The European Union (EU) is said to be preparing a comprehensive plan to respond to the US's Inflation Reduction Act and loosen the continent's dependence on Chinese technology, the Financial Times has reported. 

According to the leaked document, the European Commission would be planning to extend some of the simplified state aid rules that already apply to some renewable technologies, in order to include renewable hydrogen and biofuel storage.

In addition, EU member states will be able to offer help to EU companies that are being offered equivalent financial aid from foreign governments with measures such as tax benefits. 

Some of the €800bn (£707bn) included in the NextGenerationEU Covid-19 recovery fund could also be redirected towards tax credits, according to the draft.

This move has been considered a direct response to the fear that many EU-based companies would relocate to the US, in order to obtain access to the Biden administration's...