part in
making sure financial support and recovery measures are
there for SMEs, as well as providing structural support
towards the twin transitions for a Digital Europe and
the Green Deal" underlined the rapporteur Eddy Van Hijum.
The CoR welcomes the
SME Strategy for a sustainable and digital
Europe
presented in March by the European Commission. Its
publication has never been more timely and its
effective roll-out calls for commitment and ownership
at regional and local level. However, local and
regional leaders advocate that the Strategy needs to
address the diverse needs of SMEs and believes that
this diversity is not sufficiently operationalised so
far.
European SMEs need a genuine level playing field in a
completed and deepened Single Market. Therefore, the
CoR calls for a rigorous implementation of the
SME test
in the impact assessment of EU legislation and for a
stronger enforcement of the Single Market legislation
in the EU Member States. By assessing the costs and
benefits of policy options, the SME Test analyses the
possible effects of EU legislative proposals on small
and medium enterprises.
Together with self-employed workers and
micro-enterprises, SMEs are especially vulnerable to
the effects of lockdown. Due to their size, they are
less resilient than larger businesses. According to an
SME United survey
included into the Barometer, about 40% of SMEs report
liquidity problems as a consequence of the economic
lock-down. In the most affected sectors like
hospitality, retail and construction, 50% of SMEs have
liquidity shortage. This is further confirmed by the
EIB, which reported a steep rise in SMEs' credit
demands in the first half of 2020, going hand in hand
with tightening credit standards in the euro area.
Contact:
Matteo Miglietta
Tel. +32 (0)2 282 2440
Mobile: +32 (0)470 895382
matteo.miglietta@cor.europa.eu