Belgium, (Brussels Morning Newspaper) Germany has criticised European Commission’s joint borrowing plan to strengthen the green push.
EU Council President Charles Michel and France previously expressed support for the plan, noting that it would help indebted bloc members to support and implement green projects, according to Reuters reporting on Thursday.
The EC first used joint borrowing to help EU member states to recover from the coronavirus crisis, with wealthy bloc members including Denmark, Finland, Germany and the Netherlands objecting to the Commission’s latest joint borrowing plan.
“I don’t see a need for new financial instruments, or, more precisely, any need for new common debt at the European level,” Christian Lindner, German Minister of Finance, noted at a discussion on EU finances in Helsinki on Wednesday.
He noted that the US Inflation Reduction Act (IRA) offers USD 369 billion in subsidies to the green sector there, which some EU leaders fear will pull investors away from the bloc.
Quality over quantity
“We need better quality public sector spending instead of more quantity,” Lindner stressed and added “an excessive expansion of EU subsidies is not the right response.”
His Finnish counterpart Annika Saarikko agreed and expressed belief that EU’s coronavirus crisis recovery fund worth 800 billion euro is sufficient. “We have no need for additional EU funding,” she concluded.
The EC also proposed to relax state aid rules with the aim of supporting the green sector, which smaller bloc members criticised and warned the move risks distorting competition.
The body stressed the importance of maintaining the bloc’s position as a global leader in green tech and called for a response to the IRA with the aim of keeping green companies in the EU.
Commenting on joint borrowing, Lindner stressed “the idea of mutualising debt is a solution always looking for a problem.”
He added that the move would undermine confidence and go against European Central Bank (ECB) efforts to rein in inflation, which is significantly above the bank’s 2% target.Lindner reminded that only a fraction of the 800 billion euro made available through joint borrowing has been used, reiterating that the bloc does not need more common debt.
