No one should be surprised that the EU is showing “flexibility” in the negotiations with the UK on restricting state aid (Wolfgang Munchau, Opinion, June 8. “Britain and EU signal readiness to compromise”, June 6). The UK has consistently been one of the hawks seeking to toughen up the EU rules restricting state aid with a lot of success, and the UK Treasury has kept UK state aid as a percentage of gross domestic product in the bottom group of member states for many decades.
The latest figures on the European Commission’s scoreboard show that the EU average was to spend 0.76 per cent of GDP on state aid. Of the big member states, Germany was highest with 1.45 per cent (mainly on environmental subsidies); France spent 0.79 per cent; Spain 0.34 per cent; and Italy came in lowest at 0.31 per cent. The UK spent 0.34 per cent of GDP.
The UK Treasury is not going to change its institutional views on this issue even with a prime minister who thinks he is the interventionist love child of Michael Heseltine. Anyone who supposes the UK is potentially going to use industrial subsidies on a scale to disrupt the single market (or even, sadly, to pursue justifiable environmental and regional objectives) misunderstands the balance of Whitehall power. The only real difference is that in future the Treasury will have to come out overtly to say no, rather than blame Brussels.
Flexibility from Brussels on this issue is giving away nothing at all.
London EC1, UK