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The Impact of the Economic Crisis on Social Cohesion

Conducted on behalf of: European Parliament

Commenced:  September 2013

Project context

The impact of the economic and financial crisis, which started in 2008, is still being felt and is affecting various European Member States and regions to a different extent. In order to avoid a downward spiral, central banks have resorted to a major monetary policy stimulus and national governments have put in place a string of fiscal ‘packages’ which amounted altogether, including the effects of automatic stabilisers, to some 5% of GDP.

As a result of these efforts, financial markets were stabilised and the real economy was set back on a moderate growth path. However, the adverse impact of the crisis is expected to unfold over several years. For one thing, the labour market, which typically lags behind developments in the real economy, is still showing considerable signs of weakness. Unemployment remains high, with the youth having been hit particularly severely. Long-term unemployment is likely to rise, exacerbating existing problems of poverty and social exclusion.

To limit the effects of the crisis, the European Commission launched a European Economic Recovery Plan (EERP) in 2008 to coordinate member states’ responses. Among other things, the Plan stressed the importance of the role of cohesion policy in mitigating the effects of the crisis.

Objectives of the project

The objective of the project is to provide an overview of the various consequences that the economic and financial crisis has had and is having on the economic social and territorial cohesion of the European Union. In this context, the project uses a combination of quantitative and qualitative methods (including statistical analysis and case studies) necessary to determine what are the main factors influencing the impact of the crisis, as well as how different regions have adapted their strategies for the use of the EU structural funds. It includes an evaluation of the effectiveness of the cohesion policy before and after the crisis, as well as the main constraints for its implementation.

Research team

Dr Simona Milio is Associate Director of the Social and Cohesion Policy Unit at LSE Enterprise.

Dr Riccardo Crescenzi is Associate Professor of Economic Geography at the LSE Department of Geography and Environment.

Dr Waltraud Schelkle is Associate Professor of Political Economy at the LSE European Institute.

Niccolo Durazzi is a Deputy Project Director at LSE Enterprise.

Elitsa Garnizova is a Project Officer and Researcher at LSE Enterprise.

Pawel Janowski is a Senior Consultant at VVA Europe.

Dr Agnieszka Olechnicka is Assistant Professor at the Centre for European Regional and Local Studies (EUROREG) at the University of Warsaw.

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