UK unleashes post-Brexit subsidies to businessEuropost
UK announced plans to amend legislation to spur state financial support to troubled companies and sectors, BBC reported. Britain enjoys its independence to direct subsidies without having to wait for approval by Brussels. The new laws set to replace EU rules will grant the government and councils greater freedom to back businesses.
The Subsidy Control Bill will replace EU rules on state support which normally require Member States to seek approval for government assistance to firms.
The UK government noted that was the most important part of the post-Brexit legislation.
The Business Secretary Kwasi Kwarteng noted the cabinet was using its "newfound freedoms" following Brexit to "empower public authorities across the UK to deliver financial support - without facing burdensome red tape".
"We're seizing the opportunities of being an independent trading nation to back new and emerging British industries, create more jobs and make the UK the best possible place to start and grow a business," he added.
The government has said the new law would allow to be more focused, targeted and timely in its interventions with businesses.
The government elaborated that the initiative would not "signal a return to the failed 1970s approach of government picking winners or bailing out unsustainable companies."
The UK has historically extended far less state support to private business than its EU counterparts in France and Germany and officials have historically said they do not expect the overall level of state aid to increase significantly. The government said it will judge cases for support on whether they deliver good value for money and help hit targets such as "levelling up" and decarbonising the economy.
There will also be safeguards to make sure that government departments and local authorities do not engage in bidding wars of support that could cause a relocation of businesses and jobs from one part of the UK to another. The chief UK policy director for the Confederation of British Industry Matthew Fell said a new "swift" system could be a "useful tool to meet the government's ambitions for the economy". He said EU state aid rules were "too often proved prohibitive and bureaucratic". "Government support is a last resort for businesses, but at the right time and place, it can make an invaluable contribution to key players and industries," he added.
A new unit to issue advice on operating the new regime will be set up within the existing Competition and Markets Authority - but the CMA will have no powers to prohibit the granting of support. The UK will still be subject to World Trade Organisation rules and any decisions made can be contested in law courts.