Failure to seek state aid changes in Brexit planning ‘extremely worrying’

Concerns have been raised about the Government's failure to ask the European Union for a loosening of state aid rules to help businesses that would be damaged by a no-deal Brexit.

Contingency planning for a disorderly UK exit from the EU has designed support schemes under existing state aid rules. The State’s largest business representative group, Ibec, has called for flexibility on these rules to provide financial support to affected companies.

Department of Business, Enterprise and Innovation responses to parliamentary questions from Fianna Fáil business spokesman Billy Kelleher show that it has yet to ask the European Commission for state aid rules ceilings to be changed.

Mr Kelleher expressed concern about the Government’s “lack of urgency”in activating contingency plans to protect exposed export businesses from a hard Brexit.

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‘Colossal disturbance’

EU rules permit the Government to apply for changes to state aid ceilings if there was a “serious disturbance” in the economy. Mr Kelleher said Brexit represented “a colossal disturbance”.

"Ireland should immediately seek approval at EU level for current state aid rules to be adapted for a temporary period," he said.

“It is extremely worrying that the Government has failed to apply to the EU for a change in the rules.”

Taoiseach Leo Varadkar confirmed last week that he may seek EU permission to support companies beyond state aid rules in the event of a no-deal Brexit.

A Department of Business spokesman said senior officials were in constant dialogue with commission officials about the scope for possible future measures if needed.

He said it was an issue that Minister for Business Heather Humphreys would raise with EU competition commissioner Margrethe Vestager when she visits Dublin later this month.

Fergal O’Brien, director of policy and public affairs, said certain businesses would need to be put “on life support” in a no-deal scenario to cope with tariffs or an extreme currency shock.

He urged the Government to prepare with EU officials any changes to state aid rules as early as possible to be ready to provide financial supports to businesses if there was a hard Brexit.

“If there is a time lag of six, nine or 12 months after a no-deal Brexit, then the jobs will be gone and it may not be possible to recover them,” he said.