What is state aid?

An advantage given by national authorities to economic actors that affects trade between member states can be considered state aid under EU rules. Some kinds of intervention are excluded, such as support for poorer regions and small businesses, and support only counts as state aid if it comes to more than €200,000 (£180,000) over three years. Otherwise, state support that has the potential to distort market competition must be notified to the European Commission for approval.

State aid rules ensure a level playing field for EU economies, allowing them to compete fairly without governments unduly supporting particular sectors or regions in the national economy. Without them, bigger and richer member states, which have more resources, could simply pump resources into their economies and run competitors in smaller member states out of business.

The European Commission temporarily introduced new rules to allow governments to intervene more widely in their economies in response to the Covid crisis. These challenged many of the existing state aid principles, such as not supporting particular sectors, but were justified under existing treaty provisions to allow greater economic intervention in exceptional circumstances.

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