London Daily

Focus on the big picture.
Monday, Jun 02, 2025

New year, new crisis — same old EU money

New year, new crisis — same old EU money

There’s another new use for the post-pandemic cash pot. This time to boost European competitiveness.

The European Union is at it again: Recycling existing cash to fit whatever new crisis pops up.

"We can’t use the same money for 25 different [goals]," EU Economy Commissioner Paolo Gentiloni said at an event in Berlin on Monday in a rare candid moment. “We label the same basket of money with one word, then we change the word but it’s always the same money.”

Yet that’s exactly what the European Commission is about to do.

In guidance to be issued on Wednesday, it will nudge member countries to use post-pandemic EU cash to boost industrial competitiveness as a way of responding to the United States' green subsidy push.

It's the third crisis for which the EU has used the same pot of money — as much as anything because some countries, Germany and the Netherlands in particular, oppose more common debt and especially since a large part of the original fund has yet to be spent.

“We’re very reluctant when it comes to [repeating] something similar to NextGenerationEU or SURE,” said German Finance Minister Christian Lindner on Monday, referencing the bloc’s debt-based response to the COVID pandemic. It's not worth even having a debate about it, he added.


Recycling cash


The latest discussion stems from 2020, when all 27 EU countries agreed to jointly issue €800 billion in EU grants and loans to counter the economic impacts of lockdowns and public health measures. It was considered a turning point because member countries had never pooled debt before.

Money from the so-called recovery fund had barely started flowing when a second crisis, Russia’s invasion of Ukraine, propelled the bloc into finding a way to decouple itself from its dependency on Russian fossil fuels.

The EU's solution was to repurpose unsolicited loans under the recovery fund — around €220 billion— and top it up with €20 billion of fresh grants to accelerate the deployment of renewables and alternative energy sources. It's been branded the REPowerEU plan and it's about to be rubber-stamped by the European Parliament.

And then came the U.S. Inflation Reduction Act, a $369 billion green subsidy plan to decarbonize its industry and encourage consumers to “buy American.”

France called on the bloc to craft its own “made in Europe” industrial strategy.

That’s what the Commission is laying out on Wednesday, in an approach that will serve as the basis for discussions at the EU leaders’ level, scheduled for February 9 and 10.

The EU executive will suggest countries “adjust the [national recovery] plans to the current context" characterized by inflation, jammed supply chains and high energy prices, and insert “simple and effective measures to provide immediate support to companies and boost their competitiveness,” such as tax breaks for clean technology, according to a draft seen by POLITICO.


Candy, later


That language reflects widespread disagreement between governments on the best course of action.

The plan includes a relaxation of state aid rules, advocated for by France and Germany, to allow countries to boost their key industrial players. But that's anathema to another group of countries, who fear it will lead to a subsidy race within the bloc, inevitably won by the richest countries.

"If anything, this is about certain member states not wasting a good crisis, and using it to argue for more EU money and protectionist measures, as they have for the better part of 30 years now," said an EU diplomat.

Conscious of that, the Commission pledged to present a European Sovereignty Fund, which is meant to “give a structural answer to the investment needs” of all EU countries.

But while changes to state aid rules are set to be adopted in the coming weeks, there are no details or a timeline for the sovereignty fund, which one EU diplomat described as "candy, but it’s far away.”


Let's go further


Some within the Commission and the Council think that repurposing existing cash isn't enough, and argue in favor of new common tools.

“If we think of a common response to the competitiveness challenge, do we think that the common response is only regulatory? I don’t think that this is the right answer,” Gentiloni said on Monday.

But that’s not the majority view. So for now, the bloc has to work with what’s already in its coffers.

“They’re dangling the same carrot,” said an EU official.

Newsletter

Related Articles

0:00
0:00
Close
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
×