President Biden’s controversial Inflation Reduction Act it, that would see $369bn of investment on climate and energy policies, has been the target of much anger among the 27 EU nations.

The EU has been vexed that its companies will suffer because of US tax breaks for renewable energy technologies on condition they are made in North America.

In response, the EC has announced looser state aid rules for EU member states that will allow them to subsidise clean technology manufacturing in the EU. However, I itself this has raised some anger, as whilst larger countries such as Germany will be able to use the state subsidy, smaller countries that lack the financial capacity to support their industry will lose out.

As a first step, the EU is seeking loosen its regulatory environment, simplifying and speeding up permission for new production sites, and will also allow tax-breaks.

Given the ability for such changes to boost already dominant economies at the expense of smaller ones, a new European Sovereignty Fund, announced in December last year, will be used to ‘level-up’. However, even tis has issues as the fund will be bare of any new funds and Germany, for one, refusing to allow further borrowing.

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