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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.

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  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

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