The kings of state aid – Germany and France together account for almost 80% of Europe’s €672 billion approved programmes in 2022, despite representing just over 42% of the bloc’s GDP. A significant discrepancy that leaves 25 of the EU’s 27 countries behind. Italy comes third, receiving around 8% of the subsidies, even though its industrial production is higher than that of France (16% compared to 11%). So much for the free market!

When it comes to subsidies, Germany and France are Europe's kings, leaving the bloc's other 25 countries standing by idly as mere spectators of their joint reign.

The latest numbers released by the European Commission confirmed what many had for months feared: since Brussels tweaked the bloc's state aid rules in March 2022 to cope with the economic fallout from Russia's war in Ukraine, Berlin and Paris together account for 77% of the €672 billion approved programmes.

The changes allowed for faster and easier disbursements of subsidised loans, subsidised grants and subsidised state guarantees for companies trying to escape bankruptcy under the weight of skyrocketing energy bills, supply chain disruptions and the Kremlin's counter-sanctions.

Germany and France, two industrial heavyweights, made good use of the amendment: Berlin had over €356 billion in economic support green-lighted by the European Commission – a stunning 53% of all extraordinary aid –  while Paris got 24%, which roughly translated into €161 billion.

Italy came a distant third, securing approval for €51 billion (7.65% of the total), and Denmark stood in fourth place, with €24 billion. The rest of the bloc collectively accounts for less than 12% of the remaining state aid approved by the EU Commission, or about €78 billion.

"These figures are subject to daily change and the aid approved does not necessarily correspond to the aid that member states have disbursed," a European Commission spokesperson told Euronews, noting the €672 billion figure was a “best estimate” based on 200 decisions taken.

We need to start a real discussion

Although Berlin and Paris have historically enjoyed a political and economic dominant role inside the European Union, the striking numbers have given other capitals pause at a critical time when subsidies have come back to the very top of the bloc's agenda.

The debate was sparked by Washington's Inflation Reduction Act (IRA), a massive programme of tax credits and direct rebates promoted by President Joe Biden that unabashedly favours American-made green technology.

Over the next ten years, the IRA will dole out up to $369 billion for companies and consumers who wish to produce, invest and buy things like solar panels, wind turbines, heat pumps, electric vehicles, batteries and electrolysers – but only if these products are predominantly manufactured in North America.

The EU considers this provision as discriminatory, unfair and illegal, and fears the sudden injection of money might trigger a devastating industrial exodus across the Atlantic Ocean, leaving hundreds of factories deserted and thousands of workers unemployed.

The question has acquired a borderline existential dimension that adds to a series of epoch-defining challenges the bloc has battled within a very condensed period of time.

How exactly should Europe respond this time around?

So far, there is no clear consensus. Germany and France have expectedly joined forces to call for a new subsidy push, and even a "Made in Europe" strategy, while others, including the Netherlands, Ireland, Poland, the Czech Republic and the Nordics, have asked for caution before further relaxing state aid rules.

"We need to start a real discussion on how to improve productivity, how to enhance competitiveness and how to attract more companies based on our own capabilities and not based on long-term state aid rules," Swedish Prime Minister Ulf Kristersson, whose country holds the EU Council's rotating presidency, has said.