EU revamps cohesion policy to emphasize defense and energy sectors
The European Union (EU) has agreed on updates to its Cohesion Policy, marking a significant shift in the way funds are distributed across member states. These updates, announced in a Commission communication titled 'A modernised Cohesion policy: The mid-term review' on April 1, 2025, aim to support less developed regions in catching up, fostering jobs, businesses, social inclusion, and sustainable development.
The revised Cohesion Policy now permits member states to allocate funds towards defence, security, and civil preparedness, in addition to traditional areas like affordable housing, water resilience, and energy transition. This expansion is designed to enable Europe's states and regions to address current and future challenges more effectively.
The updates also bring about higher EU co-financing rates, which means a reduction in the necessary top-ups from national budgets. EU Member States and regions looking to invest in these new priorities will benefit from prefinancing rates as high as 20%. Reprogrammed funds will benefit from co-financing rates that are 10 percentage points above the applicable rates.
Regions bordering Russia and Belarus, adversely impacted by Russia's war of aggression against Ukraine, may receive even more favourable conditions. The new Cohesion policy updates are part of the mid-term review, scheduled for 2025.
Denmark's Minister for European affairs, Marie Bjerre, has stated that the changes are necessary for the EU to be better prepared for tomorrow's challenges. The legislation adopting these changes was passed on September 18, 2025, and once published in the Official Journal of the European Commission, member states and regions can submit amendments to their Cohesion programs to utilise the new flexibilities.
The EU's Cohesion Policy, with these updates, aims to reduce economic, social, and territorial disparities between regions to foster growth and create a more equitable, competitive, and sustainable European Union. The Commission's proposals for the updates were the result of consultations with Member States.
In September 2025, the European Parliament adopted three initiative reports concerning EU cohesion policy, emphasizing the importance and strategic challenges of the policy. However, no specific member states have announced their agreement to adopt changes regarding the EU Cohesion Policy regulations 2021/1058 and 2021/1056 for special measures linked to the mid-term review.
Previously unallocated funds will further increase for the programs which reallocate at least 10% of their total value to the new priorities, providing further incentive for member states to invest in these strategic areas. This legislation adopted today is an important step towards a European Union that takes responsibility for its own security.
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