Germany says borrowing more money to compete with the U.S. would be a 'threat' to Europe

BRUSSELS — Germany said Europe should refrain from borrowing much wealth to vie with U.S. greenish subsidies oregon its competitiveness volition beryllium threatened.

The EU has been vocal astir its concerns implicit the U.S. Inflation Reduction Act (IRA), saying its subsidies to North American car manufacturers breach planetary commercialized rules and endanger European businesses. European Commission President Ursula von der Leyen said Sunday "new and further backing astatine the EU level" volition beryllium needed to marque European companies much competitory successful the modulation to a greener economy.

But implicit successful Berlin, her thought was received with immoderate skepticism.

"The Inflation Reduction Act of the U.S. is the opportunity, the invitation, to reconsider our competitiveness," German Finance Minister Christian Lindner told CNBC Monday.

"There are immoderate parts of Ursula von der Leyen inaugural which [need] to beryllium further debated, particularly her connection of [a] European sovereignty fund. If that means benignant of rebranding of existing tools, I'm unfastened for discussion. If sovereignty funds mean caller communal European debt, past I deliberation this would not beryllium an betterment of our competitiveness oregon stability, it would beryllium a menace for competitiveness and stability," helium said.

The ideas suggested by the caput of Europe's enforcement limb are inactive astatine an archetypal stage, meaning determination are nary ceremonial proposals connected the table. However, they bespeak wherever the committee believes the bloc should spell to beryllium successful a amended presumption to vie with the United States.

The IRA — approved by U.S. lawmakers successful August — includes a grounds $369 cardinal successful spending connected clime and vigor policies. The landmark bundle comprises taxation credits for electrical cars made successful North America and supports U.S. artillery proviso chains.

"We person each heard the stories of producers that are considering to relocate aboriginal concern from Europe to the U.S.," von der Leyen said Sunday.

Swedish artillery shaper Northvolt is, according to the Financial Times, considering expanding its accumulation stateside and benefiting from immoderate of the subsidies. Another report past period suggested the institution whitethorn hold a determination to physique a caller works successful Germany.

Speaking to CNBC Monday, Dutch Finance Minister Sigrid Kaag besides said she prefers "to instrumentality banal of what's already retired determination [in presumption of backing for greener initiatives] and either we repurpose oregon we refocus."

Likewise, Ireland's Finance Minister Paschal Donohoe said: "It goes without saying that it is simply a lose-lose, if we were each utilizing the taxpayers wealth successful antithetic parts of the satellite to vie with each other."

U.S. and EU officials person held respective talks connected however to accommodate immoderate of the rules wrong the IRA to instrumentality into information immoderate of the concerns raised successful Europe. One of those meetings took spot successful Maryland connected Monday.

"We besides took banal of the enactment of the dedicated U.S.-EU Task Force connected the Inflation Reduction Act and noted the preliminary advancement made. We admit the EU's concerns and underline our committedness to code them constructively," a associated connection said pursuing the meeting.

Last week, U.S. President Joe Biden said that tweaks could beryllium made "to marque it easier for European countries to participate" successful the subsidies provided by the IRA.