EU does not limit UK state aid for industry - IPPR

Leaving the European Union would not grant the UK more freedom to grant state aid to industry as the country is currently spending as much as three times less than the bloc's other member states, the IPPR said.

The briefing document from the IPPR finds that EU state rules do not prevent an active industrial policy as it allows its member states to grant aid to a wide range of what it considers to be priorities, such as regional or environmental development and support for small businesses.

The only restriction the EU applies to its member states or the states with whom it has a trade relationship (as the UK would become after Brexit) is to not waste public money spending it on exacerbating pan-European inequalities.

According to the IPPR, the UK has spent far less on state aid than most other EU countries: in 2016 state aid expenditure in the UK was €8.6bn, versus €14.5bn in France and €41.1bn for Germany.

The report also said that EU rules do not prevent nationalisations, as some Brexiters have claimed. Nationalisation is a common feature in every EU country. While the UK has 16 state-owned enterprises, France has 51, Germany has 71 and Poland has 126. The only rules that apply to these companies are the EU’s competition regulations.

IPPR director, Tom Kibasi, said: “If the UK government decided to match Denmark, it could invest £250bn over a decade in a more active industrial policy. That would give it huge scope to support key areas of the economy, whether we remain in the EU or leave it.”