State aid is the wrong Brexit hill to die on

The writer is a senior fellow at Harvard University and advises the UK Department of Health and Social Care

It was always likely that the UK would attempt to rewrite its Brexit deal. But watching Boris Johnson’s government jeopardise its chances for a trade agreement with the EU partly over industrial subsidies is especially bewildering. After all, British voters twice rejected Labour’s 1970s-style prospectus at the ballot box.

The last time the UK picked winners and bailed out losers, we got the Austin Allegro, dubbed “the worst car ever made”. Dumpy, with a square steering wheel and prone to breaking down, it was overtaken by the Ford Escort — and the UK car industry crashed with it. 

Burnt by this failure of 1970s industrial policy, the Brits became the proud architects of the EU rules limiting state aid. France and Germany have consistently outspent the UK on helping domestic companies. This should have made it relatively easy for the two sides to agree a way forward after Brexit. Instead, trust has evaporated.

The EU has been too rigid, fearing that Mr Johnson wants to push huge amounts of cash into the north of England. The UK has been sulky and secretive, refusing to propose any alternative subsidy control regime beyond that of the World Trade Organization while…

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