B russels will use the British government bailout of Flybe to extract trade concessions from the UK, as the European Commission looks to tie Britain into EU rules long after Brexit. London insisted that the bailout of the airline is not state aid after rival IAG, the owner of British Airways, made a formal complaint to the EU executive on Wednesday. Some EU member states, such as France, are keen to push for dynamic alignment on the environment as well. It is expected to accept non-regression clauses for other standards, which are more usual in trade agreements and set minimum levels that cannot be undercut.
A ny dynamic alignment in the future relationship is anathema to the current British government , which is far more comfortable with the idea of diverging from EU rules than Theresa May’s government. Mrs May offered the EU dynamic alignment on state aid. Any discussions over state aid with the EU, he claims, will be between “sovereign equals”. The UK spends just 0.38pc of its GDP on state aid, while Germany spends 1.31pc and France 0.78pc.
But Brussels’s trust in Britain and Mr Johnson is low. The EU has noted his talk of increased government support, radical policies and the surge in support for the Tories in traditionally left wing areas in the general election. I t is also anxious about Britain’s emergence as a direct economic competitor to the bloc after Brexit and will be prepared to use state aid as the thin end of a wedge to win UK concessions. Brussels’s fears were stoked by Brexiteers’ hopes of transforming Britain into a low tax, low regulation, ultra-competitive “Singapore on Thames”.
The battlelines are drawn before formal negotiations begin after Jan 31. The commission, the birthplace of all EU regulation and the bloc’s powerful competition enforcer, will resist any British efforts to break too far from its regulatory tractor beam.
Click here to read the full article