Enrico Letta, who investigated the future of the internal market, suggests that the country distributing state subsidies would have to put part of the subsidy amount into a common EU-level fund.
Brussels
EU countries billion subsidies paid to their companies threaten to distort competition between companies within Europe, warns the former Italian prime minister Enrico Letta in its report on the future of the EU's internal market. As a solution, he proposes tighter restrictions on national subsidies and new EU-level funding.
The competition for state aid within the EU is one of the biggest concerns for Finland and many other small member states. The countries fear that they will lose the competition for future investments, when the large member countries, Germany and France in the lead, generously support investments.
Support competition started when the European Commission, which is responsible for their supervision, started relaxing the support rules in 2020. First, the rules were relaxed due to the corona crisis, then the energy crisis, and finally the green transition and US and Chinese support policies.
By the end of 2022, the EU countries have granted their companies subsidies worth more than one thousand billion euros. However, the amount does not include the subsidies that the member countries distributed last year based on the exceptions of the green transition. By far, Germany and France have distributed the most subsidies.
According to Letta, the relaxation of state aid rules has softened the effects of the crisis on the European economy, but at the same time they have distorted competition within the EU.
“There is a danger that, over time, such an approach will strengthen the distortions of the competitive structure in the internal market due to the differences in the member countries' fiscal room for maneuver,” the report states.
For example The Finnish government agreed on a support program to speed up investments in the green transition during this week's framework meeting, but was only able to allocate 400 million euros to the program, when the main focus of the meeting was on balancing the billion-dollar economy.
The entire support program is smaller than what Germany and France support individual projects with.
Major the question is whether the support competition will be permanent. The current exceptional rules are valid until the end of 2025.
Letta suggests in the report that the solution to the situation could be stricter control of national state subsidies combined with new EU-level funding. He proposes a mechanism where the member state granting state aid should pay a certain share of the aid into the common EU fund.
However, Letta does not reveal the details of his proposal in more detail in his report. At the press conference on Wednesday, Letta also did not want to comment on the state aid issue or open up his proposal in more detail.
When HS asked Letta about it, she only replied by urging her to read the report.
State subsidies are likely to come up for discussion on Thursday, when the summit meeting of EU leaders deals with the EU's internal market and competitiveness. The discussion starts with Letta's presentation. The final conclusions of the summit are intended to emphasize fair competition within the EU.
The EU leaders are supposed to speed up the removal of bottlenecks in the internal market and, among other things, the development of the European capital market. According to Letta, the matter is urgent, because the weight of the EU in the world economy is decreasing.
“This is our last chance. We have to seize it,” says Letta.
#investigator #warns #leaders #support #competition #Finland #threatens #left
/s3/static.nrc.nl/images/gn4/stripped/data114968659-fc3572.jpg)
