Ireland ranks last in EU for pandemic state aid to companies

Uneven amounts of state aid raise concerns over distortion of competition within bloc

Ireland gave out €0.93 billion in state aid in 2020,  which accounted for 0.26 per cent of national GDP, the lowest proportion in the EU. Photograph: iStock

Ireland gave out €0.93 billion in state aid in 2020, which accounted for 0.26 per cent of national GDP, the lowest proportion in the EU. Photograph: iStock

 

Ireland ranked last in the European Union for the amount of state aid it doled out to companies in 2020 due to the Covid-19 pandemic in proportion to the size of its economy, according to figures collected by the European Commission.

The EU relaxed its usual state aid restrictions to allow governments to take emergency measures to shore up businesses during the pandemic, and some €542 billion was doled out across the bloc between March and December 2020, according to a commission count seen by The Irish Times.

Over a quarter was given out by France (€155.36 billion), followed by Italy (€107.9 billion), Germany (€104.25 billion) and Spain (€90.8 billion) – the latter accounting for 7.3 per cent of Spain’s gross domestic product, the largest chunk compared to the size of its economy.

In contrast, Ireland gave out €0.93 billion in state aid during the period, which accounted for 0.26 per cent of national GDP, the lowest proportion in the bloc.

The figures do not include general economic support measures such as tax reductions or the Covid-19 Pandemic Unemployment Payment. 

Grants

Ireland was among the countries which “made more extensive use of grants and other types of non-repayable measures”, European Commission vice-president Margrethe Vestager wrote in a recent letter to MEPs.

The state aid gap could widen further as the commission has given the green light for state aid worth an estimated €3.12 trillion across the 27 member states, more than half of it in Germany alone, reflecting the country’s deep pockets.

The uneven support offered across the EU has raised concerns it could distort competition between companies located in different member states, something that the bloc’s currently suspended level playing field rules were designed to prevent.

“All the aid approved was necessary and proportionate. Still, given the large disparities between member states, it understandably raised worries of un-levelling the playing field and an asymmetrical recovery,” Ms Vestager wrote.

Bailouts

Several member states have given large bailouts to airlines. Ryanair, which recently lost a legal case arguing that state aid given to its rivals distorts competition, estimates that EU airlines have received €30 billion in bailouts since the start of the pandemic, including €11 billion to Lufthansa, €10.6 billion to Air France-KLM, €3.5 billion to Alitalia, and €1.3 billion to SAS.

Ryanair CEO Michael O’Leary last year accused German rival Lufthansa of “hoovering up state aid like the drunken uncle at the end of a wedding”.

Taken together, liquidity and fiscal measures taken by member states have cushioned economic contraction in 2020 by 4.5 per cent across the bloc, according to estimates by the commission. Ireland’s was the only economy in the EU to grow in 2020, as GDP was boosted by the presence of multinationals.

The Department of Finance had not responded to a request for comment by time of publication.

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