07 June 2012

Vice President Almunia: The State Aid Modernisation Initiative

The reform package is designed to turn State aid policy into a simpler, stronger and smarter instrument to coordinate the efforts that governments across Europe are making to boost growth in times of extraordinary fiscal constraints. Almunia said that in the very difficult economic and social situation in which Europe finds itself, all the instruments – State aid policy included – should be geared to help EU countries tackle their current challenges. 

The three pillars of the initiative

"The first and most important pillar of the reform process rests on the need to encourage more focused aid and of better quality... This is the aid that really promotes research and development; makes access to finance easier for SMEs; gives the right incentives for the development of the digital economy; protects the environment; and attracts investment towards the weaker regions of Europe. Conversely, our future policy will discourage the bad aid that crowds out private investment; keeps inefficient and non-viable companies on indefinite life support; and generally wastes taxpayer's money.

The second pillar of the reform package is simplification. Our system of guidelines and notices has grown in complexity through the years and now counts over 40 different texts. The reforms will produce a leaner and clearer regime, which means that public administrations across Europe will find it easier to comply with the rules and that the Commission will be able to take faster decisions.

The third pillar is our determination to shift the focus of our control from a case-to-case to a more structured policy approach. At the end of April there were 760 pending cases, and quite a few of them would probably have only a limited impact on the internal market.

Of course, one condition that will help us to make State aid control more rational and efficient will be a new level of commitment from national governments. The move towards a more structured policy approach also means that we can put our experience at the service of national authorities to help them design more effective aid measures."

In his concluding remarks, Almunia said that the most important objective of the overhaul of the State aid regime is to help Europe’s governments spend more wisely in these difficult times to prepare the ground for the recovery, keep the right priorities in times of fiscal consolidation and, of course, mitigate the social effects of the crisis.

"I am perfectly aware that Member States' governments are ultimately responsible for how public funds are spent and on what; the role of the Commission is to make sure that these expenses do not distort competition in the internal market. But, in doing so, I have no doubt that we can encourage smart spending; tighten coordination at EU level; and make sure that good practices travel smoothly from one country to another. This is the rationale of my initiative."

Full speech

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