What is happening and why?
On 30 June, the UK Government announced its draft Subsidy Control Bill (the “Bill”) which sets out the framework for how the UK will subsidise businesses post-Brexit. The UK government has hailed the Bill as a major departure from the EU state aid rules. In practice, the Bill provides a framework for implementing the UK’s international commitments on subsidy control, as set out in the Trade and Cooperation Agreement agreed with the European Union, and in other existing international trade obligations and World Trade Organisation (“WTO”) rules.
The Bill introduces a decentralised subsidy control framework outlining principles with which public authorities must comply when awarding subsidies. One of the key aims of the Bill is to ensure that the subsidy control regime is not used to encourage a “race to the bottom” between different regions of the UK.
While there are some important differences as compared to the EU state aid regime, the fundamental principles are comparable and any subsidies given under the Northern Ireland Protocol will continue to be governed by EU rules.