The ground, not the grant

Posted on: 9 June 2026

Italy's difficulty with European funds has never been a shortage of cash. The €73.5bn allocated for the 2021 to 2027 cohesion cycle, counting both the Union's share and national co-financing, is not going anywhere, and nobody is proposing to take it back. What the European Commission set out plainly in its spring recommendations under the European Semester, presented by Valdis Dombrovskis on 3 June, was a problem of an altogether different kind: governance fragmented between the central and the regional levels, and an administrative capacity too thin to keep pace with the projects it is meant to deliver. The binding constraint is not the allocation; it is the ground into which that allocation is supposed to sink.

That distinction is doing more work than the current coverage allows, and it is worth dwelling on.

The figures from the previous cycle make the point without ambiguity. Between 2014 and 2020 the regions of the centre and north closed with a commitment rate of 105.94 per cent, deliberately programming more projects than their initial envelope so as to lose nothing, with actual payments settling at around 70.57 per cent. The Mezzogiorno, as ever, came in well below. Same fund, same rules, same European deadline; outcomes that diverge entirely according to who is on the receiving end. The variable is not the money, which is constant. It is the administrative architecture that intercepts that money and turns it into building sites and into finished works, or does not.

Why the Italian south should remain so persistently behind is an enormous question and deserves an essay of its own, which this is not. I stop short of it deliberately, because what interests me here is not the regional diagnosis but the mechanism that makes that diagnosis almost inevitable.

The capacity to absorb funds and to spend them well is not a lever you pull by signing a decree. It is a stock, accumulated slowly, through the sedimentation of competence and of offices that know how to write a tender which will not collapse at the first legal challenge. Where that stock exists, the money enters and becomes development. Where it does not, the money enters and stagnates, or lapses.

Here is the part the headlines miss. A transfer of equal resources along a gradient of unequal capacity is not neutral with respect to the gap it is meant to close. Those who start ahead absorb better and account for their spending on time; those who start behind struggle to draw down even the share to which they are entitled by right. The instrument designed to bring the periphery closer to the centre ends by rewarding whoever was already near the centre. Cohesion policy, configured this way, carries within it an anti-cohesive force.

I put it with the caution the claim demands, not as an iron law but as a tendency worth watching. There is a serious body of work, running from Elinor Ostrom onward, that insists on a simple and uncomfortable point: the systems that function depend on the institutional capacity of the people on the ground far more than on the quantity of resources sent down from above. Applied here it means one thing only. You can move billions by bank transfer; you cannot move, in the same way, the administrative competence required to use them.

This is precisely where the British reader should feel a flicker of recognition. Strip out the euros and the Italian place names, and what remains is the argument that has circled Westminster for a decade. Levelling up was never frustrated chiefly by the size of the cheque. It ran aground on the hollowed-out capacity of local authorities asked to bid for and then deliver funds after years in which their own administrative muscle had been left to waste. The Shared Prosperity Fund inherited the same flaw. Money arrives where it can be put to work, and the places best able to put it to work are, by definition, the places that needed it least.

The moment at which this defect bites is the worst that could have been chosen. Italian debt, on the Commission's own projections, rises from 137.1 per cent of GDP in 2025 to 138.5 per cent this year, on course for 139.2 per cent in 2027. Growth is weak. The Just Transition Fund must be spent by the end of 2026 or it is lost. Every euro allocated and not converted into a finished work is development forgone at the precise moment development forgone costs the most. Not because these are loans made dearer by rising rates; they are outright grants. Rather because the opportunity lost weighs in proportion to how narrow the window is in which you let it slip, and the window now is narrow indeed.

As always, in the interest of intellectual honesty, there is a clean way to know whether this reading holds or whether I am seeing a design where there is none. At the close of the 2021 to 2027 cycle it will be enough to look at whether the Mezzogiorno's absorption rate has moved closer to that of the centre and north, or whether the gap has held at its old width, if not widened. Should the two converge, it will mean the capacity-building measures corrected the force, and my thesis must be scaled back. Should the gap hold, the gradient will have done its work undisturbed.

One question remains without a comfortable answer, and I close on it without pretending to resolve it. If the genuinely scarce resource is not money but the capacity to transform it, then the question no funding programme has yet faced squarely is whether that capacity can itself be bought. A bridge can be bought. A piece of software can be bought. An office that turns an allocation into a finished work delivered on time does not arrive by bank transfer, and until we learn how to build it we will go on pouring water onto ground that in some places drinks it in and in others lets it run away.