It can easily be seen as a European response to the American Inflation Reduction Act, thinks BNR in-house economist Han de Jong. It must prevent companies from leaving for the US to take advantage of the large subsidy package there. “It’s mainly about industrial policy,” he stresses. “There’s about 370 billion euros they allocate for this.”
According to De Jong, it is still difficult to say exactly where the funds will go. But it would mean loosening the rules on state aid. “Apparently there will also be a fund to give countries the financial space to do this,” De Jong continues. “It has been calculated that Germany and France together were responsible for 77 percent of all state aid. So smaller and poorer countries oppose the principle of state aid, because richer countries can give more state aid than they can.”
sovereignty fund
In addition to this, the EU is introducing a sovereignty fund, «and all in all it is a fairly drastic measure, because we have always had very strict rules on state aid in Europe. And now they are relaxing,’ says De Jong.
He therefore refers to a patchwork effect as a real risk, that a country like the Netherlands offers more state support for greening and thus makes it more attractive for companies than in other countries. “That’s why the European Commission also wants to set up a fund to allow countries to provide comparable support.”
Protectionism
According to De Jong, this measure is very similar to protectionism, stating that this movement has actually been going on for years. “This has already started under Trump,” he says. ‘Then the United States moved towards protectionism, to which we responded with our own protectionist measures. One could say that the Biden administration is making a quantum leap not only by maintaining protectionist measures, but also by pursuing a very active industrial policy by providing state aid. It is simply a more intensive intervention in the globalized market economy.’