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The war in Ukraine and the green transition have exacted a heavy price on Europe’s public coffers, with the European Commission approving €733bn in state support since March last year for affected businesses.
This amount has been superseded in recent years only by subsidies approved during the Covid-19 pandemic.
Germany accounts for almost half of total EU state aid funding approved under a temporary crisis scheme introduced in 2022 to shield economies from the war in Ukraine and to support green investments, according to commission figures seen by the Financial Times. A total of €90bn of the approved funding was granted in 2022.
The subsidies are lower than the record state support granted of almost €900bn, out of more than €3tn in approved Covid spending, in 2021. But EU diplomats in smaller countries have criticised the trend of continually relaxing state aid rules in emergencies, which they say favours bigger economies that can afford to offer such support to their businesses.
“We are unhappy about it because we see that the conditions for doing business are widening again between member states,” said one senior diplomat. “It is due to exceptional circumstances, but that excuse is beginning to be a bit too easy to bring to the table.”
War in Ukraine: A skyscraper in Moscow’s main business district, home to several government ministries, was damaged by a drone strike yesterday for the second time in three days.
Here’s what else I’m keeping tabs on today:
Results: BAE Systems, Ferrari, Ferrexpo, Haleon, Hugo Boss, Kraft Heinz, PayPal, Qualcomm and Taylor Wimpey report. Chinook Therapeutics shareholders meet to vote on the proposed acquisition by Novartis.
Pope Francis in Portugal: The leader of the Catholic church visits Lisbon for World Youth Day.
Summerland disaster: A service of remembrance will mark the 50th anniversary of a fire that killed 50 people at the holiday complex on the Isle of Man.
Earth Overshoot Day: Today marks the point in the year when humans begin living beyond their ecological means and move into the equivalent of deficit spending, according to environmental research body Global Footprint Network. The date has arrived in August every year since 2005 and last came in December in 1983, according to the group.
Five more top stories
1. Donald Trump has been indicted again, with US prosecutors charging him in relation to attempts to overturn the results of the 2020 presidential election. The former president was hit with four criminal counts including conspiracy to defraud the US, to obstruct an official proceeding and to threaten voting rights. Here’s more from the indictment filed yesterday.
Analysis: Even as the criminal proceedings against him pile up, Trump is betting they will benefit him in the race for the Republican presidential nomination.
2. Staffing shortages at air traffic control have fuelled a 37 per cent increase in delayed flights in Europe and forced US airlines to cut flights, sparking a blame game on both sides of the Atlantic and threatening to dent the industry’s recovery from the Covid-19 pandemic. Read the full story.
3. Britain’s cuts to foreign aid to save money would lead to thousands dying in Africa, a report by the Foreign Office has revealed. In one estimate, a 38 per cent cut to aid for South Sudan would leave 27,000 children suffering from severe acute malnutrition untreated, resulting in as many as 3,000 deaths. Here’s more on the human toll of the UK’s cuts.
4. The UK has indefinitely postponed its post-Brexit rival to the EU’s product quality mark after more than two years of lobbying by manufacturers who see it as red tape. The retreat means businesses selling electronic, industrial and consumer products into the British market will now be free to use either the EU’s “CE” or the UK’s “UKCA” marks, but two sectors will not covered by the move.
More UK policy: The government is set to back plans intended to halve the amount of time it takes to deliver the big electricity transmission projects needed to overhaul the country’s energy system.
5. Fitch Ratings has cut the US debt rating from triple A to double A plus two months after the country almost defaulted on its debt. The rating agency cited worsening fiscal conditions and an “erosion of governance” over the past two decades “that has manifested in repeated debt limit stand-offs and last-minute resolutions”. Here’s how investors and officials reacted to the downgrade.
The Big Read
The influence of Mexico’s military has grown dramatically under populist president Andrés Manuel López Obrador. To realise his vision of stamping out corruption and running state-owned facilities efficiently, the army and navy will manage more than a dozen civilian airports, the national customs agency, maritime ports and two new train lines. But critics say there has been no accountability or transparency.
We’re also reading . . .
Chart of the day
Turkish equities have posted blistering gains this summer as an economic policy overhaul and fears about a fresh flare-up in inflation draw local savers and foreign investors into the market.
Take a break from the news
The Apple TV+ series Hijack opens new vistas of wardrobe deconstruction while capturing the broad social and sartorial panorama of contemporary air travel. Subtle colour coding, the hero’s layered look and, mercifully, no sweatpants lend a sly glamour to the Idris Elba thriller.
Additional contributions by Benjamin Wilhelm and Gordon Smith
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