Local and regional authorities (LRAs) have been at the forefront of COVID-19 crisis management and this has had significant consequences for their budgets. Since LRAs are in charge of some of the most critical elements of public action during this crisis, they have faced a substantial rise in their expenditures, for instance with regards to public health, social services, social benefits, support for SMEs and the self-employed, etc. In the meantime, their revenues have fallen sharply due to a drastic reduction in economic activity as well as tax relief and deferment measures enacted at all levels of government.
This study analyses this “scissors effect” of rising expenditure and falling revenues in LRAs’ public finance in the aftermath of the COVID-19, and its potentially devastating significant and asymmetric impact.
The report will inform the CoR's analytical work on local and regional finances and investment, as well as fiscal decentralisation, and provide useful input for events and workshops in this field. This will also contribute to the "division of powers" exercise undertaken by the CoR.
It will feed into the political work of the CoR with regards to the crisis recovery and its financing, the economic governance framework (Stability and Growth Pact, European Semester, etc.) and will support its consultative work in economic policy more broadly. The analysis and conclusions drawn are also expected to make a significant contribution to the 2021 "Recovery and Resilience Forum" and to the 2021 edition of the CoR's "Barometer report".
The study is conducted in consortium with CSES and Blomeyer.