Opeida Zvenyslava. Brexit: Implications for state aid control in the UK
EU state aid law prohibits Member States from granting state aid – i.e. subsidies – in a manner that distorts competition in the European internal market (think of the recent controversies about Ireland’s relationship with Apple), although they can seek authorisation from the European Commission (which, if forthcoming, will have conditions). The rationale is to prevent companies from gaining an unfair competitive advantage through government support.
Brexit could have a significant impact on state aid law in the UK. In the event of a “hard Brexit”, the UK would only be bound by WTO rules on subsidies. The UK government might want to take advantage of the reduced constraints on granting subsidies, perhaps if there were a sustained decline in foreign direct investment. If, on the other hand, the eventual outcome of Brexit is a trade agreement between the EU and the UK, rules regarding state aid might change very little. The European Council made it clear that any future trade agreement with the UK “must ensure a level playing field, notably in terms of competition and state aid”.
