European Union member states have spent billions of euros supporting agricultural and food industries over the past two years, following a temporary relaxation of the bloc's state aid rules to help businesses cope with the impact of Russia's war in Ukraine.
Several small EU countries have on Thursday (7 March) warned against the increased use of national subsidies within the EU, which they warn undermines the foundations of the single market.
As demonstrated by farmers protests this week, subsidies are addictive and create inefficiency. Still, the biggest economic transformation since the industrialisation might not work without them.
Germany will provide €900 million to Swedish battery maker Northvolt, as the first country to make use of the European Commission’s new subsidy “matching” scheme that allows EU countries to counter foreign subsidies with their own offers.
Germany is the number-one beneficiary of the relaxation of state aid rules, having received almost half of the total state aid approved since February 2022, according to fresh data from the European Commission - deepening concerns over market fragmentation.
The EU’s Temporary Crisis and Transition Framework (TCTF), which allows member states to subsidise sustainable technologies, is welcomed by advocates for green industrial policy - but some NGOs fear it will be counterproductive for the environment and SMEs.
On Wednesday (1 February), Margrethe Vestager presented a new framework for state aid that will allow member states to subsidise more companies for longer, while also warning that such subsidies were a threat to the integrity of the single market.
A draft communication, seen by EURACTIV, laid out the measures the European Commission is due to propose on Wednesday (1 February) in reaction to the US Inflation Reduction Act (IRA).
