Europe’s subsidy boom raises new concerns about the health of the Single Market, the European Central Bank warned Tuesday.
“State aid expenditure in the EU has risen sharply in recent years, driven by economic shocks and a global resurgence of interventionist industrial policy,” the ECB said in a pre-release of its Economic Bulletin.
What began as emergency support has evolved into a key tool for pursuing what the ECB describes as a shift toward “broader industrial priorities” such as clean technology, energy security, semiconductors and technological sovereignty.
State aid has become “increasingly flexible and more aligned with shifting policy priorities in the EU,” the ECB said, adding policymakers still face the challenge of pursuing industrial objectives “while safeguarding competition within the Single Market and maintaining fiscal sustainability.”
