UK Sets Out Plans For New Approach To Subsidy Control

The UK will follow WTO subsidy rules after the end of the transition period, Business Secretary Alok Sharma confirmed Wednesday, September 9, in a press release.

The government also confirmed that the UK will adhere to any international obligations on subsidies agreed under future free trade agreements.

The WTO rules are an internationally recognized common standard covering financial assistance granted by governments and public authorities to companies. Unlike EU member states, most advanced economies do not have substantive rules regulating subsidies beyond those set by the WTO.

The EU State aid rules are a unique set of comprehensive legislative subsidy controls in which it is the responsibility of the European Commission to police against subsidies distorting competition between EU member States within the single market. From January 1, the UK will no longer be bound by those requirements and will have the opportunity to design its own subsidy control regime in a way that works for the UK economy.

The government confirmed it does not intend to return to the 1970s approach of trying to run the economy or bailing out unsustainable companies, maintaining that no government of a modern, competitive market economy should stand in the way or prevent adjustment to underlying market conditions.