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Italy urges EU subsidy package in response to U.S. IRA scheme

FILE PHOTO: Italian Economy Minister Giorgetti at news conference in Rome

ROME (Reuters) - Italian Economy Minister Giancarlo Giorgetti on Monday called for a common European Union approach to support competitiveness and protect strategic production, in response to the massive subsidies in the United States' Inflation Reduction Act (IRA).

The EU fears that the $430 billion IRA scheme, with its generous tax breaks for domestic production of energy sector components, may lure away EU businesses and disadvantage European companies, from car manufacturers to makers of green technology.

"We are in favour of a European IRA plan with the objective of reducing inflation," Giorgetti said in a statement issued on the sidelines of a meeting with fellow euro zone finance ministers in Brussels.

European Commission President Ursula von der Leyen said on Sunday the EU would adapt its state aid rules to allow governments to help their industries counter the negative impact of the IRA bill.

Giorgetti said the EU should act in a united fashion rather than follow a country-by-country approach.

"We see measures that favour competitiveness and protect strategic production as positive, but at the same time we think any intervention must be taken at the European level, preserving the integrity of the single market," Giorgetti added.

(Reporting by Giuseppe Fonte; Editing by Gavin Jones and Sandra Maler)