Berlin As a consequence of the US Inflation Reduction Act (IRA), which is worth billions, the Economic Forum of the SPD is calling for a massive European investment offensive, without a fixed financial upper limit, financed from other European debts.
Specifically, the economic experts propose an “uncapped amount of money” for investments. The US subsidy package, which amounts to around 369 billion US dollars, should serve as a guide for this. “In Europe, a similarly high amount should initially be made available via the EU institutions and member states, but this may be exceeded,” says the paper from the SPD Economic Forum, which is available to the Handelsblatt.
In order not to lose any time, there should be “start-up financing” by raising fresh capital on the financial markets, for example by issuing European bonds. This proposal is explosive. Because the SPD-affiliated association, in which many energy and industrial companies are also members, is taking the side of France.
In an internal paper reported by the Handelsblatt newspaper, the French government had also called for an investment package with no upper limit. French President Emmanuel Macron is also open to further mutualisation of European debt. The SPD-led federal government, however, has so far rejected this.
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The President of the SPD Economic Forum, Ines Zenke, urges haste. “The industry tells us about settlement decisions against Europe,” Zenke told the Handelsblatt. It is therefore important to “act quickly if the added value is to stay here”.
SPD economic wing speaks of “a chance of the century for Europe”
In his position paper, Zenke’s association not only portrays the American IRA as a threat, but also an “opportunity of the century for Europe”. What is needed now is an economic and industrial policy answer that could become a “catalyst for accelerating the energy and resource transition”.
The SPD economic politicians, based on the US subsidy package, see tax breaks as an element to accelerate investments. Those who save emissions, pay their employees “appropriately” and are organized according to collective agreements should benefit.
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“Both the private sector and households should also receive tax credits on everything that promotes the expansion of renewables,” the paper says. Subsidies should also be possible for non-European companies – but linked to the condition that these groups give European partner companies access to their technology.
According to the SPD economic forum, access to funds from the investment program should be possible without bureaucratic obstacles. The “outdated” EU state aid rules would have to be adapted to “the new realities of the global economy”.
Investment offensive to give European economy a “huge boost”.
Funding the program requires fresh money on a large scale and the financial strength of the 27 member states. In addition to new EU debts, the SPD economic forum is introducing the around 1.8 trillion euros for the EU budget and the Corona reconstruction fund “Next Generation EU”. The additional volume can be based on the spending of the Americans and the needs in Europe.
The SPD economic forum sees another possibility of counter-financing in stricter enforcement of existing tax laws and the closing of tax loopholes. According to the position paper, the EU estimates that the public sector loses around one trillion euros a year through tax evasion and avoidance. If the tax laws were applied more strictly, a large part of the income for counter-financing could be generated in this way.
The economic experts are hoping that the investment offensive will give the European economy a “huge boost”. They do not see the program as protectionist, since every company is welcome to invest under the given conditions.
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US President Joe Biden signed the Inflation Reduction Act in August. The law provides for investments in climate protection and social affairs. According to the EU Commission, this puts EU companies at a disadvantage compared to their US competitors. Subsidies and tax credits are linked, among other things, to the fact that companies use US products or produce them in the USA.
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