The European Committee of the Regions has released the sixth EU Annual Report on the State of Regions and Cities, offering a comprehensive overview of the main challenges and opportunities facing Europe’s territories. The 2025 edition highlights the crucial role of regions and cities in driving Europe’s transformation — from tackling climate change and demographic shifts to ensuring social cohesion and economic resilience.
The report confirms that EU funding for regional development has long driven convergence and growth, with local and regional authorities implementing over 70% of EU policies and managing two-thirds of public investment. However, the European Commission’s proposal for the 2028–2034 Multiannual Financial Framework (MFF) risks centralising decision-making and weakening the partnership between the EU and its regions. A one-size-fits-all approach cannot address Europe’s diverse local realities.
The report identifies several pressing issues:
• Climate and resilience: one in five communities faces multiple natural hazards, with EUR 18 billion in flood damages in 2024. Proposed MFF changes risk sidelining nature-based solutions and environmental programmes.
• Energy poverty: 47 million Europeans struggle to heat their homes, underscoring the need to continue investing in energy efficiency and renewables.
• Local security: cyberattacks, misinformation, and critical infrastructure vulnerabilities call for greater civilian preparedness and local defence cooperation.
• Housing: a shortage of 2.3 million homes per year demands stronger regional partnerships and targeted investment worth EUR 270 billion annually.
• Demography and rural services: two-thirds of EU regions may see population decline by 2050, with rural areas most affected, requiring cross-cutting investments, tax incentives and support for quality public services.
• Gender equality: gaps persist in employment and representation, with women forming a majority in only 26 of 286 regional assemblies.
Only a place-based and decentralised approach, rooted in local solutions, can ensure a resilient, cohesive and competitive Union that leaves no region behind. As Europe shapes its next long-term budget, the EPP-CoR calls for a future built from the ground up, empowering regions and cities as co-creators of Europe’s progress — not just implementers.
- Highlights of the 2025 EU Annual Report - Access the 9 highlights from the 2025 EU Annual Report on the State of Regions and Cities. Please note that the digital story is only available in English.
- Local and Regional Barometer