More state aid to big firms, no special provisions for the SMEs

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on several decisions on State aids, adopted on the same day by the European Commission. He notably announced the launch of a public consultation on a proposal for revised and understandably more relaxed State aid rules. The big multinationals are to take advantage of that. That’s why Almunia speaks in front of some market board. (EC Audiovisual Services, 18/12/2013).

Joaquín Almunia, Vice-President of the EC in charge of Competition, gave a press conference on several decisions on State aids, adopted on the same day by the European Commission. He notably announced the launch of a public consultation on a proposal for revised and understandably more relaxed State aid rules. The big multinationals are to take advantage of that. That’s why Almunia speaks in front of some market board. (EC Audiovisual Services, 18/12/2013).

Rules for state aid covering research, development and innovation investments (R&D&I) are already relaxed in the European Union, in order to facilitate growth and job creation. Mind you that in this case the bending of competition rules is not confined to very small businesses, the SMEs and mid cups, but covers the entire constellation of the European business sector, including the multinationals. Now the EU Commission tries to further facilitate state aid on R&D&I. Let’s see if this new Commission initiative is as it looks like or it is drafted to help only the big guys.

Favouring the multinationals

In the case of multinationals, most of big groups tend to locate their research and development departments or their specialised affiliate companies on European soil, in order to profit from the high educational and technical standards of the labour force and the always increasing EU subsidies on R&D. This new European Commission initiative further facilitate the conditions under which member states can grant state aid for research, development and innovation activities (R&D&I). By the same token the Commission is very probably aiming at supporting the EU multinationals, a target which is not necessarily negative.

Of course the Commission would not accept that its new proposal is aimed to further help only the big groups. Nevertheless the most important item in this package is the doubling of the threshold above which a clearing is required. Whilst currently, aid for experimental development of up to €7.5 million can be granted without prior Commission approval, under the proposed new rules member states would have to seek Commission approval only if the aid exceeds €15 million per project and per beneficiary.

Last week Commission Vice President in charge of competition policy, Joaquín Almunia, said: “The new Framework we propose means more effective R&D&I aid, fewer distortions of competition and less red tape. It will help Member States reach the targets of the Europe 2020 Strategy for smart, sustainable and inclusive growth. Well-designed public support to R&D&I will enhance competitiveness and will help address the societal challenges the EU is facing.”

Undoubtedly, €15 million per project and per beneficiary is not at all a small amount. It surpasses by far the abilities of SMEs and even of mid cups. Let alone that loan demands for such projects are usually rejected by banks, if the inquiring part is an SME or mid cup firm in the south of Eurozone. It’s not the same for the multinationals, which have many options to finance themselves, while for the SMEs it’s only the banks.

No special provision for the SMEs

The relevant Press release issued by the Commission last week stressed that this new threshold of €15 million refers “to aid for experimental development”. But this category is so broad and becomes even broader with the fact that the above ceiling refers to the aid and not to the total cost of the project. This means the interested party can receive also aid from EU R&D support programmes. In short, the entire cost may exceed the double of the above mentioned threshold.

The Commission doesn’t hesitate even to state it clearly that the whole affair is to support the large company groups. It states, “The proposed framework on state aid for R&D&I is not a stand-alone act but is complementary to the General Block Exemption Regulation (GBER) which sets the conditions for certain aid measures – including R&D&I-aid – to be exempted from prior notification to the Commission. The Framework, in turn, sets the standard for large R&D&I aid that goes beyond the GBER’s limits and requires individual scrutiny by the European Commission before being granted. The GBER is also currently under revision and a new draft has been submitted to public consultation on 18 December 2013. Both the GBER and the framework will offer Member States more possibilities to channel state aid towards boosting innovation, growth and jobs…”.

The Commission insists that this is to help growth and job creation in general, but still no particular support is provided for the R&D&I of SMEs. It should be reminded that 85% of the new jobs in the EU are created by very small firms and SMEs. It’s not only that though. The doubling of the ceiling of aid, above which an announcement to the Commission is required, helps only the wealthy countries, which can afford such expensive aid schemes.

This doesn’t mean that the proposal in question will necessarily trigger negative developments overall. The problem is that no special attention is paid to the needs of the SMEs and mid cups in crisis countries like Greece, Italy, Spain, Portugal and why not Ireland. Given that the available financial options of practically all SMEs are restricted to lenders, and that the banks in the south of Europe are not according any new loans, the Commission initiative is obviously introducing new inequalities and increases the fragmentation within the EU economy.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

High-technology manufacturing saves the EU industry

Mobile young people create the European labour market of tomorrow

G20 LIVE: “International communities and leaders have great expectations for 2016 G20 summit in Hangzhou China”, Mr Wang Xiaolong, the Chinese Foreign Ministry’s special envoy stresses live from G20 in Antalya Turkey

ECB indicates south Europeans can endure more austerity

Parlamentarians to “break up” with reality in the Google antitrust case

Why growth is now a one way road for Eurozone

Europe eyes to replace US as China’s prime foreign partner

World Health Organisation and young doctors: is there any place for improvement?

Trump enrages the Europeans and isolates the US in G7

Google’s bare truth: Europe’s Chief denies EU accusations but admits they “don’t always get it right”

GradList Launched At TheNextWeb 2014

The challenges of mental health among the Syrian medical students

What can stop the ‘too big to fail’ bankers from terrorising the world?

COP21 Breaking News_10 December:#ParisAgreement: Points that remain in suspense

The EU cuts roaming charges further while the UK weighs Brexit impact

COP21 Breaking News_05 December: Children Will Bear the Brunt of Climate Change: UNICEF

European Citizens’ Initiative: A game of much publicity and one big lie

Starbucks and FIAT again under Commission’s microscope: is Europe ready to kick multinationals out of the house?

Eurozone: Despite anemic growth and shaky banks marks record trade surplus

UK economy in dire straits: leading banks now officially plan to Brexit too

UN Human Rights Council resolution on youth and human rights: a step forward for youth rights

Can the next financial crisis be avoided?

ECB guarantees the liquidity of the Atlantic financial volume

230 Junior Entrepreneurs and over 70 guests attended the International Congress on “Entrepreneurial Skills for Youth”

On Youth Education: “Just a normal day in the life of a medical student”

The Indian case: health policies need to keep pace with public health literacy

The new EU “fiscal compact” an intimidation for all people

The developing countries keep the world going

More taxpayers’ money for the banks

Jeroen Dijsselbloem new Eurogroup president

European Youth Forum demands immediate action & binding agreement on climate change

Turkey to let EU alone struggle with the migrant crisis while enhancing its economic ties with Russia instead?

The strong version of the EU banking union gains momentum

Refugee crisis update: EU fails to relocate immigrants from Greece and Italy

IFMSA and IPSF on the Health of Migrants and Refugees

France and Poland to block David Cameron’s plans on immigration

COP21 Breaking News_12 December: Another sleepless night for the negotiators before Indaba meeting

Commission deepens criticism on German economic policies

Let your fingers do the walking

18th EU Eco-Innovation Forum in Barcelona shows the way for Europe’s new Environmental policy

Copyright: European Union , 2017; Source: EC - Audiovisual Service; Photo: Frank Molter

EU hits deadlock on the future of glyphosate a month before deadline

Brexit uncertainty keeps shaking the world’s financial markets

SMEs and micro firms sinking together with south Eurozone

The EU finally seizes the opportunity to support the sharing economy?

China invites the EU to a joint endeavor for free trade and order in the world

Germany loses leading export place

Why exchange programs are essential for the medical students of the 21st century

EU finally agrees on target for 40% greenhouse emission cuts ahead of Paris climate talks

MEPs and European Youth Forum call on EU to Invest in Youth

EU to Telcos: Stop Mergers and Acquisitions but please help me urgently with 5G development

ECB to play down IMF’s alarms for deflation danger in the EU

Falling inflation urges ECB to introduce growth measures today

Bank resolutions and recapitalisations by the ESM may end up politically swayed

Cameron’s “No Brexit” campaign wins top business support as Tory front breaks

Knowledge management and entrepreneurship: short term vs. long term perspective

Do the giant banks ‘tell’ Britain to choose a good soft Brexit and ‘remain’ or else…?

SoftLayer, an IBM company, @ TheNextWeb 2014: Masters of Failure and Change

May a parody constitute a copyright infringement? European Court of Justice to give the answer

Terrorism and migrants: the two awful nightmares for Europe and Germany in 2016

Draghi reserved about Eurozone’s growth prospects

More Stings?

Comments

  1. Like to know more about your funding and donors services

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s