Varadkar says US Inflation Reduction Act could impact investment in Ireland and Europe

Taoiseach Leo Varadkar: 'We should try to co-operate with the US on climate action rather than ending up in a subsidies race,' File Picture: Sasko Lazarov / RollingNews.ie

Taoiseach Leo Varadkar has said there is a risk the recent Inflation Reduction Act in the US could lure companies to America and impact investment in Ireland and Europe.

However, he warned against entering into a “subsidies race” with the US.

Speaking to reporters at the European Summit in Brussels, Mr Varadkar addressed concerns around competitiveness.

“Our view, and I expressed this very strongly last night, is that there must be more to competitiveness than subsidies and state aid.

“If you go too far on that what you end up is using loads of taxpayers’ money to give it to companies and countries end up cancelling each other out,” he said.

He said this is difficult for smaller countries like Ireland that do not have the same “financial firepower” as larger nations.

“That could leave our companies at a disadvantage,” he said.

He said the single market is “all about a level playing field”.

“We should try to co-operate with the US on climate action rather than ending up in a subsidies race,” he said.

Mr Varadkar said Friday’s meeting will have a “big focus” on inflation and price stability, as well as discussion on recent bank failures.

He also said he was “keen to get a view” from European Central Bank president Christine Lagarde as to when she thinks inflation will start falling significantly.