Several EU countries Seek Greater Caution In Loosening State Aid Rule

In a document dated 10 February eleven EU countries urged “great caution” in relaxing the bloc’s state aid rules in a bid to support Europe’s green industry, reported Euractiv.

The letter was sent to the European Commission and signed by Denmark, Finland, Ireland, Poland, Sweden, the Netherlands, Hungary, Latvia, the Czech Republic, Slovakia and Belgium.

Recently the Commission proposed easing EU restrictions on state aid for investments in renewable energy or decarbonising industry, partly in response to the US Inflation Reduction Act.

Read more: EU Watchdog Updates State Aid Rules To Boost Broadband Rollout

“State aid for the mass production and commercial activities can lead to significant negative effects including the fragmentation of the internal market, harmful subsidy races and weakening of regional development,” read the joint position paper. “These harms can be greater than the positive effects. We, the co-signing member states, urge the Commission to exercise great caution.”

Margrethe Vestager said this month that France and Germany – the bloc’s two biggest economies – accounted for almost 80% of the state aid approved since the Commission first eased previous limits to help economies weather the COVID-19 pandemic.