Government criticised for failing to seek EU state aid exemption

Fianna Fáil has hit out at the Government for failing to seek an exemption from EU state aid rules to provide financial supports to Irish firms adversely affected by Brexit.

The party's spokesman on jobs, enterprise and innovation Niall Collins claimed that since the Brexit referendum in the UK Irish ministers have failed to make the case for revising the rules at European level.

Citing a series of replies from Tánaiste Frances Fitzgerald to parliamentary questions, Mr Collins said the matter had not been raised at successive competitiveness council ministers' meetings or with the EU's competition directorate or the Commission's advisory committee on state aid.

“I find this alarming and systematic of the Government’s lacklustre approach to Brexit as it is already having a negative impact,” Mr Collins said.

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“ Last year, the weakening of sterling resulted in the loss of value in Irish food and drinks exports of over half a billion euro.”

“Employers’ group Ibec has estimated that this equates to 5,700 job losses. We need to urgently operationalise contingency tools,” he said.

Typically EU governments can only intervene in cases of clear market failure.

However, there are provisions within the EU rules for the use of state aid to remedy a “serious disturbance” to the economy of a member state.

Brexit and the related slide in sterling fit the definition of a “serious disturbance”, Mr Collins said.

The current EU state aid rules apply a restrictive cap of €200,000 over a three- year period for granting financial aid to enterprises. However, during the financial crisis, the Irish Government were given temporary permission from the competition directorate of the European Commission to increase the grant aid cap to €500,000 per business for support schemes.

An enterprise stabilisation fund was also establishedduring the financial crisis and allocated €100 million over two years to support viable but vulnerable exporting companies experiencing difficulties due to the economic crisis.

“Securing increases to the current state aid thresholds is a vital policy action required to protect enterprises and exporters hit by a hard Brexit as a transitional aid measure,” Mr Collins said.

“We need to do everything to enable companies trade through and adapt to any disruption ahead. It is very disconcerting that the Government are not even raising the issue at EU level,” he said.