This week, the UK Government announced a new subsidy control system that will provide financial aid to UK businesses following Brexit.
Contrary to the rhetoric, under the EU’s State aid regime, the vast majority of “aid” granted did not need notification. During the height of the COVID-19 pandemic, for example, the Commission was quick to issue up to date State aid guidelines, ensuring certainty for businesses operating in unprecedented circumstances.
As specialist advisors in this area, our experience was that notification was only necessary in relation to subsidies granted in problematic or novel areas. The subsequent decision gave legal certainty and clarity to the recipients and was not regarded as ‘red tape’.
The Government needs to take great care in the replacement to the EU regime – the key priority for businesses will be legal certainty.
This new regime will potentially open the door to a level of litigation that we did not see in the EU regime. This may create a more uncertain environment for business looking for State support to address market failure before they risk their own capital. This is particularly the case with respect to new green technologies. Whether the UK’s new subsidy control regime will provide the necessary assurance to UK businesses remains to be seen.
As ever with Brexit, the devil will be in the detail of the new legislation. We look forward to reviewing the Subsidy Control Bill in further detail once it has been published.
