David Davis says state aid rules should apply in EU and UK after Brexit

Brexit secretary David Davis has called for state aid rules to continue to apply in both Britain and the European Union to ensure fair competition after Brexit. Speaking in Vienna, Mr Davis said the principle of "fair competition" should be at the heart of the future economic relationship between Britain and the EU.

"It cannot be right that a company situated in the European Union would be able to be heavily subsidised by the state but still have unfettered access to the United Kingdom market. And vice versa. The UK has long been a vocal proponent of restricting unfair subsidies to ensure competitive markets," he said.

State aid rules limit the support national governments within the EU can offer companies to protect them against competition. Mr Davis said that other rules designed to ensure more competition and consumer choice should also continue to apply.

“The United Kingdom will continue to be a leading advocate of open investment flows after we leave the European Union. But it cannot mean that an European Union company could merge with a United Kingdom company and significantly reduce consumer choice. In our interconnected, globalised world, where goods, services and investment flow across borders, there will still be a mutual benefit to the UK and European Union co-operating to protect our consumers, our taxpayers and our businesses by promoting fair competition,” he said.

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Key meeting

Mr Davis’s speech, the latest in a series by senior ministers under the title “The Road to Brexit”, comes ahead of an all-day meeting on Thursday of Theresa May’s Brexit war cabinet. With ministers divided over how far Britain should seek to align its economy with the EU after Brexit, Thursday’s meeting has been viewed as a crucial moment in agreeing a common position.

Mr Davis played down its significance, however, characterising it as part of a continuing process of shaping Britain’s approach to the next phase of Brexit talks with the EU.

“We have started back at Lancaster House with the grand outline of the plan which was the same as it is now in outline. That was fleshed out in more detail in Florence. There are two White Papers on it. There are 14 policy papers,” he said.

“And of course we will be talking about some of these specific issues on Thursday. The policy will get more and more and more closely refined and that is what will happen this Thursday and very successfully.”

Compromises

Former education secretary Nicky Morgan, a leading Conservative advocate of a soft Brexit, welcomed Mr Davis's speech as an admission that Brexit will involve making compromises. Writing in the Guardian, she said the Brexit secretary had exploded the myth nurtured by hard Brexiteers that leaving the EU would allow them to make a bonfire of regulations.

“UK businesses won’t be relieved of the mythical EU regulations and standards that parts of our media have gone on and on about for decades, because many of them are already global – and in fact, as the secretary of state said, these serve consumers, workers and, in some cases, our environment very well,” she said.

Signalling the latest shift in his party’s policy on Brexit, Labour leader Jeremy Corbyn said on Tuesday that Britain would “have to have a customs union” with the EU after it leaves, although he continued to rule out remaining in the single market.