The United States distributes billions of subsidies to green technology projects, which also attracts European companies. So that investments do not run away, the requirements for the EU’s joint support package are increasing.
– There is no such option as looking elsewhere. If nothing is done, we will lose a large part of the industry, which will go behind the wheel, meppi Eero Heinäluoma (sd.) says.
Germany and France in particular have generously distributed subsidies for innovation to keep companies at home. Finland and other small countries cannot compete with subsidies on their own.
The United States supports projects with hundreds of billions of euros. Since the United States and Europe are roughly the same size economies, according to Heinäluoma, the magnitude of the subsidies must be the same.
In Finland, the government has hoped to return to the world of strictly limited state subsidies, where success is determined by free competition.
The Confederation of Business (EK) has emphasized that there is no going back to the old ways. The organization abandoned its old line of criticizing state subsidies and proposed an EU fund of 500 billion euros.
According to Heinäluoma, many methods are needed for financing. He supports increasing the lending of the European Investment Bank, tax breaks and subsidies from the EU budget’s own funds.
Leaders of EU countries are looking for ways to attract business and money to Europe at an extraordinary summit starting on Wednesday. Former Prime Minister of Italy Enrico Letta publishes its report on the future of the EU’s internal market as a basis for the discussion.
The fund would support the poor the most
The governing party’s meppi of the coalition Henna Virkkunen has a tight-lipped attitude towards business subsidies.
According to Virkkunen, it is very difficult for the EU to set up the fund that EK hopes for, which would distribute subsidies to projects based solely on the quality of the innovations.
Member states want low-income countries to receive more support than rich countries. It is difficult to ignore the requirement, because the decision related to the EU budget requires the unanimity of the countries.
According to Virkkunen, Finland would not benefit from such a fund.
– It would not be an investment fund of fair competition.
A good example of a pure financier of innovations has been the Horizon fund, from which Finnish universities and research institutes have received good support.
– Almost all other funds are always based on the fact that subsidies are distributed on the basis of gross domestic product. And the lion’s share of these are always directed to the poorest countries, says Virkkunen.
Horizon subsidies were not affected by the country’s economy.
– Finland should continue the Horizon tradition also when talking about possible new innovation subsidies, says Heinäluoma.
EIB is expected to be a savior
Many politicians are turning the European Investment Bank (EIB) into a super financier of euro projects. The bank is needed for help in green projects as well as in the defense industry.
The EIB is a major player in its field, granting almost EUR 90 billion in loans last year.
Significantly increasing the loan portfolio would require the EU member states to increase the bank’s capital.
Heinaluma supports the strengthening of the EIB. He points out that the investment bank, however, gives a loan and not a subsidy.
According to Heinäluoma, in the United States, support is mainly given in the form of tax breaks. According to him, tax subsidies could also be applied in the EU, as long as the rules of the game are agreed upon.
– Then part of the profits of future companies will be used to finance today’s investments.
The budget’s own funds accumulate slowly
Heinäluoma also supports increasing the EU budget’s own funds, even though the project has progressed slowly. The purpose is to collect funds that do not depend on member countries’ payments to the budget. These include, for example, customs duties.
The EU Commission has proposed that part of the revenues from emissions trading and the new carbon tax be channeled into the budget. In addition, at least the plastic tax and the digital tax have been on display.
Virkkunen points out that the tax burden on citizens should not be increased.
– We should find new sources of income that are not taxed in the member countries, says Virkkunen.
Only tens of billions of euros would accumulate in the EU coffers from own funds.
Half of the recovery package has not been distributed
Joint debt is constantly being talked about in the EU because of the big money holes. For example, France supports joint debt, while Germany opposes it. Finland is also not enthusiastic about joint debt.
Virkkunen emphasizes the countries’ own responsibility for their debts.
– Joint debt easily undermines how interested people are in taking care of responsible financial management. And yes, we have many EU countries that have problems with this.
– I’m not in favor of taking on debt because it shifts the burden to the future, Heinäluoma says.
For the first time, the EU took joint debt for the recovery package of the korona, in current value about 800 billion euros. Subsidies and loans were distributed to the countries from the package.
According to Heinäluoma, the support package kept the wheels of the economy turning and brought faith to the market. However, only about half of the money has been used.
– There is still quite a lot of money coming in, which of course will support the economy when it gets there. But you can be critical of this speed of implementation, there is time after the corona crisis.
Support was granted, for example, for phasing out fossil fuels and speeding up digitalization development, not just for the disadvantages of the pandemic. Abuses also came to light.
Agricultural and regional subsidies take the most from the EU budget
The EU’s current budget framework is valid until 2027. Its preparation is starting.
Virkkunen thinks that the budget needs to be increased a little, even though many countries are against it.
– Above all, you must also be able to make internal allocations within the EU budget, so that the money is used efficiently.
Heinäluoma does not want to increase the membership fees paid by the countries, which make up the budget.
– A small increase is quite likely, but it would be justified to seek it by developing the EU’s own funds.
The size of the EU budget is a generous 1,200 billion euros, which is about one percent of the combined gross national product of the member countries.
More than 60 percent of the EU budget is spent on agricultural and regional subsidies. There are no significant changes to this. We want to preserve agriculture in the EU. Regional benefits, on the other hand, have been able to equalize the uneven development of the regions.
The United States attracts important green technology investments for Europe – asked experts if there is reason to worry
How do you think EU money should be distributed? Is it more important to get as much of the money as possible to Finland, or should the poorest countries be supported the most?