EPSU-CEMR project “Future of the Workplace” project -
Providing high quality, modern and sustainable jobs within local and regional government
Theme n°1
Funding of Local and Regional Government: Key challenges, solutions to growth and alternatives
A very difficult economic context
At present, local and regional government in the European Union (EU) is operating in a very difficult economic and financial context and there is little prospect that this will improve in the short term.
With the exception of Estonia, Hungary and Sweden, the budget of every government in the EU was forecasted to be in deficit in 2011. These high levels of deficit are to a large extent a consequence of the 2008 financial crisis and the recession it caused. However, the banking crisis has been followed by a sovereign debt crisis, and, under pressure from financial markets, European governments have adopted policies which aim to eliminate government deficits as rapidly as possible.
This approach has been also been enshrined at European level, as evidenced most recently by the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. This was initially agreed in December 2011 and signed by the governments of 25 states, those of the Euro zone states plus eight other governments on 2 March 2012. The Treaty includes a commitment that the signatory states will incorporate “through provisions of binding force and permanent character, preferably constitutional”, a rule under which: “the budgetary position of the general government of [the signatory state] shall be balanced or in surplus.”
Downward pressure on local and regional government expenditure as significant part of overall government expenditure (33.6% on average in 2010 on the basis of CEMR/Dexia figures ) will be ongoing.
Final report October 2012:
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