Parties and member states divided over EU business subsidies dispute

The intensified competition between the United States and China is pushing the EU to consider more radical solutions regarding business subsidies. At the same time, the debate over the EU common debt is escalating as member countries have differing views on its necessity. While subsidies are not typically paid in a market economy, finding a balance between being right and acting rationally is a challenge for the EU. The concern is that if Finland adheres strictly to orthodox principles and does not attract investments, what will be the consequences? There is optimism from some, like Director of Labore Mika Maliranta, who believe that Finland can still secure green investments with small tax breaks.

However, there are contrasting views within the business community. While Finnish growth companies received significant capital investments last year, Swedish business figure Jacob Wallenberg expresses a more pessimistic outlook. He highlights the negative impact of the US government’s support on green transition investments flowing to Europe, favoring the US. Wallenberg suggests that the EU should respond to competition from the US and China with a corona-era recovery mechanism.

Amidst these debates, there are concerns over the effectiveness of the EU common fund and how funds will be allocated. Risto Murto, CEO of Varma, criticizes the overly optimistic view of the EU common fund, emphasizing the need for a merit-based project funding approach. Economists like Vesa Vihriälä stress the importance of increasing funding for research and development activities to address Europe’s shortcomings in scaling cutting-edge technologies.

Looking ahead, the next EU commission and parliament will need to consider the future of support policy. Will the EU continue on a path of temporary supports or shift towards a market-driven model? These decisions will have significant implications for member countries like Finland. With different perspectives within the EU and the business community, finding a consensus on the best approach for supporting businesses in the face of global competition is a complex challenge.