Economic, social and territorial disparities at both regional and national level have increased in the enlarged European Union. At the dawn of the 21st century, gross domestic product (GDP) per head in the lagging regions of the Union averaged 66% of the EU15 average, which stood at EUR 20,213 per head. The enlargement to ten new countries in 2004 and to two more in 2007 reduced the EU average GDP per head to EUR 16,500. The population living in regions with GDP per head of less than 75% of the present EU average was increased from 71 million to 174 million, or from 19% of the EU15 total to 36% of the EU27 total. Three groups of countries can be distinguished in the EU of 27 in terms of GDP per head. The first group with GDP per head 20% above the new average was formed by the EU15 Member States, apart from Greece, Portugal and Spain. These three cohesion countries plus Cyprus, the Czech Republic, Slovenia and Malta formed the second group, with GDP per head between 68% (the Czech Republic) and 95% (Spain) of the EU 27 average. The remaining 8 countries formed the third group, with GDP per head only 40% of the EU27 average.
The identification of the priority regions and areas at European level are based on the common classification of territorial units for statistics (NUTS) [Regulation 1059/2003]. On this basis, Regulation 1083/2006, laying down general provisions on the Structural Funds, identifies three categories of regions covered by priority objectives: (a) the Convergence objective; (b) the Regional competitiveness and employment objective; and (c) the European territorial cooperation objective [Regulation 1083/2006, see also Regulation 1989/2006 and section 12.3.1].
The regions eligible for funding from the Structural Funds under the Convergence objective are regions corresponding to level 2 of the common classification of territorial units for statistics (NUTS level 2) whose gross domestic product (GDP) per capita, measured in purchasing power parities [Regulation 1445/2007] and calculated on the basis of European figures for the period 2000 to 2002, is less than 75% of the average GDP of the EU-25 for the same reference period. These regions are to be found both in the new and the old Member States. The latter are the regions suffering from the statistical effect linked to the reduction in the EU average following the enlargement of the European Union. These regions would have been eligible for Convergence objective status had the eligibility threshold remained at 75% of the average GDP of the EU-15. They benefit for that reason from substantial transitional aid in order to complete their convergence process. This aid is to end in 2013 and is not to be followed by a further transitional period. In addition, the Member States eligible for funding from the Cohesion Fund under the convergence objective are those whose gross national income (GNI) per capita, measured in purchasing power parities and calculated on the basis of European figures for the period 2001 to 2003, is less than 90 % of the average GNI of the EU-25 and which have a programme for meeting the economic convergence conditions referred to in Article 126 of the Treaty on the functioning of the EU (ex Article 104 TEC). In reality the Convergence objective for 2007-2013 applies to 100 regions, including 16 granted transitional ''phasing-out'' status – accounting for just over 35% of the EU27 population [COM/2006/281].
The regions eligible for funding from the Structural Funds under the Regional competitiveness and employment (RCE) objective are those not eligible under the convergence objective or the transitional support objective. The NUTS level 2 regions totally covered by Objective 1 in 2006, whose nominal GDP level per capita will exceed 75% of the average GDP of the EU15 are eligible, on a transitional and specific basis, for financing by the Structural Funds under the Regional competitiveness and employment objective. Hence the RCE objective applies in principle to the rest of the Union, or to 155 regions with 61% of EU27 population, while another 13 regions are classified as ''phasing-in'' (almost 4% of the EU population).
A European territorial cooperation objective covers regions having land or sea frontiers, the areas for transnational cooperation being defined with regard to actions promoting integrated territorial development and support for interregional cooperation and exchange of experience. These are NUTS level 3 regions of the EU along all internal and certain external land borders and all NUTS level 3 regions of the EU along maritime borders separated, as a general rule, by a maximum of 150 kilometres. For the purpose of interregional cooperation, cooperation networks and exchange of experience, the entire territory of the European Union shall be eligible.
Moreover, certain regions or areas benefit from specific measures and/or additional funding, notably: areas with an extremely low population density in Finland and Sweden, as referred to in Protocol 6 to the 1994 Act of Accession; the outermost regions mentioned in Article 349 of the Treaty on the functioning of the EU (ex Article 299 TEC), and areas with a natural handicap, i.e. certain islands, mountainous areas and areas with a low population density, as well as for certain border areas of the EU following enlargement.