The German consumption plan causes concern in the EU due to possible disruption of the unique market

Source: Politico - Author: M.J. GDNUS

European governments have expressed fear that radical consumption plans announced by the future German chancellor could impose a unique EU market and give an unfair competitive advantage.

The month after the election that almost certainly brought Friedrich Merca on the head of the German Parliament to exempt the investment in defense above 1% of the EUR 500 billion for infrastructure and green energy, which passed the last parliamentary step.

Although German allies generally welcomed the long-awaited commission of budget discipline Berlin, which are still recovering from double shock - Pandemia Cavid-19 and the war in Ukraine - as well as due to the threatening trade war with the United States.

At the EU leader summit in Brussels, where Germany was leaving the Olaf Solc, as the new government has not yet been formed - the topic was not directly considered, and the focus was on strengthening the defense capacities of the continent.

However, the question is already causing concerns throughout the block and within the European Commission, which oversees state subsidies - which he calls "state aid". More diplomats from different parts of Europe have expressed concern in political statements.

Deepening the gap between the two largest European economies

Since additional consumption - which could reach as much as 1 trial of euros in the coming decade, mainly for defense, infrastructure and green energy - reducing the pressure on the regular budget of Germany, it will enable greater expenditures in other sectors. Part of that money is already intended for subsidies to the industry, which could give German companies an unfair advantage over competitors in the rest of the EU.

"We need to be careful when it comes to productive investments in Germany," Former French minister, the second largest economy in the EU, under the conditions of anonymity due to the sensitivity of the subject. "It can help us, it can pull our economy in the right direction. It is good for us - this means more markets for French companies. But it could deepen the gap between our countries. We will need to follow Germany."

France leads a group of countries, including Italy and Spain to the EU's largest economy - which have repeatedly called the block to design the potential "distortions of the unique market, such as joint borrowing of all EU members. Germany, however, rejects the idea.

Subsidizing "strategic industries"

"The issue of possible distortions is something we need to consider," said a diplomat from a south-European country. He added that he would only be seen which subsidies the new German government would agree on its final coalition agreement.

In a preliminary agreement on the future coalition, Merc's CDU / CSU and Social Democrats said they wanted additional funds for subsidies "energy intensive sectors" and introduce a "permanent restriction of network fees".

Also, the agreement envisages state aid to strengthen the "strategic industries" and attracting foreign investment, such as "semiconductor indoor, battery, hydrogen, hydrogen, or pharmaceutical products".

German allies fear that Berlin could separate billions of euros to attract factories of chips and batteries or reduced energy costs of German companies, while other EU countries do not have financial opportunities for such subsidies. This reminds that the strong reaction across Europe experienced 2022. year when he introduced a program of 200 billion euros to reduce energy prices in Germany at the beginning of the war in Ukraine.

"First of all, I really greet that Germany significantly increases the allocations for defense. The country is an important country," said Jesik Rozenk, Swedish Minister for European Affairs, for politics.

But when it comes to state aid, she added, "Obviously, we have rules."

The mass investment plan of Friedrich Merca - which represents a drastic detrimental to the German and its conservative party advocates - already causes tensions in Europe, while Berlin tries to mitigate the strict EU fiscal rules that once insisted that they have insisted.

The German official sought to reduce the concern about the disturbance of the unique market, noting that the planning German budget was widely welcomed, including by French President Emanuel Macrons during his visit to Berlin on Tuesday.