Thread by @faisalislam

Deploying state aid the big sticking point for PM with VDL?

in Q&A today Chancellor publicly sceptical actually using it

Re “state aid, I’m slightly cautious about Govt ability to sit here & pick precise winners..market better at figuring out than I am sitting in this office”

Could prioritisation of theoretical wider ability to subsidise bust industry, which Sunak inherently sceptical about even if we were flush with cash, but right now not, (esp when we didn’t use powers allowable even under EU laws) lead to tariffs on actually profitable industries?

Also worth recalling that the specific question on the Chancellor’s q&a to which he gave sceptical answer was about what proportion of state aid would be earmarked for the tech sector - exactly what was percolated out as the big plan last month...

So the negotiation win the Govt is going for in state aid, is full sovereignty to use powers they don’t generally show an appetite to use, for which there is not really the funds to use, and for which British govts have not tended to use to full extent EU rules allowed...

Going to be an intriguing Cabinet discussion on this one, if it does remain the fundamental sticking point between WTO tariffs and zero tariffs with EU. Obviously not just about economics but an interesting dilemma...

Also - if it is about pumping state money into the tech sector - that tends to be best done via the military budget... also German kurzarbeit wage subsidy scheme is a helpful backdoor subsidy to boost manf exporters etc. Plenty of ways to achieve state support through backdoor...