Europe’s response to the US Inflation Reduction Act should not disadvantage smaller EU member states, according to Ireland’s finance minister.
(Bloomberg) — Europe’s response to the US Inflation Reduction Act should not disadvantage smaller EU member states, according to Ireland’s finance minister.
Michael McGrath said US and European firms appear to be making investments of “significant scale” in response to the range of subsidies being offered by the Biden administration to help facilitate a green transition. McGrath warned, however, that Ireland’s support for a comparable EU package would be dependent on protection being offered to all EU countries.
Smaller EU member states do not have the same capacity as bigger countries to deploy large subsidies, McGrath said in an interview with Bloomberg Radio, noting that if Ireland were to support a “significant new response” it would be “essential” that safeguards were put in place to protect the EU’s level playing field.
He also stressed that it was important to determine whether the investments being made in the US would have gone to Europe in the absence of the IRA.
McGrath said that Ireland would not repeat its previous mistakes in the handling of its economy, which led to cycles of boom and bust. Addressing the Bloomberg New Economy Gateway Europe event near Dublin, he said that some of Ireland’s corporate tax revenue would be put away in a long-term fund to help pay for future costs and avoid the need for budget cuts in tighter economic times.
The “biggest mistake” the government could make would be to make permanent expenditure decisions on the back of unreliable corporate tax revenues, many of which are regarded as windfalls, he told Bloomberg TV.
“I’ve to think of the current generation but I’ve to think of the next generation too,” he said.
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