The Inflation Reduction Act (IRA), passed in the United States a year ago, has given rise to considerable concern in Europe. This ambitious programme in favour of the climate and the development of green industries is welcome, but its protectionist content seems to threaten the European economy. By explicitly reserving public aid for local production, i.e. by promoting Made in USA in violation of WTO principles, it raises fears of European companies relocating to the United States, or even a race for subsidies between States that could make the green transition even more costly. What should Europe’s response be? To inform the debate, the Franco-German Council of Economic Experts has examined the US programme in detail and assessed its economic impact.
The complete by-lined article in the French news paper Le Monde by Camille Landais, chair of the Conseil d’analyse économique (French Council of Economic Analysis), and Monika Schnitzer, chair of the German Council of Economic Experts, both are co-chairs of the Franco-German Council of Economic Experts is available online.
