The government has “triumphantly announced” that its new state-aid bil will allow it to “lavish subsidies on businesses” post-Brexit, says Simon Nixon.
Quite why “self-styled Thatcherites” are so thrilled about that is a mystery. Still, what can we expect of the new regime? The idea is to set up a more “nimble, flexible” system without EU red tape that avoids trying to pick winners or bail out failed firms as we did in the 1970s. This set-up will certainly be faster than when we were in the EU, which insists on all subsidies being pre-approved by the European Commission, a process that takes six months. One potential problem, however, is a lack of legal certainty. The bill lists “seven woolly principles for legitimate state aid” that the Competition Appeal tribunal must interpret if a conflict arises. On the political front, avoiding 1970s-style bailouts and picking winners is easier said than done. After the pandemic all governments are under pressure to prop up industries and riding to their rescue may be hard “to resist without the shield of EU rules to hide behind”. The bill could also stoke regional tension if one part of the UK appears to be luring jobs from another – not least because Northern Ireland will remain subject to EU rules.
Simon Nixon
The Times
moneyweek
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