Scholz to seek reforms to boost EU competitiveness at Brussels summit

BERLIN (Reuters) – German Chancellor Olaf Scholz said on Thursday he will seek to boost European competitiveness through reforms at an EU summit in Brussels next week, including making state aid more flexible and completing capital markets and banking unions.

In a speech to the German Bundestag, Scholz urged the European Union to pull together to face a raft of challenges, including in response to a massive U.S. subsidy programme for clean technologies known as the Inflation Reduction Act.

European solidarity has repeatedly been tested in recent years as the bloc seeks to keep pace with the U.S. and China economically and support Ukraine to repel Russias invasion.

As markets were roiled by wobbles at Credit Suisse, Scholz also urged the bloc to complete a unified banking market that aims to create a single system for regulating lenders and ensure taxpayers are no longer on the hook for rescuing banks.

“Our competitiveness is the prerequisite for economic success,” Scholz said. “And our competitiveness is the prerequisite for Europes future as a geopolitical actor.”

As Scholz spoke, the German Association of the Automotive Industry (VDA) issued a statement warning that “in the international race for raw materials and energy, Germany and Europe are increasingly left behind.”

The EU is unveiling a Critical Raw Materials Act aimed at keeping pace with the United States and China in access to raw materials. Scholz said raw material security will also top the agenda when he visits Japan for talks this week.

The Brussels summit will also discuss proposals to reform the EUs fiscal rules that were set up to limit government borrowing to safeguard the value of the euro. Such proposals have previously faced opposition from Berlin and Scholz called them a “difficult topic”.

Turning to the war in Ukraine, Scholz said that EU member states will agree further measures to improve the continued supply of arms and ammunition to Kyiv, without going into specifics.

He said Germany was ready to open up its own military procurement projects to other EU countries in order to speed up the production of ammunition.

(Reporting by Friederike Heine and Matthias Williams, Editing by Rachel More)