A new study by the European Central Bank (ECB) has examined the effectiveness of the EU’s Cohesion Policy as an investment programme, focusing on which businesses receive funding and how this financial support impacts their performance.
The report, covering the period 2014–2020, concludes that EU subsidies play a crucial role in driving business growth, particularly in countries where access to bank credit remains restricted. The authors stress that the findings offer valuable insights not just for the past, but also for shaping future funding strategies.
Key findings of the ECB reportEU funding increases the likelihood of new investments.Positive effects are strongest among small and medium-sized enterprises (SMEs).Results vary significantly between countries and regions.
Across the EU, firms receiving subsidies experience an average 15% increase in capital within a year, followed by steady gains in productivity—around 1% after one year and up to 3% after four years. The effects are particularly pronounced for smaller firms and those facing financial constraints.
Greece: A case of high dependency
The study identifies Greece as one of the countries most dependent on EU funds, especially through the Operational Programmes of Cohesion Policy (known locally as ESPA). Following the debt crisis, many Greek businesses struggled to secure loans from banks, making EU subsidies a vital lifeline for private investment.
Between 2014 and 2020, 36,379 organizations in Greece benefited from these programmes. Greek firms, especially SMEs, showed larger productivity gains from EU grants compared to peers in other countries, as subsidies often substituted for missing bank financing.
The ECB notes that Greek programmes focused on:
SME support (competitiveness, innovation, modernisation).Green transition (energy efficiency, renewables).Social cohesion (youth unemployment, social structures).
While projects linked to the green transition were found to be less impactful on productivity, they still contributed to sustainable development goals.
Broader implications
The ECB report suggests that carefully targeted EU funding strategies—balancing support between high-performing businesses and those under financial pressure—can further enhance the effectiveness of European investment tools.
It also points to areas for future research, such as determining the optimal level of co-funding that maximises impact, and measuring the fiscal multipliers of subsidies in terms of output and employment.
Overall, the findings underscore the vital role of EU Structural and Investment Funds in fostering business growth, improving productivity, and supporting long-term cohesion objectives across Europe.