EU finance ministers will once again discuss, on Tuesday 17 January, the EU’s response to the US Inflation Reduction Act (IRA) (see other news), bearing in mind the conclusions of the December European Council (see EUROPE 13085/2).
This informal breakfast discussion will be supported by EIB President Werner Hoyer, who will present the EU Bank’s instruments to stimulate the energy transition. It will help to identify the European tools available to avoid relocation of European companies attracted by US subsidies and to preserve the integrity of the internal market, as not all states have the same budgetary space to support their industry.
Among the instruments available is a further relaxation of State aid, in particular to facilitate the setting up of ‘Important Projects of Common European Interest’ (IPCEI) in strategic areas of activity such as batteries and semiconductors.
The question of “an emergency fund mobilising existing instruments”, with the contribution of the EIB and that, in the medium term, of a possible “sovereignty fund” will be raised, a French source said on Friday 13 January, while several Member States, including the Swedish Presidency of the EU Council, fear the triggering of a subsidy race (see EUROPE 13097/4).
French Economy Minister Bruno Le Maire and German Economy Minister Robert Habeck are expected to visit the US, possibly before the special summit on 9-10 February, to continue discussions with the US authorities on limiting the damage of the IRA to European companies. Before Christmas, the Franco-German tandem unveiled joint proposals to support the development of a European industry based on green technologies, in response to the IRA (see EUROPE 13087/5).
The Swedish Presidency of the EU Council will present its political priorities for the first half of 2023 in the economic and financial fields (see EUROPE 13095/11, 13092/10).
War in Ukraine. On Tuesday, the Ecofin Council will take stock of the economic and financial consequences of Russia’s aggression in Ukraine.
As in the Eurogroup (see other news), one of the questions raised concerns the continuation of emergency budgetary measures to help the most affected households and businesses cope with the surge in energy prices.
The Ecofin Council will take stock of the implementation of the Recovery and Resilience Facility (RRF), the fiscal instrument of the Next Generation EU Recovery Plan. It will approve the modification of the Luxembourg plan in which the financial contribution has been reduced (€82.7 million instead of €93.3 million). According to the EU Council, by 2023 all national plans will be amended “at least once” to access new grants under the ‘REPowerEU’ strategy, to apply for available loans or to take account of the updated allocation.
European Semester. Finally, in the context of the 2023 exercise of the ‘European Semester’ budgetary process (see EUROPE 13068/23), the ministers will adopt two draft conclusions.
The first text takes up the socio-economic policy priorities for sustainable growth in 2023 set out by the European Commission.
See the conclusions: https://aeur.eu/f/4w3
The second text broadly endorses the Commission’s analysis of the alert mechanism on the evolution of macroeconomic imbalances and notes the Commission’s intention to carry out balance sheets on seventeen countries with such imbalances.
See the conclusions: https://aeur.eu/f/4w2 (Original version in French by Mathieu Bion)