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• Energy prices and subsidies – Is Europe losing?

  20-48

  Sarolta Somosi

  Éva Voszka

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  236

  In the early 2020s, several large US public investment subsidy programmes, followed by a surge in energy prices as a consequence of the Russia-Ukraine war, have raised concerns in Europe. This article examines these two recent causes of the weakening of the EU's competitiveness, focusing on the impact of the US Inflation Reduction Act (IRA) on investment diversion. Based on an analysis of the initial consequences of the IRA and some patterns of corporate behaviour, it concludes that, in an environment of political uncertainty, the relocation of firms and investment to the US is not yet a mass phenomenon, but that the new situation may lead Europe to develop new coherent strategies.

  Journal of Economic Literature (JEL) codes: F21, F68, L50, L62, O14, O25