At the second discussion of the EU heads of state or government on the competitiveness of the EU on Thursday 9 February, they agreed on at least one thing: the question of new European funding is not urgent and it is first of all a question of “making flexible” and exploiting existing funds that are not yet deployed. This is in line with the 1 February proposals by European Commission President Ursula von der Leyen to respond to the US Inflation Reduction Act (IRA) (see EUROPE 13112/1).
Even the most ardent defenders of the Sovereign Wealth Fund, such as France, admit that actions need to be “prioritised”. Member States were largely divided on the idea of deploying new financial resources (see EUROPE 13117/2): “I assume that I have favoured a clear agreement rather than a difficult debate on new funding. We have the possibility of making existing funds more flexible, that’s what we have to do”, said French President Emmanuel Macron.
In the conclusions adopted at the end of their meeting, the leaders state that “existing EU funds should be deployed in a more flexible manner and options to facilitate access to finance should be explored”. They call on the Commission and the EU Council to ensure the full mobilisation of existing instruments. In addition, the European Investment Bank (EIB) should also be fully utilised to support industries in transition.
The European Sovereignty Fund should “complete the response” in a second phase, according to Emmanuel Macron. And to admit that there is no consensus among the Member States at the moment. “But there were none in July 2020 at the time of the stimulus package either”.
The European Commission has therefore reiterated its ambition to present legislative proposals in this sense during the first half of March, before the next European Council on 23 and 24 March. At that time, leaders will have the opportunity to evaluate the Commission’s texts.
State aid policy
The EU Council conclusions stress the need to make procedures “simpler, faster and more predictable, and allow for targeted, temporary and proportionate support to be deployed speedily, including via tax credits, in those sectors that are strategic for the green transition and are adversely impacted by foreign subsidies or high energy prices”. Emmanuel Macron insisted on the “flexibilisation” of State aid and the possibility of using tax credits. Today, aid sometimes arrives two years later.
“With the IRA, it’s a five-year tax credit that falls every year; we’ll be able to do the same thing”, he said.
The President of the European Council, Charles Michel, underlined the consensus of the leaders around a “relaxation of State aid which must be targeted, limited in time and coupled with more flexibility with existing means, to support the EU’s industrial and economic base”. He stressed the need to defend the integrity of the Single Market, referring to Member States expressing fears about a centralisation of support in Germany.
Ursula von der Leyen, the President of the European Commission, said that EU leaders had not discussed the ‘matching clause’ because the consultation launched by the European Commission with EU countries on the new crisis framework was “still ongoing”.
Consensus on the value of international trade
The EU27 agreed on the need to trade with as many partners as possible around the world, even if the devil is in the detail (of trade agreements). This is crucial to diversify supply chains, especially in critical raw materials, where efforts are needed, EU leaders write in their conclusions. They call for “fair and transparent trade and investment agreements”.
Finally, the Capital Markets Union (CMU) “is a very powerful lever that is under-used, under-exploited, but which should allow us to mobilise more private resources in the future”, according to the President of the European Council, Charles Michel.
In their conclusions, the leaders call on the co-legislators to accelerate the implementation of the CMU Action Plan and to finalise the legislative work in this area.
See the conclusions: https://aeur.eu/f/5ai (Original version in French by Léa Marchal and Lionel Changeur)