Blog: UK has most to gain from Brexit state aid compromise – Telegraph.co.uk

It is also unclear what dispute settlement measures – now there is an indication there might be some – would look like, or how they would be enforced.

Mr Pope argues that the UK having its own system of subsidy control would be better than the EU’s, which is administratively cumbersome. “A subsidy doesn’t have to be big before it has to jump through hoops to qualify,” he says. “It doesn’t normally mean a subsidy is prevented but you have to get a lawyer in to help with the design.”

It would also be better than relying on the World Trade Organization, whose remedy for subsidy violations is tariffs, he says: “If you have to impose a tariff on another country, that harms you too because your consumers have to pay higher prices. The idea of the aid being repaid (as under the EU system) reverses the subsidy so it’s a more complete remedy.”

In a mark of the divisions in Whitehall, the Department for Business, Energy and Industrial Strategy (BEIS) still claims “the UK will follow World Trade Organization subsidy rules and other international commitments after the end of the transition period”, the default position.

But Ms Rickard adds that without its own state aid rules, the UK risks a subsidy race between the devolved nations, which could make Scottish independence more attractive. “You end up with a situation like you have in the US where states give huge subsidies for businesses to move from Kansas to Nebraska and actually it creates very few jobs,” she says.

The IfG suggests that the Competition and Markets Authority should mimic the EU system when Britain leaves the single market and customs union at the end of the year, until a new system is designed.

The think-tank argues that having its own domestic subsidy control regime would also help the UK calm the furore over the Internal Market Bill by making it possible to override the application of Article 10 of the Northern Ireland Protocol that gives the EU Commission jurisdiction over subsidies that affect the trade in goods between Northern Ireland and the continent.

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