Euro-Commentary

Abstract

Around two-thirds of European Structural Funds are allocated to Objective One regions, classified as such because their level of GDP per head is less than 75 percent of the EU average. In the spending round 2000-2006, four UK areas qualified and, as a result, these areas combined could receive up to £3b from Brussels and also additional funding from the UK Treasury to maximize the `call down' of funds. This Euro-commentary questions whether all four areas should have qualified and also the criterion of qualification itself. One conclusion is that although all four technically qualify, it is only because of the way the area boundaries were drawn. This was rather more economically justified in the case of Merseyside and South Yorkshire than in West Wales and the Valleys and Cornwall. Redrawing boundaries in other areas could have resulted in a different set of qualifying areas. In any event, a second conclusion is that GDP per head is a rather poor indicator of economic performance at least on its own. A more sensible choice of indicators might have cast doubt on the inclusion of all four of the present set of UK Objective One regions and particularly those of Cornwall and Merseyside. These findings are of relevance to the wider European case.