European Commission: Lack of orientation and conflicting interests endanger Europe's economy.

European Commission: Lack of orientation and conflicting interests endanger Europe's economy.

According to a report from www.euractiv.de, the European Commission made two important economic policy announcements this week that reflect Europe's lack of direction. On the one hand, the EU Commission presented its strategy for economic security, on the other hand, the review of the multiannual financial framework (MFF) and the presentation of the new STEP program (Platform for Strategic Technologies for Europe) took place.

The European Commission plans to pool funds with STEP to subsidize companies and projects in the fields of green tech, biotech and cutting-edge technology. It calls on the member states to increase the current contribution by 10 billion euros. However, STEP is seen as a reduced version of the originally planned “European Sovereignty Fund”. This should counteract the fragmentation of the internal market through a national subsidy race.

The proposed sum of 10 billion euros for STEP is criticized because, for example, the US Inflation Reduction Act (IRA) offers subsidies and tax credits worth 369 billion dollars. The European Commission is having difficulty convincing member states to adopt a more ambitious plan, as some member states do not want an EU industrial policy and others have already received national subsidies.

The EU's economic security strategy is seen as ambiguous. On the one hand, the EU recognizes economic dependencies as a weapon, but on the other hand, it adheres to the ideal of free multilateral trade, even though China and the USA largely ignore the rules of the World Trade Organization (WTO). The EU Commission is trying to reach a “common understanding of the risks” before proposing concrete policy changes.

Analysts believe the European Union is lagging behind in the tech-industrial race led by China and the United States. The low budget for STEP reinforces this impression. China and the US have clear ideas about where they want to go, while European economic policy seems like a boat without a captain, tossed about by the clashing Chinese and American bow waves.

The European Commission's proposed measures are expected to have limited impact, particularly compared to the US and China's initiatives. It remains to be seen whether European politicians and legislators are able to implement a coordinated and ambitious industrial policy to ensure that Europe does not fall further behind in technological competition.

Source: www.euractiv.de