Former Italian Prime Minister Enrico Letta proposes a new pan-European fund to finance competitiveness investments.
The leaders of the European Union member states will continue their extraordinary summit in Brussels on Thursday.
Today’s agenda includes improving the Union’s competitiveness and strengthening the internal market.
The heads of state heard a briefing on the matter from the former prime minister of Italy Enrico Lettalta. He has been working since last fall EU internal market report among.
The report has 147 pages. While preparing it, Letta visited 65 cities and participated in more than 400 meetings. He says that he has met thousands of people through it.
In Letta’s opinion, the EU Commission should draft a comprehensive internal market strategy. It should include measures to dismantle existing trade barriers and increase competitiveness.
He states that the relaxation of EU state aid rules has not only protected the real economy, but also caused distortions in the competitive situation.
According to Letta, the EU states have “various fiscal leeway” at their disposal. In practice, this means that some countries are able to channel more public money into state subsidies than others. Germany and France in particular have supported their companies heavily.
The report states that the problem could be fixed with a state aid assistance mechanism. It would be a new instrument that would oblige member countries to allocate part of their national funding to pan-European competitiveness investments.
It remains unclear whether Letta by national funding means public money in general, or specifically money earmarked for state subsidies.
In Finland, the Confederation of Business and Industry has proposed that the EU should think about an implementation method for a financial instrument that strengthens competitiveness and investments. Its size could be around 400–500 billion euros. The instrument would work so that money is distributed to the best projects, and not, for example, in relation to the gross national product of the countries.
Letta states that the EU does not have sufficient political tools to develop industrial strategy tools like the US IRA. The US climate package Inflation Reduction Act is based on fast and agile tax credit systems.
“In the long term, it is crucial to address the political disagreements about the EU’s tax capacity.”
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A think tank from Brussels Bruegelin researchers have a positive attitude to the internal market report.
“It is a convincing argument for a much deeper and wider internal market. Enrico Letta hits all the right notes,” Bruegel Director Jeromin Zettelmeyer evaluate.
Bruegel senior researcher Maria Demertzis sees that the report is “a collection of very sensible ideas”. The question, however, is how to find a political consensus in the EU to proceed with some of the ideas presented in the report.
Suomen Yrittäje’s first assessment of Letta’s report is also positive. The organization plans to carefully weigh the report’s suggestions over the coming weeks.
“Expectations regarding the report have been high. Based on the initial assessment, Letta has been able to fulfill them in many respects”, Chairman of Suomen Yrittäjie Petri Salminen states in the announcement.
The entrepreneurs’ assessment is that the report also contains many ideas that have been circulating in Brussels for years, but which have not been promoted due to the opposition of the member states. Such are, for example, the calculation rules of the corporate tax base.
