How state aid became a Brexit deal-breaker

Tories used to think controls on subsidies were the best thing about Brussels. Now they want to open the spending taps

For years only left-wingers like Jeremy Corbyn, the former Labour leader, and Bob Crow, a trade-union honcho, were bothered by Europe’s state-aid regime. For Conservative Eurosceptics, it was the best thing about Brussels. Rules prohibiting distortive subsidies to businesses were cast in the European Union’s founding treaty, but it was Margaret Thatcher who gave them teeth. For her they were a means of rolling back the state at home and abroad. She made common cause with Jacques Delors, the architect of the single market. Europe’s ailing economies could only integrate and become competitive, the logic ran, if their governments stopped doping companies on public money.

Control over state aid has since become one of Brussels’ strongest tools, granting the European Commission power to overrule finance ministries and claw back huge payments. Yet Conservative politicians mostly ignored it after the Brexit referendum of 2016. Britain doles out little aid compared with other European countries, and has navigated the rules nimbly, rarely getting hit for infringements. Whereas they despised her plans for a close relationship with the single market and customs union, Tory mps did not mind Theresa May’s proposal to keep Britain in lock-step with Europe’s state-aid regime, and to uphold the rules even if it left without a deal.

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