image credit: Reuters New legislation has been announced by the government, allowing central and municipal governments more flexibility in supporting business. The EU-wide state aid restrictions will be replaced by the Subsidy Control Bill. Member states are required to seek authorisation for government aid to businesses under these guidelines. Ministers in the government say that the new system will allow enterprises to receive quick and targeted help without experiencing bureaucratic delays. The European Commission will scrutinize the bill’s wording, since it has long expressed worry that the UK may distort competition by failing to ensuring that UK and EU forms function on a “equal playing field.” What does it mean to have a level playing field? What are the rules in the EU regarding state aid? “Today, we’re leveraging the opportunity of being an independent trading nation to back new and developing British businesses, create more jobs, and make the UK the finest possible environment to start and grow a business,” said Business Secretary Kwasi Kwarteng. We want to exploit our newfound freedoms as an independent, sovereign country to allow public bodies across the UK to provide financial assistance without being stymied by bureaucratic red tape.” Officials from the government told the BBC that it was “the most crucial piece of post-Brexit legislation yet.” Competition attorneys agree that it is critical, but they also warn that it may be contentious. The EU will be looking to see if UK government support violates vows to preserve a fair playing field in the Brexit trade deal, which is likely the EU’s top concern in the Brexit negotiations. The UK government says it will decide whether to fund cases based on whether they provide excellent value for money and help the country meet goals like “levelling up” and decarbonizing the economy. It is not a “blank check.” The United Kingdom will continue to be bound by WTO standards, and any choices made will be susceptible to legal challenge. There will also be controls in place to prevent devolved government departments and local authorities from engaging in support bidding wars that could result in firms and jobs being relocated from one part of the UK to another. Within the existing Competition and Markets Authority, a new unit will be established to provide advice on the operation of the new regime, but the CMA will have no jurisdiction to ban the giving of support. PA copyright image Media The administration was quick to point out that this would not “mark a return to the disastrous 1970s strategy of the government picking winners or bailing out unsustainable businesses.” Historically, the UK has provided substantially less government help to private businesses than its EU peers France and Germany, and officials have stated that they do not expect the aggregate quantity of state aid to increase significantly. They claim that this new bill will allow the government to be more flexible, targeted, and prompt in its interventions. This new bill also serves as a reminder, if one was needed, that this is a Conservative government willing to take a far more assertive role in the day-to-day operations of industry and the economy. When asked what the UK government can do today that it couldn’t before, officials will point to this new system as a crucial post-Brexit freedom. It also has the potential to be a major source of future trade disputes. The economy of the United Kingdom Post-Brexit trade agreement between the EU and the UK Read More about Brexit
