The state of regions and cities
EU annual report 2025
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Much more than a budget – highlights of the 2025 EU annual report
The proposal on the next multiannual financial framework (MFF) put on the table by the European Commission on 16 July 2025 raises questions about the kind of Europe we want. More than at any previous time, the preparation of the EU’s next MFF represents a defining moment in history.
For the scope and scale of the changes envisaged, it is essential to guarantee a truly democratic process, with all EU institutions agreeing which long-term objectives of the EU should be financed, how they should be funded, and which governance models should be applied.
We seek to empower regions and cities and not sideline them."
Kata Tüttő
President of the European Committee of the Regions
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CHAPTER 1
COHESION
- 1. Competitiveness
Over 170 smart
specialisation
strategies
have been implemented, thanks to Cohesion Policy
Revamping the EU single market and implementing the Clean Industrial Deal requires a place-based approach and decentralised strategies for energy and innovation.
46%
Automotive production
decline from January
2019 to December 2024
The new MFF proposal would discontinue the just transition objective, whereas instead there is a need to enlarge the current scope to include regions that have emission- and energy-intensive industries.
- 3. Social and affordable housing
1.2 million
people are homeless in
the EU (equivalent to
the population of a city
the size of Amsterdam)
Regions and cities urgently need stronger EU support to close the housing investment gap, estimated at EUR 270 billion per year.
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CHAPTER 2
RESILIENCE
- 1. Natural resources
In 2024 alone, floods caused an estimated €18 billion
in damages across Europe
Cities and rural areas instead need stronger EU investment in nature-based solutions and circular water systems.
47 million
people in Europe were unable to heat their homes sufficiently last winter
Cohesion Policy needs to continue allocating funds to energy efficiency and renewables to mitigate the impact on the most vulnerable populations.
- 3. Security
6 out of 10
Europeans feel unprepared for an emergency or disaster
The new EU security and defence agenda needs to invest more in regions and cities.
© EU 2025 - Source : EP
CHAPTER 3
PROXIMITY
- 1. Demographic change
12 years of shorter life
A child born in Severozapaden (BG) can expect to live 73.9 years, while a child born in the region of Madrid (ES) has a life expectancy of 86.1 years
The EU needs to strengthen its socio-economic policies to help regions in their demographic transition.
At the level of the EU expenditure on general public services decreased from 9,5% of GDP in 1995 to 5,9%
of GDP in 2023
Regions, especially rural areas, that struggle with depopulation and ageing, need tailored EU support to maintain services of general interest and essential infrastructure.
- 3. Gender-sensitive territorial policies
Closing the gender gap could unlock up to €3.15 trillion
in EU GDP by 2050
The employment rate for women remains ten percentage points lower than that for men, highlighting the need for targeted funding, care infrastructure and inclusive governance.