Article by me in @prospect_uk on State aid rules and Covid-19. prospectmagazine.co.uk/economics-and-…
Key points. 1. These rules will continue to bind the UK’s economic response to Covid-19 even after the end of transition (because of Art 10 of the NI Protocol negotiated by the Johnson Govt).
2. The State aid rules have the flexibility to deal with this emergency and have an important role to play.
3. The Commission has acted fast to clear aid packages and its approach has worked well to date. There are though some points that need looking at.
4. As the crisis develops, and it becomes clearer that there won’t be a rapid return to normal, the need for different types of aid (large equity stakes/grants) will grow. These aren’t dealt with in the current framework. But a new framework will be needed and soon.
But as @Gilesyb points out in his excellent thread (and even better paper) the challenge of devising a framework for recovery that respects “dynamism” (eg not preserving zombie businesses that simply won’t survive in the new post crisis world) is very hard indeed.
