Tel. +44 (0)20 7287 4414
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The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

Bruges Group Blog

Spearheading the intellectual battle against the EU. And for new thinking in international affairs.

The EU’s unlevel playing field; why Britain must re-secure the right to support it’s industries

The EU’s unlevel playing field; why Britain must re-secure the right to support it’s industries David Frost and Michel Barnier

The Covid-19 crisis has brought to light a fundamental flaw within the European Union – there is one rule for Germany's state aid regime and another for the UK's. As such there is a fundamental need in negotiations this week to redress this flaw.

Data analysed from European Commission State Aid cases

Data shows that Germany made up for nearly 10% of all EU-authorised State Aid requests from April till September this year, whilst the UK only accounted for 2.5%, a fourfold difference. This illustrates in the simplest way how we cannot allow the UK to be tied to EU State Aid law at the end of the transition period (TP), particularly in these very challenging economic times. It would be a death sentence for our industries to be in competition with hugely subsidised German businesses as part of the so called 'level playing field' put forward by the EU.

Bowing down to these demands, the UK would continue to require permission from the Commission before enacting any type of State Aid to support businesses and jobs; with the possibility of appearing before the European Court of Justice (ECJ) if we don't comply.

 Now, with this power to block investment post-TP, what's to say that the EU doesn't block the UK government from attempting to entice foreign investment since it could affect their precious trade surplus. Firms such as Hitachi, which recently abandoned plans to build a nuclear power station in Anglesey, would not be able to receive state support to attract them back. This is a project which would create thousands of jobs and ensure that we meet our net-zero carbon target by 2050. The EU may conclude that they should receive the investment or that we are challenging their energy exports to us and thus strike the support down. Not only would this affect our environmental obligations but also our ambition to become 'Global Britain', as incentives for foreign investment are blocked.

The failed efforts to assist Tata Steel in 2016, when the government at the time was severely restrained in saving the Port Talbot site due to EU State Aid regulations, is a perfect synonym for the straight jacket of these laws. It was emblematic of government failure to assist jobs in not just London but the little industrial base which we have left. This government should understand this by not betraying the voters in seats of traditional industrial towns that they gained in the last election.

Indeed, investment would be blocked and in more normal times this would be disappointing. But in these times, it would be disastrous. However, it's not just investment which would be curtailed; the government had to notify the Commission about its recent need to distribute free PPE to health and social care services. The Commission allowed it of course but how can we appropriately respond to this crisis if we are at risk of being blocked along the way? This is not the time when we should allow ourselves to fight Covid-19 with our hands tied behind our back.

Meanwhile, against all of the rhetoric from the government about 'taking back control', if they buckle under the level playing field demands, then the ECJ would still have the power to arbitrate over parliament through the intended dispute resolution mechanism. Notwithstanding the arguments over sovereignty and the right to self-determination against the ECJ, the court would be even less likely to approve any action which provides UK businesses with an advantage over the trading bloc. If any of the past 4 years have shown one thing, it is that the EU does not want Britain to succeed post Brexit.

This disliking of a successful Britain has translated into unfaithful and unreasonable engagement in negotiations. Michael Barnier has repeatedly stated that there is a red line and that is rules over State Aid. However, how can they want us to comply with EU regulations when the playing field is already unlevel; the disparities within the Single Market over State Aid and the Euro blatantly favour Germany. Not to mention the matter that compliance with EU State Aid law has never been a pre-requisite of any past trade deals. Yet we are still slated to have been unfaithful and unreasonable in these negotiations.

Ahead of this round of negotiations this week there have been rumours that the EU have softened their stance; Britain will only have to adhere to a 'baseline of principles'. Whilst this could be a step in the right direction, the questions about who will head the dispute resolution and how far these 'principles' go remain. The UK government cannot allow itself to be deceived and to mislead the British people over any attempt by the EU to continue their power and control over our economy. It will only lead to a state of perpetual subjugation to Brussels.

This government has long stated its intentions over the two policy areas, fishing rights and state aid, where they will not give an inch over to EU demands. This is the time to uphold these promises not just for the sake of the electorate, the economy and our society, but to those whose livelihoods rely on the right to oversee these laws returning to our sovereign control.

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