Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments

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Local finances - 15.05.2017

Open letter to the EU: towns and regions need more flexibility for long-term public investments
It is no secret: EU fiscal rules prevent local and regional governments from making the investments they need to create real and sustained growth, jobs and services.

This needs to change, and it can change. For this reason, we are sending an open letter to EU institutions to call for more flexibility for long-term public investments at local level.

We are confident the EU is ready to listen to the voice of local governments. Here is our open letter:

Open letter to EU institutions: municipalities, cities and regions call on the eu to support long-term investments

CEMR, POLIS and EUROCITIES call on the EU institutions for more flexibility for long-term public investments at local level.

Resilient municipalities, cities and regions have the capacity to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience. Being long-time supporters of the European Agenda for Growth and Investment, we are convinced that Europe needs to support local and regional governments’ investments as the backbone of its social, economic and environmental future.

Member States, the European Commission and the European Parliament acknowledge the urgent need for public investment in our cities, regions and municipalities. The provision of good quality services and infrastructure will trigger private investment, stimulating job creation and growth. Municipalities, cities and regions are now calling for more flexibility in budget and financial rules to boost local investment and to deliver long-term benefits to society.

Long-term investments at the local level support growth and employment in Europe, and should be at the heart of discussions about the future of the European Monetary Union and the European Fund for Strategic Investments (EFSI), as well as the future negotiations on the Multiannual Financial Framework (MFF) post 2020.

On 8 March, during the European Parliament event ‘Long-term investments: Barriers and opportunities for regional and local authorities’, representatives from CEMR, POLIS and EUROCITIES discussed possible solutions to boost investments together with representatives from the European Commission, the European Parliament, the Urban Intergroup and the Long-Term Investment and Reindustrialisation Intergroup.

CEMR, POLIS and EUROCITIES, representing local and regional governments from all over Europe, are now calling on the EU institutions to take the following actions:
  • The European Commission to include a chapter on regional and local public investments in its reflection paper on the future of the Economic and Monetary Union;
  • The European Parliament to draft an own-initiative report on the barriers to local public investment to further highlight the current barriers and challenges ahead;
  • The European Council to discuss how to create some leeway for public investments at local and regional levels within the Stability and Growth Pact;
  • The Committee of the Regions to further engage in dialogue with EU institutions, as a follow up from its opinion “Bridging the investment gap: the role of the local and regional authorities”;
  • Eurostat to distinguish debt related to long-term investments from functional spending and ensure that strategic investment costs are spread across construction time (depreciation);
  • The European Fund for Strategic Investment to include tailored financial rules for identified projects within the investment programme.

The political representatives of the three organisations stress these elements to relaunch investments at local level:

Flo Clucas, Cabinet Member, Cheltenham Council (LGA, UK) - CEMR spokesperson on local finances: “Good, quality investment is the key to real and sustained growth, jobs and services. For towns, cities and regions to be able to grow their economies, their business and employment base, they need to invest. Currently, fiscal rules both by national governments and the EU prevent local governments from investing, as when they borrow, their investments count as national government debt. If we want our economies to grow, that has to change and become more flexible.”

Pascal Smet, Minister of Mobility and Public Works of Brussels Capital Region (Polis member): “Cities and local authorities should be allowed to spread out investments in their accounts like the private sector and in line with the works carried out. The existing accounting rules oblige regions and cities to take up large scale projects in one budgetary year whereas in reality they spread out over several years. Economic recovery and economic growth is central to European, national, regional and local policies.”

Tanja Wehsely, Chair of the Committee on Financial, Economic and International Affairs of the Vienna City Council – Chair of EUROCITIES economic development forum: “We are convinced that EU funds and EIB loans must fit our integrated policy approach, and not the other way around. Sustainable long-term public investments are not only good for our citizens, but also for the economy in general”.
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