1. European cities confronting the financial and economic crisis
Key messages from expert panel held on 16 April
Johan MAGNUSSON
DIRECTORATE-GENERAL FOR REGIONAL POLICY Directorate for Policy Development Unit C2 - Territorial Cohesion and Urban Development
Urban development Inter-service Group Brussels 30 April 2009

2. Background
Joint exercise of URBACT and DG REGIO with active involvement of the European Investment Bank
Aimed at identifying:
- Already visible impact of crisis on cities
- Policy answers at various levels
- Scope for the exchange of good practices/policies.

3. Some characteristics of the current crisis
Different effects on places, people and projects
Crisis: fiscal, property development, economic, social
Different cycles: has challenged development and property models, now it is getting more serious with impacts on urban economies

4. Impact of the crisis on public investment in cities
Physical regeneration and property-based development mostly affected (risk of not being completed), but also investment in public transport
R&D and innovation projects less hit
Private investors no more reliable as partners in Public-Private Partnerships due to the crisis?
More public-sector driven financial engineering without private funding?

5. Impact of the crisis on the economy of cities
Place matters - size not: what counts is the nature of the city, the sectoral mix, the ‘diversity of employers’, the attractiveness of the place
Foreign Direct Investment (7-20% in capital cities in new Member States) will decrease
Opportunity or not for green economic growth and change of consumption patterns? Or do cities go for cheaper solutions in time of crisis?
Nature of income of cities: taxes or grants - immediate or later impact

6. Social impacts of the crisis in cities
Big cities face the greatest challenges in terms of integration and inclusion…
…but also smaller and medium-sized cities heavily dependent on one employer heavily affected
Alternative projects: labour market support programmes, keep people in their homes
Short term peak in summer when school and university leavers enter the job market
Risk of xenophobic reactions

7. What future are we heading towards?
Florida-styled development - place-making strategies?
Demographic trends - reverse immigration?
Retail, housing, leisure and construction not any longer key drivers
New drivers:
Knowledge economy, R&D, entrepreneurship?
Production of health care? Social economy?
Rethink construction: improve existing stock, energy efficiency, self-sustainable housing

8. Are the principles of the ‘Acquis Urbain’ relevant in the light of the financial and economic crisis? Are there elements that need to be added?
Less public money available: need to make it ‘work harder’
Local authorities need to take more risks and be more entrepreneurial…
…but at the same time more transparency in public life needed
More financial innovation?
Reinforce the budget? Ring-fencing?
Time: need to respond fast – a challenge to integrated urban development approach?
Incentivise integrated behaviour?

9. How should the Commission respond?
Acquire a better understanding of how the financial and economic crisis affect cities (URBACT)
Spread the knowledge to cities
Possibilities provided by the Cohesion policy should be used
Lack of knowledge on how to access funding: need to explain to cities what available tools exist in an understandable language
New financial instruments – European Investment Bank