Cities shape up for economic challenge

An increasingly important focus of EU regional policy is urban development, which combines economic, environmental and cultural dimensions.

Part of the importance of cities comes down to numbers. Cities account for more and more of the EU’s population and more and more of its economic activity. Between 1995 and 2004, on average the share of gross domestic product of regions containing capital cities increased by 9%, while their populations grew by 2%, according to figures from the European Commission.

But the balance of influence is shifting. As well as the cities which in recent decades contributed to Europe’s prosperity (London, Paris, Milan, Munich) there are now emerging growth centres such as Madrid, Helsinki, Dublin, Budapest, Warsaw and Prague.

As well as having tremendous potential for economic growth, cities are also marked by great and growing economic disparity. Even in well-developed cities, there are social, economic and environmental problems which require attention.

It is addressing these economic disparities that has traditionally been the focus of urban policy in the European Commission’s regional aid schemes. The Commission has provided cohesion policy funding for depressed urban areas. They qualify if unemployment is above the EU average, the crime rate is high, education levels are low and there is deemed to be a high level of poverty in the area.

More recently the Commission in 2005 launched two new programmes tailored to developing urban centres. Jeremie (Joint European Resources for Micro to Medium Enterprises) allows better access for such enterprises to funds from the European Investment Bank, the European Investment Fund and other international financial institutions (see above). Jessica (Joint European Support for Sustainable Investment in City Areas) promotes sustainable investment in cities by allowing the managing authorities of structural funds programmes the chance to bring in outside expertise and have greater access to loans (from international institutions and banks and investors) for urban development, including loans for social housing.

Earlier this summer an informal ministerial meeting on urban development and territorial cohesion held in Leipzig (24-25 May) put forward some more suggestions for development.

Together the European Commission and German presidency launched two papers - the Territorial Agenda and the Leipzig Charter - as ‘road-maps’ for future regional policy on cities. "Our regions and cities are on the front-line of our common effort to deliver more growth, quality jobs and innovation across the Union," European Regional Policy Commissioner Danuta Hübner told EU ministers. She added: "We need cities in good shape, wisely using their resources in an innovative and sustainable way, cities for all, for us today and for future generations."

The Leipzig Charter puts forward strategies for upgrading buildings in the face of pressure from economic changes, boosting local economies and labour market policies, proactive policies on children, teenagers, education and training and the integration of migrants into the community.

The EU Territorial Agenda focuses on allowing businesses, science, social groups and offices to co-operate on regional development and sets up networks of urban regions to create ‘growth zones’.

Wolfgang Tiefensee, German minister for transport, building and urban development, said that the papers were important given the "renaissance" that Europe’s cities were experiencing. "Living in cities is becoming increasingly popular. This is a positive development, and one that we have to boost," Tiefensee said.

He added: "We want to create a foundation for a new urban policy in Europe. That is why we need a model of integrated urban development. It has to take public participation in urban planning into account and improve the co-ordination of public and private sector investment for and in cities."

An increasingly important focus of EU regional policy is urban development, which combines economic, environmental and cultural dimensions.