A new EU report, set to be unveiled this week, proposes the establishment of a joint fund to finance significant industrial initiatives, aimed at competing with the US's climate package IRA without causing imbalances within the internal market.

Authored by former Italian Prime Minister Enrico Letta on behalf of the European Council, the report suggests that the EU's response to the competitive challenges posed by global powers requires a more competitive industrial strategy.

This comes as individual EU member states have been extending temporary relaxations of state aid rules to match US support for new climate projects, with actions like Germany's over 900 million euro support to Northvolt highlighting the approach.

However, this has led to competitive distortions within the EU's internal market, prompting the report to recommend a balance between stricter national state aid application and expanded EU-level financial support.

Letta's report, which emphasizes the need for financing the green transition, expansion, and new security needs, will be presented to EU leaders at a special competitiveness summit later in the week.