From Convergence to Discontent: How Lagging Regions Are Testing the EU Social Model

The EU has successfully reduced income gaps between countries, but many regions within countries are stuck in long-term economic stagnation, fueling political discontent and Euroscepticism. The paper argues that better-targeted social support, stronger local government capacity, and evidence-based policy innovation are essential to restore social cohesion and trust in the European project.

For decades, the European Union has been one of the most successful economic integration projects in history. Backed by institutions such as the World Bank, the European Commission, Eurostat, and the European Central Bank, research shows that EU membership has helped poorer countries grow faster than richer ones, lifting millions into higher living standards. Since the first enlargement waves, the EU has functioned as a powerful “convergence machine,” helping new member states close income gaps and escape the middle-income trap. Yet this success at the national level hides a growing problem within countries, one that is now reshaping European politics.

When Countries Converge but Regions Fall Behind

While EU countries have grown closer together economically, many regions inside those countries have been left behind. Prosperity has increasingly concentrated in large cities and dynamic urban centers that are well connected to global markets. In contrast, many rural areas and small towns, often in wealthy countries like Italy, France, Spain, and Belgium, have seen little or no growth for more than a decade. These places face weak investment, low productivity, aging populations, and the steady exit of young people. Economists describe this situation as a “regional development trap,” where stagnation feeds on itself and recovery becomes harder over time.

Why Stagnation Fuels Political Anger

Economic stagnation does more than limit incomes, it erodes hope. In regions trapped in long-term decline, job opportunities are scarce and young people no longer expect to live better than their parents. The paper shows that these same regions are far more likely to support hard Eurosceptic political parties. This suggests that Europe’s political discontent is driven less by inequality between individuals and more by inequality between places. People are not just reacting to low incomes; they are reacting to the feeling that their region has no future in today’s Europe.

Megatrends That Could Deepen the Divide

Three powerful forces threaten to make these divides even worse. First, Europe is aging rapidly. The working-age population is shrinking, which will slow growth and hit lagging regions hardest as young workers continue to leave. Second, the green transition under the European Green Deal will reshape entire regional economies. Higher energy prices and the decline of carbon-intensive industries could disproportionately affect poorer households and coal-dependent regions unless policies actively protect them. Third, rapid technological change is transforming labor markets. High-skilled workers and innovative firms benefit most, while routine and manual jobs disappear. Workers with vocational education are especially vulnerable, as their skills age faster and wage growth slows.

How Cohesion Policy Can Work Better

The EU already has a powerful tool to address these challenges: Cohesion Policy, particularly the European Social Fund Plus. These funds have helped raise regional GDP, but their social impact has often been weaker than hoped. Too much money is spread across too many objectives, programs are judged by how much they spend rather than what they achieve, and local governments often lack the capacity to deliver results.

The paper argues for a sharper focus. First, social spending should prioritize well-targeted Guaranteed Minimum Income programs that reach the poorest households. When combined with personalized case management, linking people to jobs, skills training, childcare, health care, and social services, these programs can address the real barriers keeping families in poverty. Second, Europe must invest in local government capacity. Better planning, management, and service delivery are essential if EU funds are to improve lives on the ground. Third, social policy must become more adaptive. By testing new ideas, evaluating what works, and scaling successful programs, the EU can respond more effectively to economic change and rebuild public trust.

Europe has already shown that shared prosperity between countries is possible. The challenge now is to ensure that prosperity reaches the places that feel forgotten. Without that, the paper warns, the economic success of the European project risks being undermined by deepening social and territorial divides.