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Government subsidies for industry - new EU rules to boost R&D


The EU is to make it easier for governments to help companies as part of an overhaul of rules designed to boost growth and encourage research and innovation.

One of the main aims of the reforms is to focus resources on investigating the cases of government support ('state aid' as it is known in Brussels) that have the most potential to harm competitors.

Firms will in future be able to benefit from different kinds of aid for a broader range of activities and at higher amounts, without their plans being subject to prior scrutiny by the EU authorities.

Under the new liberalised rules it is estimated that countries will notify between 10% and 25% of state aid cases to the Commission - rather than the current 40%. This reduction will be due to a reduction in the number of criteria that trigger an official notification.

About three-quarters of today's government support and some two-thirds of subsidies will now be exempt from Commission notification, reducing the administrative burden on companies, national civil servants and the EU itself.

In return, countries will have to publish online details of any financial support over €500 000 given to companies by public bodies. This will give other countries, companies and the general public the opportunity to scrutinise state support for the economy throughout the EU.

Good for the economy

The new rules will give countries the flexibility to invest in, for example, innovation clusters, broadband infrastructure or cultural conservation when the aid is clearly aimed at creating jobs or boosting competitiveness.

It is hoped that the changes will help boost Europe's spending on R&D and innovation by 50% by 2020. The EU currently invests around 2% of its economy in this area. Increasing that to 3% would bring the EU into line with the US and Japan. This in turn should help companies bring new products to market and create jobs.

The reforms, which will apply from 1 July, are part of a wider package of measures designed to speed up the decision-making process in competition cases. Over the last couple of years specific rules for a wide variety of sectors - including regional development, risk finance and airports - have already been introduced.