Jeremy Corbyn says EU state aid rules make no sense

Four reasons Jeremy Corbyn is dead wrong about EU state aid

The most depressing aspect of Corbyn’s recent interview in the Guardian was his claim that the European Union’s state aid rules “need to be looked at again, because quite clearly, if you want to regenerate an economy … then I don’t want to be told by somebody else that we can’t use state aid in order to be able to develop industry in this country”.

That statement shows no sign that he has followed any of the debates about whether the state aid rules are, as Lexiters claim, a reason why Labour should oppose membership of the single market.

There are several reasons why the Lexit claim fails to stack up.

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In his speech earlier this year, Jeremy Corbyn cited state aid control as a reason for not wanting to stay in the single market after Brexit.

That argument faces three main problems.

The first is that the EU has made it clear that state aid control will be a red line for any free trade agreement with the UK after Brexit. Brussels sees this as part of a “level playing field“. Its fear here is legitimate.

The UK is economically very big and very close to the continent. If it can subsidise its industries to its heart’s content, it could flood the European market with cheap goods, which producers in France, Germany and elsewhere would be unable to compete with.

That is why state aid rules are written into the EU’s deep and comprehensive fair trade agreement with Ukraine and its agreement with Turkey – also a (limited) customs union.

So, unless Labour is advocating no-deal – which it obviously is not – the state aid regime is just something it is going to have to live with.

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