Under EMU, the less competitive regions of the EU—usually assumed to be peripheral—have been widely expected to lose ground, yet it is the core of the EU that, so far, has appeared to have suffered from the advent of the euro. This paper looks at the processes behind regional divergence in the EU, and presents evidence on recent and prospective trends as EMU is consolidated. Bearing in mind that the imminent enlargement of the EU will radically change the political economy of the EU's efforts to assure ‘cohesion’, policy issues are then discussed. Looking forward to the next renegotiation of the Structural Funds, it is argued that difficult decisions have to be taken about the extent and character of EU policy. The option of an open method of coordination for cohesion policy is put forward as a means of resolving some of the hard choices
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