Skip to main content

Brussels seeks relaxation of state aid.

 

Brussels state aid

Brussels has started a review of state aid rules as member states push for far-reaching measures to boost support for the industry in response to the new US green subsidy legislation.

In a letter sent to ministers yesterday, EU competition chief Margrethe Vestager said the «competitiveness of Europe» faced multiple challenges, including pressure to respond to the US Inflation Reduction Act. She said this «risks luring some of our EU businesses into moving investments to the US».

To counter this, Vestager said she was proposing changes to state aid rules, which have repeatedly loosened in recent years as governments poured subsidies into sectors hit by Covid-19. In a letter seen by the Financial Times and dated this week, France called for a «Made in Europe» strategy, including a «modernisation and simplification shock» for the state aid framework.

One French request is to increase the thresholds when subsidy schemes have to be notified to the authorities while widening the range of projects that would not need to be reported to include strategic projects in sectors such as batteries, photovoltaics, hydrogen and critical materials.

Europe also needed to try «targeted, fast track schemes» and one-stop shops via subsidies and tax credits for a limited number of sectors, adding that the relaxation could last until 2030.

This would prevent the risk of fragmentation of the internal market by deploying common EU borrowing modelled on a pandemic-era unemployment insurance mechanism.

Countries have until January 25 to respond to Vestager’s consultation, and the commission plans to publish an impact assessment on how the US measures are set to affect the bloc by the time leaders meet early next month.

Speaking in Kiruna, Sweden, European Commission president Ursula von der Leyen said state aid changes would be «targeted and temporary» and make the rules more predictable and straightforward.

www.sba.tax

Labels:

Comments

  1. Adriana14 January 2023 at 17:32

    Good to see this US green subsidy legislation is pushing EU states into action. I think we will see some very important (and hopefully good) measures coming out in the following months.

    ReplyDelete
  2. Martin14 January 2023 at 20:12

    Many EU companies are very tempted to move their business to the US in the upcoming 12-18 months. It's up to the EU to respond quickly to this threat. It's not going to be easy but there are ways to encourage companies to stay in Europe.

    ReplyDelete

Post a Comment

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more

Tariffs on UK electric cars.

  The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...
Post a Comment
Read more