London Daily

Focus on the big picture.
Wednesday, Mar 22, 2023

EU leaders head for a fight over new money to save European industry

EU leaders head for a fight over new money to save European industry

France is leading calls for more funding for industry to compete with China and the US, but it’s not going to get its way without a struggle.

All EU leaders agree Europe needs to be more competitive in the face of rising energy prices and U.S. President Joe Biden's green subsidy splurge.

At a European Council summit in Brussels on Thursday, they are in for a fight over how to make that happen.

Throwing money at the problem in a bid to redress the balance with China and America Inc. is an increasingly likely option. Just a contentious one.

France is the main cheerleader in arguing that it's time to shift to a more centralized European industrial policy, and is stressing it's now a race against the clock. Major provisions of America's Inflation Reduction Act, which grants $369 billion worth of subsidies and tax breaks to U.S. green businesses like electric vehicles, kick in on January 1. Paris fears that Europe will be left in the dust if it doesn't bring some of its own financial firepower to the table.

But more free-trading nations like the Nordics are long-time skeptics about subsidies and state-led industrial strategies. They fear government-selected corporate champions are a recipe for over-expensive and inefficient behemoths.

"There is no secret that we are among the very many countries that are very much pro-trade, pro-markets," Swedish Prime Minister Ulf Kristersson said on Wednesday.

Critically, the conversation among EU leaders is likely to focus on how to craft subsidy packages without allowing the EU's hallowed single market to become unfairly distorted. Small countries fear that a shift to state largesse will simply play to the advantage of bigger nations such as France and Germany that will be able to prop up their companies artificially to the detriment of rivals from poorer nations in the bloc.

Beyond the common market, a subsidy race could also go global, shattering attempts to forge global trade rules and reverting back to the law of the jungle. Some fear France is firing the starting gun on this kind of subsidy race to the bottom. “If we start to do this together with the U.S., third countries and big economies will also join in and we will all be worse off,” a senior EU diplomat said. 

This debate cuts to the heart of the European Union as an economic single market: When faced with a major economic blow, how much solidarity is there really between EU countries? 


Plans on the table


European Commission President Ursula von der Leyen on Wednesday suggested relaxing the EU’s emergency state aid rules so that European capitals can pour more government money into industries affected by the massive U.S. green package. 

But a wide range of EU countries don’t want the matter to be left at that. If carte blanche is given for countries to spend their way out of trouble, that will simply mean that Germany will pull out the big fiscal guns again. Good luck if you are a Greek or Portuguese rival to a German company enjoying a free ride from Berlin's war chest.

“If there is a race for the deepest pockets, that undermines the single market. This is very delicate,” one senior national official said in the lead-up to the meeting. An EU diplomat said that while Brussels wants to avoid a subsidy race with the U.S., it also definitely wants to avoid a subsidy race between EU countries. 

Therefore, Brussels is turning to European money to avoid single-market fissures. 

A first step is greater firepower for REPowerEU, the plan to wean the bloc off its dependency on Russian gas. Von der Leyen also flagged tapping money from the Emissions Trading System (ETS) — the EU's carbon allowance scheme — but one EU diplomat warned that the “ETS is turning out to be like an ATM for the Commission.” 

A second, more controversial step is an upcoming proposal from von der Leyen for a European Sovereignty Fund, which was first mentioned in her State of the Union address to the European Parliament in September.

“This will be the most contentious point of the discussion,” one EU official said, especially as it reminds of the debate that led up to the establishment of the COVID recovery fund, which was ultimately financed through joint borrowing.

Eight to 10 countries have a problem with new EU money, three EU officials said — mostly the countries who already have comfortable fiscal space, known as the “frugals.” They first want to look at the existing funds.

"We still have quite a lot of undistributed funds that have been mobilized," German Chancellor Olaf Scholz said on Wednesday.

Some EU countries also want a deeper analysis from the European Commission first on “which companies within those sectors are really feeling the burden,” according to the senior EU diplomat mentioned above.


Clash of ideas


Don’t hold your breath for any quick solutions just yet.

A wide range of diplomats expressed disquiet over the late initiative on the state aid proposals and the European Sovereignty Fund from von der Leyen, which didn’t leave enough time for the EU’s finance ministries and others in national capitals to get their feedback for leaders ready. 

In a sense, EU countries have already agreed to disagree beforehand. EU officials and diplomats on Wednesday managed expectations, saying that Thursday is “orientation time,” according to one senior EU official. 

One diplomat quoted the French poet Nicolas Boileau, saying that “from the clash of ideas comes the light.” In an ideal scenario, leaders would on Thursday give the European Commission clear political guidelines on the next steps, for example on the Sovereignty Fund, which von der Leyen promised for the summer. 

But another diplomat warned that all of these proposals will be hard fought over, “especially if the funds are mainly going to the Germans and the French,” the EU’s two biggest economies. 

Three of the diplomats didn’t rule out the idea that the discussion could be kicked down the road to a potential extra European Council in February, although that meeting could also be centered on migration. Another said the topic could be dealt with at a regular meeting in March.

Newsletter

Related Articles

London Daily
Close
0:00
0:00
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
You're Beautiful - James Blunt (Boyce Avenue acoustic cover)
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
You Are So Beautiful
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Postmodern Jukebox European Tour Version
Paris Rioting vs Macron anti democratic law
An old French tune (by Georges Brassens) Pomplamoose ft. John Schroeder
'Sexual Fantasy' Assignment At US School Outrages Parents
Sattahip Motor Show 20
Orbán Viktor: the restructuring of the power relations in the whole of Europe is taking place
SONATE AU CLAIR DE LUNE - Moonlight sonata
Credit Suisse to borrow $54 billion from Swiss central bank
A kiss to build a dream on
The BBC problem about China
Wiz Khalifa - See You Again ft. Charlie Puth, Furious
Strikes-Hit UK Pledges 94 Billion Euros In Cost-Of-Living Budget
Wonderful Tonight - Eric Clapton (Boyce Avenue acoustic cover)
Russian Hackers Preparing New Cyber Assault Against Ukraine
Mean Blues
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
La Chansonnette
UK face biggest fall in spending power for 70 years
Pattaya Addicts
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
Franz Liszt - Liebestraum - Love Dream
If this was in Tehran, Moscow or Hong Kong
Dream a little dream of me
Announcing GPT-4
Tu Vuo' Fa' L'Americano - Hetty & the Jazzato Band
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
Unchained Melody sung like you've NEVER heard!
Drew Barrymore
Dave Brubeck - Take Five
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
Édith Piaf - Non, Je Ne Regrette Rien (Sofie)
A brief banking situation report
Rondo Alla Turca
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Kiss of fire
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Ed Sheeran - Perfect (Amadeus violin cover instrumental)
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Tom Jones - I´ll Never Fall In Love Again 1967, 1989, 2001
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Israel Cachao López - Guajira Clásica
Silicon Valley Bank exec was Lehman Brothers CFO
Edward Maya - Stereo Love (feat. Vika Jigulina) (Extended Mix)
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Strauss - Radetzky March - Karajan
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
La vie en rose
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Despacito (Piano Cover) - Peter Bence
A Mississippian man, who was once considered a “ticking time bomb,” has lost a whopping 165 kilograms! What motivated this incredible transformation?
The Temptations - My Girl (Smokey Robinson Tribute) 2006 Kennedy Cent
Elon Musk Is Planning To Build A Town In Texas For His Employees
Orlando Cachaito Lopez Redencion
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
Edith Piaf - NON, JE NE REGRETTE RIEN
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
RADETZKY MARCH-2008-Wien, New Year Concert
Fitness scam
Only you (And you alone)
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
Beautiful in White x Canon in D (Piano Cover by Riyandi Kusuma)
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"
Strangers In The Night
Barcelona is feeling the heat as they face corruption charges over payments to former vice-president of Spain's referees' committee, Jose Maria Enriquez Negreira
Charles Aznavour - La Boheme
Banking regulators close SVB, the largest bank failure since the financial crisis
Summer time
Watch: “They are wounded but unbowed, unbreakable.”
Sting and Stevie Wonder - Fragile (from Sting's 60th birthday concert)
Silicon Valley Bank: Struggles Threaten Tech Startup Ecosystem"
Aux Champs Elysees
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Stand By Me - Ben E. King (Boyce Avenue acoustic cover)
Old clip of Bill Gates saying Ukraine is a big, fat, corrupt sinkhole is going viral
La Mer (Beyond the Sea) – Avalon Jazz Band
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
She
Motorist fined £650 after council ‘paints disabled bay around his car
Nathalie Song by Enzo Petrachi Stjepan Hauser Cello
Brexit Deal Falls Short: UK Regains Few Pre-Brexit Benefits
Shape of My Heart - Sting (Boyce Avenue acoustic cover)
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
Radiohead - Creep
Brexit is done (sort of), again
Quizás,Quizás,Quizás - Andrea Bocelli - Jennifer Lopez
JP Morgan Becomes First Bank to Predict UK Will Avoid Recession
Perhaps, Perhaps, Perhaps - Multi-Couples
JP Morgan Becomes First Bank to Predict UK Will Avoid Recession
Pentatonix Havana
JPMorgan has become the first City of London forecaster to predict that Britain will stay out of recession in 2023
Paula Cole - Autumn Leaves
How do stolen goods end up on Amazon, eBay and Facebook Marketplace?
Oscar Benton Bensonhurst Blues
It's the question on everyone's lips: could a four-day workweek be the future of employment?
OH NANANA vs ABUSADAMENTE
Nina Simone - ”I Put A Spell On You”. Vezi aici cum cântă Jeremy Ragsd
NIGHTWISH - The Phantom Of The Opera
Motorshow 2016 Tanjay Negros Oriental
Monica Bellucci - Ti Amo
Michael Jackson - Billie Jean Milena The Voice France 2018
Michael Buble (Help Me Make It Through The Night) feat Loren Allred
Memories Canon In D - Maroon 5 (Boyce Avenue piano acoustic cover)
Matteo Simoni - Marina
Maroon 5 - One More Night
Maroon 5 - Memories
Mark Knopfler - Brothers In Arms (Berlin 2007 Live)
Mark Knopfler & Emmylou Harris - Romeo And Juliet (Real Live Roadrunni
Marina, Marina - The LUCKY DUCKIES intimist live concert at Guimarães
Major Lazer & DJ Snake – Lean On Mauranne The Voice France 2016
Love Theme from Romeo and Juliet - Joslin - Henri Mancini, Nino Rota
LoLa & Hauser - Love Story
Linkin Park Jay-Z - Numb Encore (Live 8 2005)
Hallelujah Mennel Ibtissem, The Voice France Leonard Cohen
Leonard Cohen - Dance Me to the End of Love
Leonard Cohen & Natasha Rostova - Dance me to the end of love
La casa de papel - Bella Ciao
La Camisa Negra
L'italiano (Toto Cutugno) - The Gypsy Queens
Juanes - La Camisa Negra
Jonathan and Charlotte - Britain's Got Talent 2012 Live Semi Final - U
John Powell - Assassin's Tango
Joe Cocker - You Can Leave Your Hat On (LIVE in Dortmund)
Joe Cocker - Unchain My Heart 2002 Live
Joe Cocker - A Whiter Shade Of Pale
Jay Z & Alicia Keys - Empire State of Mind LIVE
Jason Mraz - Im Yours (live)
Jarrod Radnich - Bohemian Rhapsody - Virtuosic Piano Solo
James Blunt - You're Beautiful
James Blunt - You're Beautiful & Bonfire Heart (Live at The Nobel Peac)
If You Go Away - Helen Merrill & Stan Getz (Tribute to Virna Lisi)
I'LL BE MISSING YOU
I Say a Little Prayer
Hotel California ( Eagles ) 1994 Live
Historia de un amor - Luz Casal. Vezi interpretarea Biancăi Sumanariu
Here Comes The Sun - The Beatles (Boyce Avenue acoustic cover) on Spot
Heart - Stairway to Heaven Led Zeppelin - Kennedy Center Honors
HAVANA by Camila Cabello Zumba Pre Cooldown TML Crew Kramer Pastra
HAUSER and Señorita - I Will Always Love You
HAUSER - Waka Waka
HAUSER - Sway
HAUSER - Lambada
HAUSER - Historia de un Amor
HAUSER - Despacito
Great Pretender
Georgia May Foote & Giovanni Pernice Samba to 'Volare' - Strictly Come
Gary Moore - Still Got The Blues
GIPSY KINGS VOLARE Penelope Cruz
Fugees - Killing Me Softly With His Song
French Latino - Historia de un Amor
For A Few Dollars More The Danish National Symphony Orchestra (Live)
Flashdance • What a Feeling • Irene Cara
Filip Rudan - “Someone You Loved” Audicija 4 The Voice Hrvatska Sez
Eric Clapton - Wonderful Tonight
Enya - Only Time
Enrique Iglesias - Bailando (English Version) ft. Sean Paul
Enrique Iglesias - Bailamos
Elena Yerevan Historia de un amor
Ed Sheeran - Shape of You (Official Music Video)
Ed Sheeran - Perfect Symphony [with Andrea Bocelli]
Ed Sheeran - Perfect (Official Music Video)
Easy On Me - Adele (Boyce Avenue 90’s style piano acoustic cover) on S
ERA - Ameno
ELENA YEREVAN- Cancion Del Mariachi-IN STUDIO-2017 DPR
Dust In The Wind - Kansas (Boyce Avenue acoustic cover)
Don't Let Me Be Misunderstood
Despacito x Shape Of You - Pentatonix
Deep Purple - Child In Time - Live (1970)
David Foster When A Man Loves A WomanIt's A Mans World (SealMichael Bo
Dance me to the end of Love ( Pi-Air Design )
Coolio - Gangsta's Paradise (feat. L.V.) [Official Music Video]
Conquest Of Paradise (Vangelis), played on Böhm Emporio organ
Cielito Lindo
Chico & The Gypsies - Bamboleo
Canción Del Mariachi - Antonio Banderas, Los Lobos • Desperado
Camila Cabello - Havana (Audio) ft. Young Thug
Camila Cabello - Havana ( cover by J.Fla )
California Dreamin' - The Mamas & The Papas José Feliciano (Boyce Ave
Buster Benton - Money Is The Name of The Game
Hallelujah Pentatonix
Bobby McFerrin - Don't Worry Be Happy (Official Music Video)
Bob Dylan - Knockin' On Heaven's Door Emilia The Voice Kids France
Besame Mucho - Cesaria Evora
Ben E. King - Stand by Me Sax Cover Alexandra Ilieva Thomann
Bella Ciao
Bella Ciao - INSTRUMENTAL
Beautiful in White x Canon in D (Piano Cover by Riyandi Kusuma)
Bad Romance - Vintage 1920's Gatsby Style Lady Gaga Cover ft. Ariana Savalas & Sarah Reich(1)
BELLA CIAO 2020 - KARAOKE ITALIANO
BAMBOLEO - Gipsy Kings • Antonio Banderas, Katya Virshilas
BAILANDO (original)
Awesome Ukrainian yodeler - SOFIA SHKIDCHENKO (with English subtitles)
Avicii - The Nights
Atom - The Great Gig in the Sky
Aretha Franklin - (You Make Me Feel Like) A Natural Woman (Official Ly
Antonio Banderas - Cancion del Mariachi (Desperado)
André Rieu - Zorba's Dance (Sirtaki)
André Rieu - Can't Help Falling In Love
André Rieu & Mirusia - Ave Maria
Andrew Reyes Elton John - Don't Let The Sun Go Down The Voice 2020 (
Andreas Kümmert Whiter Shade Of Pale The Voice of Germany 2013 Showd
And I Love You So
All About That Bass - Postmodern Jukebox European Tour Version
Alan Walker - Faded (Piano Cover)
Ain't No Sunshine -- Bill Withers (cover by Canen 12 y.o.)
African music
Adriana Vidović - “Creep” Audicija 4 The Voice Hrvatska Sezona 3
Adriana Vidović - “Believer” Nokaut 3 The Voice Hrvatska Sezona 3
A Fistful of Dollars - The Danish National Symphony Orchestra and Tuva
4 Beautiful Soundtracks Relaxing Piano [10min]
2CELLOS - Whole Lotta Love vs. Beethoven 5th Symphony [OFFICIAL VIDEO]
2CELLOS - Smooth Criminal (Live at Suntory Hall, Tokyo)
2CELLOS - Smells Like Teen Spirit [Live at Sydney Opera House]
2CELLOS - Despacito [OFFICIAL VIDEO]
13 Year Old Girl Playing Il Silenzio (The Silence) - André Rieu
094.All About That Bass
00 - SADNESS PART 1
(Ghost) Riders In the Sky (American Outlaws Live at Nassau Coliseum, 1
(Everything I Do) I Do It For You - Bryan Adams (Boyce Avenue ft. Conn
What a wonderful world
Moon river
×