State aid is on the agenda: deal or no deal

Contrary to the thinking of the Labour Party EU law does not prevent nationalisation.There are two filters, the private market investor test and rules relating to the financing of public services, which facilitate state financing of sensitive sectors. Moreover the EU has created several Guidelines to allow State aid to be granted swiftly and without negotiation with the Commission. Brexit will not avoid the application of a State aid discipline. It is on the agenda as part of the EU negotiating brief for any future trade agreement with the UK. The EU is likely to apply Antidumping and Countervailing Duty duties against any trading partner granting State aid against its rules. Thus, the only way to be exempted is to sign a Free Trade Agreement that embodies EU state aid rules. In the event of a ‘no deal’, the fall- back position of the World Trade Organization will also require a system of effective control of State subsidies. All these requirements will require a transparent domestic State aid monitoring and enforcement body, as well as an ex post review of the effectiveness of measures taken. In addition to the political discussion of when, and how, State aid should be used any discussion needs to take on board the legal vacuum that will emerge if, and when, the UK leaves the EU.