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

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

WHO reports ‘very strong progress’ in battling DR Congo Ebola outbreak

The Cold War had an unintended side effect: It created a European wildlife paradise

Senior UN children’s advocate says they ‘should never be targeted by violence’

EU to lead one more fight against climate change at G7 summit

Why the Greeks forgave Tsipras’ pirouettes around austerity and voted again for SYRIZA

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

Ukraine turns again to the EU for more money

How public private partnerships must evolve to create social impact

Commission presents EU-Vietnam trade and investment agreements for signature and conclusion

Record-high number of civilian casualties in Afghanistan: UN Report

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

These are the regions where people have most faith in their schools

European Banking Union: no one is perfect

Libya detention centre airstrike could amount to a war crime says UN, as Guterres calls for independent investigation

Global climate change: consequences for human health in Brazilian cities

5 things to know about African migration

Spending another 3 billion euros on Turkey feels better than admitting EU’s failure

6 facts to know about EU alternative investment funds

Governments and non-state actors need to take urgent action to meet Paris Agreement goals

Universal Health Coverage will ‘drive progress’ on 2030 Development Agenda

Africa-Europe Alliance: Four new financial guarantees worth €216 million signed under the EU External Investment Plan

Sustainable investment is on the rise – here’s how to connect the dots

Here are four steps SMEs can take for long-term success

Commission offers discount on fines to banks for competition infringements

Eurozone close to agreeing on a Banking Union

Fleeing violence, Cameroonian refugee arrivals in Nigeria pass 30,000, reports UN refugee agency

Parliament makes EU electricity market cleaner and more consumer-friendly

Venice will now start charging tourists an entrance fee

Online shopping across the EU to be easier from 3 December

State of the Union 2018: The Hour of European Sovereignty

Parliament to vote on new European Commission on 27 November

Digital development: technology-enabled, but human-centric

The EU Commission by serving the banks offers poor support to European mainstream political parties

‘A trusted voice’ for social justice: Guterres celebrates 100 years of the International Labour Organization

Mali just took a huge step towards universal healthcare

Greece begins a new chapter following the conclusion of its stability support programme

Security spillovers from Trump’s trade wars: China, Germany prepare for global disorder

Security Union: Commission receives mandate to start negotiating international rules for obtaining electronic evidence

Paris agreed with Berlin over a loose and ineffective banking union

Eurozone: The cycle of deficits, debts and austerity revisited

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

Climate change: Direct and indirect impacts on health

Three UN workers killed following Benghazi car bomb attack, as Security Council meets in emergency session, honours their ‘ultimate sacrifice’

EU to give more power to national antitrust authorities in a bid to secure regulatory fines

Sudan: New political transition, bolstered by peacebuilding, could bring long-term stability to Darfur, Security Council told

UN calls for action to tackle ‘ubiquitous but invisible’ global road safety crisis

Wednesday’s Daily Brief: Sudan, Libya, Yemen updates, solutions for e-waste, flood response in Iran, online security for children

Major humanitarian hub in north-east Nigeria burned in attack

Brussels to tear down the trade wall with Mexico as opposed to Trump’s “walls”

Project Manager – 2024

A major win for transgender rights: UN health agency drops ‘gender identity disorder’, as official diagnosis

Young health workforce – a core of effective primary healthcare?

Brexit talks stalled at launch; issues with European Court’s authority in Britain

Hungary: Commission takes next step in the infringement procedure for non-provision of food in transit zones

Tax evasion and fraud threaten the European project

Combatting terrorism: EP special committee calls for closer EU cooperation

UN Human Rights Council stands firm on LGBTI violence, Syria detainees and Philippines ‘war on drugs’

Brain Drain: Follow your dreams, wherever they might take you

ECB ready to counter the rise of the euro?

Migration crisis update: lack of solidarity not only among EU leaders but also EU officials

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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s