How Much Does Greek Growth Cost?

Posted by: Ben Vickers on November 7, 2011

greece-airport-300.jpg

From 1986 up until today, the EU has spent 602.7 billion euros on helping the poorer regions of the bloc catch up with richer ones, according to European Commission data. The money has been funnelled through the so-called structural funds, and has been spent on roads, railways, ports, business development, training—just about anything that could be shown to improve prospects for economic growth. The structural funds have been one of the EU’s tools for pulling Europe’s disparate economies together.

And who has benefited the most? Spain has been the big beneficiary in absolute terms, with 130 billion euros pouring into the country over those 25 years. Greece, a much smaller economy, has received 58 billion euros and Portugal has had 60 billion euros. These three countries along with Italy, which got 74 billion euros, account for more than half the funds handed out by Brussels to help push up GDP.

However, the expansion of the EU to Eastern Europe in 2004 and in 2007 meant the bloc had to divert money to the economic development of the new members, and the Mediterranean countries had to compete for funds with their even poorer eastern neighbors—and they will eventually be excluded from this funding altogether.

structuralfundschart.png

The figures for this year, admitedly with two months still to go, show a big the drop in EU investment funds for some. The most dramatic cut has been in Greece, which received 5.2 billion euros for investment from the structural funds in 2007 and this year has received 1.6 billion euros—that is a substantial drop for a country with a GDP of 305 billion euros in 2010.

Italy’s funds have been cut from 5 billion euros to 1.3 billion euros, a drop of about 70 percent. Spain’s funds have dropped about 30 percent to 4.4 billion euros. Only the Portuguese seem to be in line for preserving their 2.8 billion euros from the EU’s investment funds.

The question remains, for eastern European nations as much as for southern Europe, whether these funds accomplish what they were intended to do.

Reader Comments

hate the pensioners

November 7, 2011 9:40 AM

John

November 7, 2011 11:42 AM

The article forgot to mention the European Union value added tax (EU VAT) and the loans of the poorer regions. EU gave 602.7 billion euros for 50% of the cost, each country took loans for the other 50%.
So you sould write something like: EU took from EU VAT some billions, gave some as help and the country A took some billions loans for the help and paid some billions from their budget.

Mike

November 8, 2011 7:48 AM

I think you missed the elephant in the room. How much and to who have the enormous CAP payments been made to over the last 25 years to support agrarian economies in europe vis a vis industrialised northern europe ?

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George Langadinos

November 18, 2011 12:40 PM

Barroso: "The policies for the outcome of the crisis so far have failed". "There is no economic growth that we thought so" "We will not make the euro stronger with the fragmentation of the European Union." - If so, Mr Barroso, you must sow to reap! There are only two choices! The road to Euro-bonds or, the road to flip under!!
From Canada, George Langadinos

George Langadinos

November 18, 2011 12:45 PM

Barroso: "The policies for the outcome of the crisis so far have failed". "There is no economic growth that we thought so" "We will not make the euro stronger with the fragmentation of the European Union." - If so, Mr Barroso, you must sow to reap! There are only two choices! The road to Eurobonds or, the road to flip under!!
From Canada, George Langadinos

George Langadinos

November 25, 2011 11:30 AM

This is the beginning of the end of "Merkeldelism" - It is clear that Merkel buys time for the smooth "fracture" of the euro, in order to avoid disastrous consequences for Germany. The European Central Bank will have to print money – You may believe it or not, the collapse of Germany and the EU it may come sooner than those who pray to the promising output of Greece from the euro-zone.
From Canada, George Langadinos

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Financial markets are on the edge as investors await a solution to the European debt crisis. This blog examines the banks that hold billions of euros worth of Greek, Italian, and other sovereign debt; the governments that must pay off or refinance that debt; and the implications for the worldwide financial system if they can't.

Analyses or commentary in this blog are the views of the author and or commentators, and do not necessarily reflect the views of Bloomberg News.

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